Establishing an Asking Price
The worst possible way to choose an estate agent is to instruct the one that quotes the highest asking price. Unfortunately this is exactly how many home owners make their decision. A minority of estate agents exploit this by deliberately over-valuing the properties that they see in order to get instructions. Once instructed, they will try to persuade the client to reduce the asking price in the hope that the property can still be sold before the end of the sole agency period. Such agents should be avoided like the plague. Fortunately they are very easy to spot. An agent who deliberately overvalues will spend the whole valuation appointment trying to find out the price that you want to hear. The least subtle will ask you directly for the price that you are hoping to achieve. Most will try to find out by more subtle methods.
One common method is to ask you how long you have owned the house and how much you originally paid for it. By applying the appropriate annual adjustment factors the agent will be able to calculate the likely present value.
An alternative method is to ask how much you are intending to spend on your next house and then later on by how much you are planning to increase your present mortgage. Some very simple mathematics will give the agent the price that you are hoping to achieve for your present house. A more subtle technique involves the agent mentioning the prices of a number of other houses that have been sold recently. Each time a price is mentioned the agent will watch closely for your reaction. Each time you look disappointed, he will raise his 'valuation' for your property until he is sure that you will be happy with the figure that he gives you.
You have absolutely nothing to gain from revealing your assessment of the property's value before you have heard the agent's opinion and my advice would be to respond to all such questions by saying something like 'I really would like to hear your valuation before I discuss my expectations with you.' Faced with this response the agent will have no choice but to give his own opinion of value.
Control your Reaction
However disappointed you are by the agent's figure, it is important not to show it at this stage. In order to obtain the maximum benefit from the agent's experience, you must first work calmly through four further stages:
Stage 1 - Confirmation
Some agents try to leave themselves room for manoeuvre by saying that the property is worth between £50 to £55,000. It is important to try to pin the agent down to a precise figure. Try asking him in what circumstances he would expect to achieve both the lower and the higher figure.
Stage 2 - Qualification
The main purpose of this stage is to prevent an agent from trying to wriggle out of his original valuation when challenged. He may try to do this using words such as:
- My original figure of £65,000 is the price I expect to obtain after negotiation. The asking price of course would be much higher.
To avoid this you should ask the agent to confirm every aspect of his valuation by asking questions such as:
- What would be your recommended asking price?
- What price would you expect to obtain after negotiation?
- How long would you expect it to take to find a buyer at this price?
Stage 3 - Justification
Ask the agent to explain to you the exact process by which he arrived at his valuation. In particular ask him which comparable properties he took into account before arriving at his final figure. A good agent should be able to justify his valuation without hesitation, by referring to at least three comparable properties. A really good agent will have brought the sales particulars of all comparable properties with him to the appointment.
Stage 4 - Negotiation
Once you have heard both the agent's valuation and his justification for it, you can safely reveal your own expectation and the process by which you arrived at it.
The Final Decision
Always remember that the final decision on an asking price is yours and yours alone. There is absolutely nothing to stop you instructing an agent at an asking price that is different from the one recommended. The agent's job is to advise, your job is to weigh up advice from as many different sources as possible and to decide. No one else should make that decision for you.
