Agent suggesting guide price to generate bidding war..thoughts/experience?

[WaterBottle123]

My house was worth 425k pre pandemic. Zoopla now suggests it's worth 500k, but Zoopla doesn't know I've added a kitchen/diner extension and fourth bedroom, extra parking space, full redecorate, new bathroom.

Agent suggests a guide price of 550k, which feels low given Zoopla suggests 500k without all that work. 4 beds in catchement for our local outstanding secondary are like gold dust round here. His argument is it will create more interest and go to a bidding war in a hope to achieve 600-615k.

This feels like an odd strategy - I think he just wants to flip the house quickly, without getting the best price...

Thoughts?

Well I must be ignorant, when I've been viewing I haven't paid attention to whatever words were written before it and only looked at the price. And then offered below that, because I like to feel I'm getting a bargain. Looking back at the old adverts, both places I've bought were 'guide price'. So it certainly wouldn't put me off viewing but evidently I didn't get the memo that I was meant to start a bidding war!

I do not understand his reasoning. If I saw an asking price (or guide price or even 'offers over') I'd still expect to get it just below or at most at the price advertised. I'd feel hard done by if I went over asking, and wonder how an agent could be so bad at judging a property's worth?

We’ve offered on a lot of houses recently (before finally getting an offer accepted). Many agents seemed to be pricing low in hopes of a bidding war. It worked- people did offer over asking, but only by £15k-£20k for the ones we bid on. Expecting people to bid up by £50-75k seems crazy.

Is the EA Purple Bricks? They seem to favour this method

My EA BIL tells me that when an EA suggests a guide price with 'an aim' to get a higher price, it's because there's a big difference in what the EA and seller believe the house is worth, but the seller is quite insistent that their house worth more....

The market always decides the value at the end of the day. Good luck

Two thoughts I had -

1. Like Londongent said there's a difference between listing at a fair price and then getting multiple offers vs. Deliberately underpricing to encourage competitive bidding. (The latter really doesn't appeal to me ethically).

2. Don't assume any higher price offered is the what you'd actually get! We recently listed at perceived market value based on 3 valuations, did an open day with one day of back to back viewings and got multiple asking price offers on the day. Our purple bricks agent said it was up to us what we did and we decided we didn't want a bidding war so instead he helped us to decide which buyer to choose at asking price. (Despite PB's terrible reputation he's been really good). Later in the process when valuations came back our house was downvalued by £10k and the house we're buying was downvalued by £30k (both between 5-7% of the agreed respective prices). Through researching we then learnt that lots of properties are currently being downvalued due to the bidding wars being created by the current market and then sales either fall through or the price is renegotiated down during the process.