Press Release: NPT CEO’s response to the investigation in to property overvaluation
In response to The Times investigation in to property overvaluation:
Cormac Henderson, CEO of National Property Trade, comments:
“The issue of overvaluation is endemic across the whole of the UK property market and is the primary reason why, according to research, over 50% of property has not sold after 10 months of listing with an estate agent1. It was therefore no surprise to read the extensive investigation in to the practice of overvaluation this weekend. The findings provide an opportunity to address where the problem comes from and, crucially, how we as an industry can fix it.
As a house-buying service, we have bought over £116million worth of property at an average of 80% of its market value. Since the outcome of this service is to sell property via the open market, we must establish the realistic valuation of a property prior to making an offer. Our experience reinforces that there is misalignment between a listing value and the ‘true’ value of a property.
During the 15 years National Property Trade (NPT) has been in practice, thousands of sellers throughout the UK have contacted us with an inflated view of the value of their property, based on the advice they have been given by agents. We consider extensive comparable evidence of property sales, as well as instructing an independent RICS survey to establish value, but sellers still feel disappointed when we show that, on average, their property is worth around 9% less than what it was listed as.
The overvaluation of property has been going on for many years and has an undeniably damaging effect on the housing market. It is also the main reason there is demand for National Property Trade’s services.
It is important to recognise that there are lots of experienced agents out there who carry out responsible, informed valuations. Tougher industry standards also mean that it is becoming harder to get away with inaccuracies, but the recent figures reinforce that overvaluation is still rife.
So, what can be done? On a basic level, there needs to more understanding behind the motivation that drives home-sellers. In 2018, 40% of almost 10,000 NPT enquiries came from homeowners looking to sell their property quickly so that they could purchase a new home. The biggest motivation for selling property is not always to achieve the highest value, but more to release liquidity in a reasonable time frame. This is often overlooked by agents, particularly by those in larger firms who are incentivised by lengthy referral platforms, including mortgage brokers and in-house legal teams, and sale commissions.
If the industry truly acknowledged that most homeowners value the timely sale of their property just as much as the eventual sale value, there would be less inclination to take a risk by overpricing the property and thus extending the time on which it ends up on the market.
The impact of the ‘upfront fee’ structure that has been popularised by some online agencies can also lead to overvaluations. The emphasis here is on the listing, rather than the actual sale value. The seller is also given a larger role in establishing the listing price, rather than based on the advice of a professional, whilst agents working remotely can find establishing local values harder.
Fundamentally, the emphasis for agents should be on achieving a guaranteed outcome in a reasonable time frame. Listing a property at its true value means that it is more likely to sell faster, assuring the agent’s fee whilst providing a fair service to clients.”
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National Property Trade
National Property Trade was founded in 2007 to provide quick-sale property solutions, in response to the challenges faced by consumers in the UK housing market. Headquartered in London, the award-winning company is now one of the UK’s largest property buying services and operates nationwide. National Property Trade offers a range of buying solutions and aims to provide the best price for those looking to sell their house quickly. National Property Trade is a member of the regulatory bodies National Association of Property Buyers and The Property Ombudsman.