Some estate agency chains
are overvaluing properties to mislead sellers into paying higher rates of
commission, a report in The Times claims.
The newspaper says that in
an analysis of 200,000 Zoopla listings chains are overvaluing properties by up
to a fifth. It said that the biggest agents and those with the highest
commissions are overvaluing more, and referred to Foxtons, Chancellors and Hamptons International.
The Times offers an
example: ‘Nearly two thirds of homes listed by Foxtons, the biggest agent in London, have to be
reduced from their initial price before they can be sold, almost double the
national average. Foxtons charges a commission of 3%, which is more than twice
‘When properties marketed
by Foxtons had their asking prices cut, the average reduction was 10%, or
£56,000. Land Registry data on a sample of these homes shows that the sale
price was lower still, falling 16% or £85,000 from the original asking price.’
When asked for a response for
the article Foxtons and Chancellors told the newspaper that their policy was
always to obtain the best price for a seller’s property.
In publishing the claims, the newspaper should perhaps have mentioned that the market in the south east has been softening of late, prompting some sellers to accept lower offers which they might have declined in the past. They might also have considered that valuation is rarely an exact science and that undervaluing properties by 20% probably wouldn’t be very popular with sellers.