Is anyone a valuer for an estate agent? I have a question

[philopastry]

I've seen a house I like. It is on the market for £425k which I thought was too expensive for what it is. I looked on the net and found the house next door (the adjoining semi) sold in March 2007 for £375k (which was the asking price)
Zoopla reckons that house is now worth £333k - I know that they are not an exact science but it does seem the market in the area has gone down 10% in last 2 years - sounds likely to me.
When estate agents rang me to see what we thought of the house I explained we liked it but thought the asking price was 'extremely optimistic' and ended up explaining why I thought so ie the house next door which had been sold by the same estate agent in a more buoyant time for £50k less. The agents said she would spk to the valuer to clarify the asking price, why it was set as it was. They have come back to me today and said it is because the house we have seen has a conservatory (8 x 6 horror we would knock down anyway)and the house was 'just worth more, we don't feel we have to explain why' What if anything do you make of this? I really did expect them to come back with some actual reasons. It confirms my suspicion that the asking price has been set on the very optimistic side but shouldn't the valuers at least try and explain the discrepancy? Just after an opinion from those in the know really.

philopastry - the agents asking price has nothing to do with the conservatory or the market or anything else logical. Agents put a house on at the price the vendor demands that they put it on at. If the agent refuses and suggests a lower price they know they are very unlikely to get the instruction so they just agree to whatever the vendor wants. Simple as that.

Vendors are also adding 10% to what they originally wanted as they know people will bargain them down. It is a stupid tactic by vendors as it puts buyers off and agents are playing along with it.

I would say that Zoopla is somewhat optimistic on its estimate. Houses today are actually selling at 20 - 25% off the August 2007 peak although asking prices have not dropped as much which I think is consistent with the 10% drop you are quoting over the last two years. There is therefore a wide gap opening up between the apparent asking prices which are still too high and actual much lower transaction prices on the very few properties that are selling.

What I have just said about actual transaction prices is what agents behind closed doors are telling each other (but not sellers and buyers obviously). The banks are also aware of the true state of the market and are now demanding big deposits as they fear further price falls.

I am constantly amazed at how agents keep bringing houses to market at prices which are at or above the peak in 2007. They are not going to sell.

I would say £300k is a fair value in this market for the property you have described and the seller has no way of achieving £425 unless they get incredibly lucky with one desperate buyer.

ABetaDad, That is really useful, thank you.

I doubt that the sellers will accept anything like £350k let alone £300k but it gives me a lot of food for thought about what we should be paying for this house or whatever we end up buying.

From what you have said, it sounds like you are in the business, so can I ask, do you think that in 6 months the asking prices will more accurately reflect the real value of properties in the current climate? Or when they will they start to reflect the real value? Ideally I want to move this summer because of schooling but I won't pay a stupid price in order to do so.

Also, any idea what the best way to negotiate is? I feel that I have got the agents back up by even asking the question but I didn't want to go in with a perceived 'insultingly low' offer and upset the vendor - just wanted to let them know that it seems to have been set way too high in the first place.

I think there is a website that shows asking prices versus selling price - does anyone know what that is called?

Any other thoughts/ advice appreciated.

You will have got the agent's back up by not simply believing in the magical formula that is his valuation - "just worth more" and, if he does want someone to buy it, he will have to explain why. I think it is extremely unlikely you are going to be able to negotiate anything like a realistic amount off the house at the moment but, guess what, neither is anyone else so it will sit there. In six months, ring the agent up again (if he hasn't rung you before then).

PP, one of my friends who is currently househunting has experienced something similar - the house she is interested in (same house, not even neighbour) is up for sale for 25% MORE than it was sold for in late 2007...virtually no work has been done to it since then!

My friend - when asked what she thought of house by EA - said she considered it overpriced given what it sold for it 2007.

EA claimed not to know about the 2007 prices, and said they would get the valuer to ring my friend...so far no call!

I suspect hell will freeze over first but I would so enjoy taking that call

I agree lala. It is just going to sit there at that price. What's annoying is that we will also have to sit around and wait for the 6 months of no viewings/ no offers to make the point that it is not worth anything like that amount of money.

I (probably rather dimly) didn't realise the fear of falling house price/ values was what lay behind the sudden need to have 25% plus deposits though, that is interesting, makes me think I should just wait a year and see how things are then.

Hatespnge - mmm, interesting, the plot thickens! But why are they doing it?
I see that the odd cash rich desperado bites but the vast majority of people just can't consider paying over the odds, so no-one wins do they? I am bemused by it - don't estate agents work on a no sell no fee basis?

It's a tactic some EA's are applying apparently - over-price the house and then reduce it so purchasers think they are getting a bargain. Similarly, some are marketing properties at less than the value in the hope it will generate interest and result in competitive sealed bids. Its more risky and less attractive to vendors though.

If you make an offer, the EA is obliged to present it to the vendor though. Might be worth a cheeky punt.

philopastry - I am not in the business but have friends who are. The reality is that repossessed flats in Manchester, Leeds, Liverpool etc are selling at 50% below original purcase price to true professional investors with cash. In the commercial property sector again office buildings and such are also selling at 50% off the peak but it does depend on getting finance. Again this is professional investors.

The deals I am talking about above are where banks have repossessed and are offloading property to unemotional buyers who only care about rental yield. If the wider residential housng market fell to '50% off' tomorrow then transactions would pick up, houses woudl be affordable, first time buyers would be able to get into the market. It is just going to take a long time to get there and al sortsof things can happen in etween.

i am pretty sure the market fr hosues is not going to go back up in the ext 6 months. Nationwide published its house price index this mornng and was 0.4% down in April compared to March. House prices are still falling - albeit slowly. Sit tight is best in my view.

It sounds like the sensible thing to do is wait. But I feel like I have been doing that for about 18months already. Will try and be patient. Thanks for all the advice.

The problem with bad estate agents is that they are ridiculously deluded optimistic. They have had that sales mentality thumped into them - "Yes we can achieve it! We are salesmen!" - and they become convinced of their own powers of persuasion. They took on the house at the wrong price basically to stop any other agent taking it on and getting a sale.

I was speaking to a reasonably realistic agent a few weeks ago who said that it is best to get the instruction after it has been on with someone else now because the vendors will be that bit more realistic and cooperative. He said some vendors have to experience the market in order to have accept a correct valuation but too many are convinced that their home is recession proof and too many agents are willing to take them on at unrealistic guides to obstruct other agencies and in the hope that they can chip them down over time.

The best things come to those who wait