Moving home can be a stressful time and full of difficult decisions you need to make. Without the expert advice of the most highly qualified and professional agents, you can make terrible mistakes and poor decisions which can cost you not only wasted time, but more importantly thousands of pounds.
To help you, here are the top 6 mistakes made by badly advised vendors and cowboy estate agents which almost always result in you losing out:
Mistake 1: Pricing too high
Without a doubt, one of the easiest mistakes to make as everyone wants the highest price for their property and rightly so.
However, the hardest concept people find difficult to understand is this: the lowest priced properties sell for the highest price and the highest price properties sell for the lowest price. You may find this difficult to accept, but it is true. If a property appears really good value, everyone is going to want to view, and likely, offer on it. That competition will drive the price up to absolute market value.
In contrast, if realistically your property is worth £325,000 and you decide to market it at £365,000, what do you think will happen?
Firstly, you will have limited interest as your property will appear expensive compared to the competition. Secondly, you are justifying a buyer buying a competing, correctly priced property. In other words, you’re helping your competition sell.
Thirdly, it’s likely after two months your property will start to stagnate on the market. It will start to earn a reputation for having something wrong with it. No-one wants what no-one else wants and everyone wants what everyone else wants. It’s human nature. Unfortunately, there is only one solution at this point and that’s a price reduction.
Your problem is that it is unlikely reducing it down to where it should have been in the first place will solve the problem. Your house is now stagnant on the market, it’s got a bad reputation and you’ve missed the prime market launch period to get competing offers and, therefore, the best price. You’re going to need to reduce your £325,000 house to closer to £315,000 in-order to re-invigorate the marketing and make it appear in searches where people wouldn’t have previously seen it. So what started out as ‘let’s just try a bit higher and see what happens’ has actually cost you £10,000 and two months of wasted time.
This scenario is most common with ‘internet-only’ estate agents whereby you pay a flat fee to list your property, regardless as to whether it sells. It doesn’t matter if your £325,000 home goes on the market for £295,000 (making their lives very easy for them and gaining the reputation for selling a property extremely quickly, regardless as to whether you could have got more) or for £350,000 and it stagnates and remains unsold. They get paid that attractive, low flat fee regardless and while you believe you’re saving a couple of thousand pounds, it’s actually costing you more than five times that amount. This can be easily avoided by engaging the services of a Chartered professional firm such as Mount & Minster who often achieve sale prices in excess of their guide prices.
Remember, it’s not possible to under-price a property (as long as you don’t sell it to the only buyer who views it) but you can very easily over-price a property and kill the crucial early interest.
According to Which?, sellers lose £4,300,000,000 a year to overvaluing and homes with a 5% price cut take 2 months longer to sell.
Mistake 2: Choosing the Cheapest Estate Agent
What’s the difference between an estate agent and a great estate agent? I’ll tell you. 2% of your asking price. It is. Honestly. According to extensive research, the average estate agency achieves just 97% of the asking price whereas great agents achieve 99-100%. On a £500,000 house, that 2% difference equates to £10,000 more for your house… that’s alot of money.
As with any good, great or extra-ordinary service, it’s slightly more expensive but better value overall. As the saying goes, buy cheap, buy twice.
Estate Agents are no different, there are the good, the bad, the ugly and the remarkable. But if you pay peanuts, you’ll get monkeys! Given that your home is your most valuable asset, can you afford to pay a cheap estate agent to get it wrong?
Here’s a scenario to consider… You have a house which you’re planning on marketing for £250,000. Agent 1 is offering to sell it for a flat fee of £900 but has a track record of achieving 98% of asking price and Agent 2 is offering 1.25% but has a track record of achieving 100%… which is the best value agent? Agent 1? Absolutely not!
Agent 2 is the better estate agent for you as you’re likley to achieve £5,000 more for your house but only be charged £2,225 more for the privilege, so you’re £2,750 better off at the end. If you had gone with the cheaper agent you would have only paid £900, but you would have sold it for £5,000 less! If you’re house is more than £250,000, that loss is much higher.
Again, this is the difference between a real estate agent, and an ‘internet-only’ agent. The difference between the two is negotiation. Good negotiators will achieve a better price for you. They do this with good communication either on the phone, or face-to-face. Next time you see a Purple Bricks sale board, have a good look at it, where is their telephone number? Nowhere! Of course not, they don’t want you to telephone them, they don’t want to actually speak to you. If you want to make an offer, you just type it and click! It will either be accepted or declined. There’s no negotiation involved, no explanation or justification. No engagement with the agent on the telephone who through years of experience will be able to help you, their client, achieve a higher price. But that’s what you get for your lower fixed fee. Poor service, lower results. The only person who benefits is your buyer. It doesn’t even matter if they sell it or not, they still get paid the same!
Mistake 3: Thinking Your House Will Sell Itself
Whether you love or loathe estate agents… you need them as houses most certainly do not sell themselves. Here’s why:
They do not value themselves at the correct level to achieve maximum interest resulting in optimum price, quickly, avoiding stagnation and reduction.
They do not photograph themselves to attract maximum viewings.
They do not write a description that will give potential buyers just enough info, but not too much… to encourage a viewing.
They do not promote themselves in the places they will be seen the most.
They do not overcome people’s objections resulting in more viewings.
They do not continuously analyse and review the marketing and make changes where needed to avoid stagnation.
They do not arrange viewings in a way to creates a sense of competition and urgency.
They do not carry out viewings in a way that starts and ends the viewing in the area of the house the buyer most wants in a property.
They do not follow up viewings addressing people’s possible concerns and starting a negotiation.
They do not negotiate the best price for themselves (on average, 4% more than a buyers initial offer).
They do not progress the sale solving the inevitable problems along the way (chains collapsing, survey issues, slow solicitors, etc)
… an experienced, committed, expert estate agent does. The only way to benefit from this is to use a proper, pro-active and personal agent.
Mistake 4: Being Fixated on the Price You Want
As this article has already hinted, there are good agents and there are exceptional agents. There are also terrible agents! The terrible ones will market your property based on what price you want to achieve. The ‘online-only’ agents are the guiltiest party here as it doesn’t matter if it sells or not, or what the price is, they still get paid. Most people would be well advised to avoid these agents at all costs. So instead, how do you tell the difference between a good agent and an exceptional one?
Easy! When it comes to price, there is one agent that will have the best knowledge as to value, the RICS Registered Valuer.
An RICS Registered Valuer is someone who has achieved the highest qualification in not only property and real estate (RICS stands for Royal Institution of Chartered Surveyors) but also, more specifically, values. To get to this level is very difficult, so difficult in fact that there are only a handful of professionals out there who are qualified to this highest level. These few are the exceptional agents.
So, when an RICS Registered Valuer advises as to value, chances are they’re right! If it’s not the value you were hoping for then perhaps you need to consider who is in a better position to be right, you or the highly respected valuer?
Of course, it’s difficult if you’ve previously been fixated on higher price, or if a previous cowboy agent advised it was worth more before you considered getting the pros involved. It feels as though you’re losing money. But this is not the right way to look at it. How can you be losing money, if you never had that amount in the first place?
Others have their heart set on a house which they can only afford if they sell their house for a certain amount. Oh dear! These types of vendors don’t seem to know in their own minds why they’re selling, or whether they even want to sell. You’ll find these types of vendors have very few viewings and very little success as they’re fighting a losing battle. You sell because it’s the right stage in your life as a family to sell. Once you know what your house is worth and you’re getting people though the door with one or two offers on the table, then you can go out there and realistically look at properties you can afford to buy. Everybody would love to live in Buckingham Palace, but would you really expect someone to pay over the odds for your house just to help you live the dream?
Mistake 5: Refusing an Early Offer Because it’s an Early Offer
There have been many circumstances where vendors reject over the asking price offers from excellent buyers in the first week or two of marketing, only to sell under the asking price 6/8 weeks later. Do not let this happen to you!
You actually have a better chance of getting a higher offer early on in the marketing as that can be used as leverage against the buyer to push them up. An exceptional agent would say to the buyer “at this stage, as it’s so early in the marketing, your offer will need to be 6% higher”… the buyer begins to fear losing out and 9 times out of 10 you will be able to agree a deal.
Remember, you chose your agent because you thought they’d do well. By getting you an acceptable early offer, they’ve proven you right!
Each offer, whether early in the marketing or not, needs to be assessed on it’s individual merits:
- Offer amount
- Buyers position (i.e. no chain, first time buyer etc)
- Financial situation (i.e. cash buyer etc)
- Motivation… It may be that they have been waiting for a house in your road for 6 months. That’s gold dust and the chances of that sale completing, even if there are slight issues in a survey, is probably 90% vs a 66% national average as they’re a ‘minority’ buyer. However, if a buyer has made offers on 3 houses at the weekend, yours being one of them, then clearly you have to question their motivation and most likely not agree a sale to them. Only once you’ve got all the facts can you make an informed decision to move forward.
Mistake 6: The ‘I’m in No Rush‘ Mentality
12 days is the optimum time for a house to achieve it’s maximum selling price, according to analysis by the Home Owners Alliance.
Agents with an average selling time of 12 days achieved 100.89% of their stated price, compared to those with a selling time of four weeks which achieve 98% of the original asking price, according to the research.
So, what does that tell you? Whether you’re in a rush or not, the longer you leave your house sitting on the market, the less chance you have of getting optimum price.
You may think “I’ll just wait for the right buyer to come along”… and that may well be a good strategy, but in reality, once that buyer comes along (it may be 2,3,6,8 months later), you’ve been for sale for such a long time, they will almost certainly use it against you. They will use it as leverage when making an offer.
The better strategy would be to work back the dates you would like to be where you want to be. So let’s say you want to move to a bigger house and you want to be in that new house by September. We know the legal process can take 3 months and you need 4 weeks to secure a buyer, that means you need to be live on the market by April, beginning of May the latest.
So rather than going on the market in January at an inflated price because at that point you’re in ‘no rush’, hold off, price competitively and launch with the view of having the best buyer secured at best possible price within 4 weeks.
So it’s all really quite simple. When you use the right estate agent, chances are you’ll never fall foul of these common errors that other people are guilty of when picking the wrong agent.
Mount & Minster is an award winning company which has frequently exceeded our client expectations with highly qualified career staff and a thorough knowledge of our industry, our market and our clients. We differ from the common estate agent in may ways which we would be happy to discuss in more detail over a FREE consultation or valuation to suit you. Please Contact Us for further information.