The valuation of older “new homes”.
Estate agents – they only act in their own best interests
Estate agents proudly state that a home was sold in 12 days, with the implication that the agent is good – more likely he was just plain lucky. It is even more likely, in fact a virtual certainty, that the home was severely undervalued by the agent in the first place. Sold too cheaply. You don’t need an estate agent to sell your home at a bargain price and paying upwards of £7,000 commission to the agent is adding insult to financial injury.
Whilst it is well known that most buyers take what they are told by estate agents with a pinch of salt, the same cannot be said of those selling their homes. All too often they are far too trusting, believing that as they are paying an agent for a service, acting on their behalf, in their best interests. However the industry is like the proverbial giant squid, is always “sticking its tentacles into everything property that smells like money.” Take the Energy Performance Certificates (EPC), arranged by agents for £105 yet available online for under £40. The managers running offices in high street estate agents have monthly sales targets to meet. They need properties on their books that they can sell. Homes they can sell quickly, with a minimum of time and effort or they will lose both bonuses and commission. It matters little to an agent when an offer of £20,000 less than the “asking price” is made. He loses around £300 (at 1.5%) but the vendor loses £20,000!
The great sellers’ rip-off begins with the valuation visit. They invite the agent into their home for a valuation, trusting that the agent is the professional and will advertise their home for the maximum achievable in the market. The agent will already know what “price” he will tell you to market your home for before he even gets in his car! This will be based on the most recent sales and homes currently on the market in the area. It will have little to do with the location, condition and features of your particular property. If a four-bedroom home on an estate was priced at £335,000 and sold for £320,000, then this is what he will suggest you market your four-bedroom home for and the price you can expect to get. This irrespective of the desirability of your home and whether it is double fronted and has additional rooms.
Valuation of a brand new home
Most housebuilder’s developments can have three or four different styles or house type variations for each size of new home. For example a development may have three different designs of four bedroom homes available, all at different price levels to reflect the specific accommodation that each has to offer, such as utility room, study, second en-suite bathroom, double garage, or larger rooms in general. It is also not uncommon for homes even within the same house type to also vary in price depending on the actual plot location, size and aspect. None of this is a surprise and is perfectly reasonable and to be expected.
House builders will know the local market and will have carefully researched the price history of an area, perhaps even before buying the land and certainly before any building works are started. The homes will be set at the absolute maximum price they can achieve in the market at that time. These prices are then adjusted, normally increased, when each phase of new homes is released for sale. Discounts or other “incentives” may be offered at certain times of the builder’s financial year and for certain plots.
Overall, if you are buying a new home you will pay a premium price over and above comparable prices on the general market. People are happy to do this as new homes have a warranty (such as it is!) and in a perfect world, they buy a new home expecting not to have to pay for any expensive, unexpected repairs for several years. That said, there are many disadvantages of buying a brand new home.
But how do estate agents value these ‘new’ homes often sometimes several years down the line?
Unfortunately for those who bought new and stayed, when the time comes to move on, many often find that local estate agents consider all the different designs of four bedroom homes on an estate as the same when giving a “valuation”. Agents appear to agree that a particular house, in excellent pristine condition is more likely to attract a buyer on an existing estate. Agents claim that those that do view will make their offer based on the prices homes on the estate recently sold for, regardless of room size, condition, additional rooms, features or aspect. Clearly this is nonsense. Despite this agents believe that a higher price to reflect the additional desirability could result in many potential buyers using price filters on websites such as Rightmove and Zoopla and never finding the home. This would indicate that high street estate agents now view online marketing on such websites as essential, with the traditional local methods they claim to be unique and advantageous no longer able to secure the best price for vendors. So you have to ask why do people need to use a local estate agent at all? People are gradually waking up and realising they can save themselves thousands of pounds by selling online using PurpleBricks or HouseSimple.
If you listen to the agents it would appear that whilst a new development being sold by a housebuilder will attract a premium price the same cannot be said later on. Agents may describe existing estates as “popular” but then tell owners they cannot command the same price as similar sized older homes in non-estate locations. They are also told “Asking Prices” are not “selling prices.” Offers are now 6% less than “asking prices” twenty years ago the price was the price, with any lower offer being less than 2% of the advertised price and usually following a survey.
Time is running out for these property parasites. We don’t need them anymore. They do not add or do anything that an online agent can do for a few hundred pounds. Unless agents evolve and stop cheating both buyers and sellers alike they will have all disappeared in a few years, just like milkmen.