A comprehensive survey of estate agents has revealed that 95% believe competitors issue unrealistic property valuations to secure sales mandates. This practice, where a property's value is artificially inflated to convince owners to grant the mandate, appears to be widespread in the market.
Two-thirds of respondents stated that overvaluing properties for the purpose of acquiring mandates has become more frequent compared to twelve months ago. This development indicates more intense competition in the estate agency sector, prompting players to pursue more aggressive strategies for client acquisition.
Causes and Effects of Overvaluation
The pressure on agents to defend or expand their market share is often cited as the main reason for this trend. However, an excessively high valuation can have negative consequences for property sellers, as overpriced properties remain on the market longer and ultimately often have to be sold below the original asking price. This not only leads to a loss of time but can also damage the property's reputation in the market.
The results of the survey, originally published on PropertyWire, underscore the need for realistic and well-founded valuation practices. Trustworthy agents prioritise objective market analysis and transparency to provide both sellers and potential buyers with a solid basis for decision-making.
Experts warn that while issuing inflated valuations may secure mandates in the short term, it undermines confidence in the industry and distorts the property market in the long run. A sustainable strategy in the estate agency business is based on professionalism and a realistic assessment of properties' market value.
