Realistic pricing for market conditions is essential. There are lots of reasons why! Below is what is happening right now!
- Realistic pricing for market conditions is essential.
- More than 75% of agents state that properties are selling at a reduction on the initial asking price according to the latest poll of Dataloft Inform subscribers.
- With property price growth softening, realistic pricing is paramount to sales success, with many vendors seemingly overly optimistic in current market conditions. Rightmove reported the average asking price of a newly listed property rose by 1.8% between April and May.
- More than 50% of agents state that properties are, on average, selling with a price reduction of up to 5% on the initial purchase price, while 23% indicate reductions are more substantial.
- Back in November, half of all agents stated properties were selling at asking price, compared to February 2022 where many were selling above asking price. Source: #Dataloft Poll of Inform subscribers (https://dataloftinform.co.uk/)
The graphic above at first glance looks extremely worrying. Indeed, right now, there is plenty of things happening in the property market to worry about.
Having said that, it isn’t all doom and gloom. So let’s try and make some sense of all this.
Have property prices really fallen?
Realistic pricing for market conditions is essential.
The problem with this is that there are so many facts and figures, and so many different organisations producing conflicting stats.
Only last week, two of the biggest mortgage lenders in the UK (Nationwide & Halifax) produced conflicting figures with one showing a drop of 3.5% while the other showed just 1%.
The reasons behind this are simply that different companies use different methods to reach their conclusions.
The only real accurate one (in our opinion) is: THE LAND REGISTRY
The problem with Land Registry is that you have to wait at least 6 months for sales to be registered and therefore there is a lag.
Local Estate Agents should also be a good measuring stick. However, the over pricing that is rife right now, is a major factor in the graphic we are writing about!
What a difference 15 months make!
Back in February 2022 virtually everything sold, and sold quickly, and indeed sold at or above asking price. The only stumbling block was the alarmingly high ‘fall through’ rate which was around 40%. Now, there are many reasons why property sales fall through. However, the most common back then was that come mortgage valuation, the property did not ‘value up’. Once again, this was down to agents either not understanding the market OR, they simply over priced it to get the instruction.
You have to take into account that back in Feb ’22 in Harlow for example, there were around 220 properties for sale. Buyers were plentiful and property sold quickly. Indeed Town and Country Herts & Essex had an average selling time in 2022 in Harlow of just 4 DAYS!!
We had to turn down ridiculously high offers as we knew they would never value up!
So even back then, pricing of a property was critical. Not for selling it, but for making sure the sale would go through!
Forward to present times, and there are around 430 properties for sale in Harlow, an increase of 95%! Buyers have decreased by around 70%. That means that ALL estate agents are struggling to get stock.
Guess what happens next?
Over pricing goes bonkers!
Yes, around 50% of all properties currently for sale in Harlow have undergone at least one price reduction. Many have undergone two, and three is not that rare!
The right hand graph shows that only 22% of properties are selling for, or above asking price!
Why?
Mortgage rates obviously play a big part in this. However, you can’t just blame it on that.
Firstly MSM (main stream media) only ever issue ‘doom and gloom’ news it seems when talking about mortgage rates.
When they quote hikes they always use the lowest available rate from the past, against the highest available rate from the present. This of course paints the blackest picture possible! Even as we write this (16th June 2023), the news on LBC have just said that the average 2 year fixed mortgage is now 6%. They don’t mention however, that a good independent broker with access to the entire market (did you know there are still over 4,000 different products available), can probably still get you a 2 year fixed mortgage at less than 5%!
However, we digress!
Why are only 22% of properties selling for or above asking price?
Why are only 22% of properties selling for or above asking price?
It is blatantly obvious that when getting a valuation done, and allowing for the fact that you may well have 2 or 3 local agents round to give their professional opinion, your property is only worth what someone is prepared to pay for it!
What a local agent with good local knowledge should be able to do is show you with HARD ACTUAL FACTS, what your property is worth. Not what you would like it to be worth, not what they tell you they can get for it but WHAT IT IS ACTUALLY WORTH!
If all local agents did this then property would still be selling for asking price or slightly above and also selling much quicker!
How to rectify this.
We are going to follow this up with a blog on how agents should valuing property and how you can actually get more for your property. In short, take two house both identical and both in the same condition and in the same street. House A goes on for £375,000 and the house B goes on for £410,000.
Question:
- Which sells first?
- Which sells for the most money?
The answer is A for both!
Read our forthcoming blog which will go into greater detail.
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