Asking price are still very high and sellers are still thinking it is 2020

[BroglieBoy]

A 3 bed house was listed in Wokingham for £700K in June this year. It was then reduced to £650K then to £600K and then very recently reduced to £550K.

House is a Probate with 2 individuals.

The house looks fine and needs some modernisation. New carpets, new decoration new kitchen units.

The house next door which is a 4-bed house was sold in June 2023 for £492K.

I would expect the estate agent to be aware of the recent sold prices in the area( in fact recent sold price of the adjacent property ) and market it accordingly.

How come the estate agent thinks they can market a property that is smaller than the adjacent property, but market it for more than the recently sold prices, especially in a falling market?

Yes, that house was 2 bed, and had a garage.

2 other houses sold last year on same street for £120k, and £135k.

Time will tell. I expect to see a reduction any week now.

"I think they are being advised to overprice and then drop 10% down from that price."

Couldn`t really think of any worse tactic than that just now? LOL Any EA trying that should find a different job IMO.

Yes, that house was 2 bed, and had a garage. And that was last year, markets changed somewhat.

BUT 2 other houses also sold last year on the same street for £120k, and £135k respectively.

Time will tell. I expect to see a reduction any week now. If it had been more realistically priced I'd have viewed but nearly 15% increase in 6 months is a piss take in my eyes.

Indeed. A seriously run-down house can easily eat up 100K with the major items, like roof tiling, rewire, and updating really knackered kitchen/bathrooms before you even think about extending it if you aren't careful about your spending. Some people -buyers and vendors- are not realistic about current reno costs, nor the specs and quantity of work they 'need'.

I'd agree. A type of house can be 'rarer' but if buyers for it are 'even rarer' that doesn't increase its value!

Very true, I think a lot of EA`s are staying afloat by gouging landlords and their tenants TBH, hopefully there will be more regulation coming to stop them doing this.

Yes, there is still some crazy pricing going on. Lots of unrealistic sellers, lots of agents desperate for business who are over valuing, some agents who don't seem to grasp how different the market is now, some sellers 'testing the market' ona wasting agent's money and time.
Unsurprising that demand has dried up.

That's interesting @hannahcolobus . Unless they get paid just for listing houses and not for selling, it seems a pretty stupid tactic.
Did they actually admit that they were deliberately over pricing?!

Lots of reasons:

• seller denial 'I know what my house is worth!/ 'houses only ever go up in value!''
• agent lies to secure instruction- ego stroke seller with high valuation, then plan to reduce over a period of months.
• seller needs to achieve X price to perform a worthwhile move/upgrade - this could lag the general market fall.

Don't read into it too much- if you're keeping a close eye on the market you will have a good idea what it's actually worth - make an offer.

Age that we will work to is going up and up and up. Some houses I've seen (that have now been sat on the market for 10 months!) feel they deserve that extra money 100k so they can retire earlier.

People get bogged down by the fact that it's their home so it must be worth £10,000,000 because it's the home where their children came home to/ grew up in / memories were made, when it's a 2 bed mid-terraced property in Scunthorpe.

This too.

A university team did a study on 'perceived value' where the split freshers into two groups.

Group A where given a free university logo mug that retailed for £12 in the gift shop.

Group B where not given a mug but told they could buy one in the gift shop at RRP. (virtually non did choose to buy a mug).

Group A where asked if they would have bought the mug at full price and most wouldn't have bothered but where happy with the 'free' one.

After things settled for a while they then went back to Group A and asked if they would sell their mug and how much for?

Most of Group A wanted between 50-80% of the RRP. for this second hand 'free' mug they received because 'it would cost a lot to buy a replacement'.

They then asked group B if they wanted to buy group As mugs and how much they would be willing to spend on a second hand mug?

Most didn't even want a mug and the very few who would entertain buying it would however only spend a max of 20% of the RRP.

The study proved its point that people perceive something to hold greater value purely because it belongs to them rather than what the market dictates.

@housethatbuiltme interesting study! Thanks for posting.
You see this a lot on ebay as well. People put things on for ridiculous 'buy it now' prices. I don't think they have even bothered to research what similar items have sold for recently or are listed for currently. Their item is somehow 'special'!

You’ve got be a mug to buy an overpriced mug.

Thanks @hannahcolobus. It's a tactic, but I don't think it will work.
Buyers only have a certain amount of money to spend and that has reduced considerably for the majority. Sentiment has changed which makes a difference too. Most people are not foolish enough to do no research on their local market.
There have been multiple posts on here recently from people who have had no viewings or one a month. Clearly, potential buyers aren't even bothering to view because they perceive the prices to be ridiculous.

*Asking prices are still very high and sellers still think it's 2020
*
Absolutely this!

Certainly here in SE London this seems to be the case

A few have dropped their price significantly...to me those are the serious/desperate/need to to sell vendors

The others seem to be just waiting and hoping

2 years ago their property would have been on for at least 100k less

I understand there is a feeling they have "lost money" on their home but I think some vendors need to wake up and read the room

We did a second viewing on a lovely 3 bed semi, still priced at New year 2023 price...spoke to agents about making an offer and were told vendors will only accept full asking price.

Fair enough, although I think they'll still be waiting by the end of 2023!

We are vendors and have accepted 10% under original asking price

We would like to move, not so much a need or desperation. We're going to keep looking but may need to admit defeat in the coming months

It doesn't necessarily follow that prices must come down though. I'm sure that they will come down a bit, but in some cases, buyers will have to accept that they will get less for their money than they would have done before (if they need a mortgage that is. The majority of houses are bought with cash).

There will no doubt be some desperate sellers, but equally, there will be desperate buyers. Buyers in their 20s who live with parents have the luxury of being able to wait it out, but for people in their 30s paying rent, there isn't a good alternative. Rents are rocketing and house building has fallen of a cliff because building costs are high, and builders won't build in a falling market.

In my area, prices are still rising, albeit at a much slower rate than they were before.

The majority of houses are bought with cash

I'm pretty confident that's not true.

"The majority of houses are bought with cash"

Take this example....

https://www.msn.com/en-gb/money/other/barratt-sees-new-home-reservations-slump-by-30-as-mortgage-crunch-hammers-sales/ar-AA1gjLGR

Would you say that most new-builds are bought with mortgages or that cash buyers know they can wait for a bargain?

I think it would be more correct to say that most houses are bought with EQUITY (a lot less people than you think have the hundreds of thousands sitting in the bank just to drop on a property, and smart money isnt buying as the biggest property bubble in history bursts) and that equity plus savings, family money etc. feeds up the chains from the bottom where FTB are the lifeblood so to speak, they inject new money into the system so chains can complete further up , with FTBers staying away from the market surely the rest of the Pyramid just collapses?

Back in the real world, all indices show significant falls already, including annual ones now. If you area is genuinely rising, others have fallen 10-15% already.
The great majority of houses are bought with a mortgage btw.

• The vast majority of buyers use the equity within their existing homes to help fund the purchase of their new ones, so most have a large equity cushion
• Only buyers who recently purchased a property with a high loan-to-value mortgage might be at risk of negative equity. And even then, the situation may only be temporary
• If mortgage rates were to stay above 6% for the majority of 2023, which we now believe to be much less likely, then UK house prices would need to fall back in order to reflect the buying power hit for those using mortgages

Ref https://www.zoopla.co.uk/discover/property-news/house-price-index-october-2022-negative-equity-is-it-something-to-worry-about/

Not everyone has a mortgage - perhaps they've paid it off.
BUT they NEED to sell their property to then buy another.
This could be a more expensive property as perhaps they have had a windfall.
Maybe a smaller less expensive property, so they gain some capital to save/spend.
Perhaps a roughly identically priced property.
They may not need to move (quickly).
ALL out there have individual circumstances. Generalizing about greed or ridiculous asking prices should be followed by the words "in my opinion".
It is a tough, far slower market for both sellers and buyers. But the cost to extend/renovate/construct has increased terribly. And the big housebuilding firms (e.g. Crest Nicolson) wont build in falling market so landbank for later.
If you have a mortgage and need to jig it to buy another property, then perhaps the pickings are currently slimmer.

Of course greed exists, but that goes both to sellers and buyers. Expectations, disappointments, frustrations...you have to have very thick skin when buying and selling and be prepared to walk away, always. Although it can be the most deflating of feelings....

When mortgage applications are down 30-40% a lot of that "equity" doesnt get released (a house isnt like a bank account, you need a buyer) or there is a lot less equity than previously thought, or even no equity if you are a recent buyer, also inflation is here to stay (did you see the sugar price yesterday?) and mortgage rates are going higher.