Estate agents who overprice properties cost sellers £19,000

A new study from Which? has found that sellers are losing an average of £20,000 because estate agents are overvaluing their properties when they are put up for sale.

Which? analysed over 370,000 property sales in England and Wales and found that 19% had seen the asking price cut drastically.

The consumer watchdog found that homes sold with a reduction of over 5% sold for less than homes bought within 5% of the value they had originally been listed for.

Because estate agents make commission on top of their salary from a percentage of the value of the homes they sell. This means they earn more money the higher the house sale.

Homes sold at a reduction of more than 5% of their original asking price had an average final sale price of £241,000, while those sold within 5% of the original price had an average final selling price of £260,000, £19,000 more. This means that by overvaluing properties initially sellers are losing almost 8% of the value as well as taking 64 days longer to sell.

But the research from Which? Suggests this aim has a bad impact on final selling prices for a high proportion of sellers, because by putting them up at an unrealistically high price in the first place, the effect for many is that prices then have to be cut further to sell than if they had been originally up at a more realistic price.

Estate agents, according to the Home Owners Alliance, normally receive between 0.75% and 3.5% of the final selling price.

Richard Headland, editor of Which? said: “When selling your home, make sure your agent can provide evidence of similar sales to back up the valuation. If the valuation is not realistic, you could end up thousands of pounds worse off and wasting a lot of time.”

Paul Higgins, chief executive at the Homeowners Alliance, which represents homeowners, said: "The problem is that greedy sellers attract greedy estate agents. If an estate agent tells a seller they can get 10% more than other agents for their home they are likely to choose them. But sellers shouldn't just consider the price agents claim they can get. They should be thinking about how the agent is going to sell the property and whether they are asking smart questions."