Would it surprise you that there are 49% fewer properties for sale today in Southampton than a decade ago? Property values are much higher than a decade ago and the property market at the moment in Southampton is on fire. In all my years as an agent, I have never seen it like it is at the moment. Many people are saying it’s reminiscent of 1988 when dual-MIRAS relief was abolished by Nigel Lawson, as people are paying top dollar for property because they are buying property like there is no tomorrow.
65.8% of properties on the market in Southampton are
sold stc
In a ‘normal property market’, that figure would be between
30% to 40%. There is no rhyme or reason behind it because it’s not as if we are
going to run out of property to sell (unlike the panic buying of loo rolls last
year in the supermarkets). With such a buoyant Southampton property market, being
adept to state what your Southampton property is worth is exceptionally problematic.
This is further exacerbated by the lower-than-average
properties on the market at the moment. To give you an idea of the issue …
there are 1,479 properties for sale in Southampton
today,
compared to 2,910 a decade ago.
When there aren’t many properties on the market, to gain
your instruction some estate agents will value your Southampton property by
giving you an over inflated suggestion for the asking price. Why do they do
that when the considered wisdom is estate agents only get paid when they sell
it?
Well would it surprise you that many (not all) estate agents
pay their employees a bonus to put your property on to the market and then pay
a further bonus when they get you to reduce the asking price? Some estate agents
know the fastest way to get your property to market is to be optimistic on the
asking price to secure your property for sale, then work on you to reduce your
asking price after it has been sitting on the market for a few months.
Nothing wrong with that you might say, I want to get the
most for my Southampton home (and it is indeed the job of the estate agent
to get the best price for their client). If I believe it is worth testing
the market at a slightly higher asking price, I will suggest that, yet will
always explain my thinking and if we have over cooked the asking price, we can
swiftly realign it after a couple of weeks.
Yet because many estate agents are disposed to suggest over
inflated asking prices to the house seller just to secure their business (i.e. overvaluing)
but not manage the property for months and months ... this in turn causes Southampton
properties to sit on the market and not sell.
In the best property market for 20 years, 20% of
properties for sale in Southampton have been on the market for 6 months or more.
Overvaluing is widespread among Southampton estate agents.
Most Southampton homeowners will ask three or four estate agents
to value their Southampton home and take the middle figure when they want to
sell. Yet, if all (or most) of your Southampton estate agents are over
optimistic and they all give you a ‘gilded lily’ price to secure your
instruction to sell your home (i.e. overvalue), then that middle figure will be
too much. Most Southampton estate agents
know they don’t win the business (i.e. secure the listing) if they tell the homeowner
what they don’t want to hear.
So, what is the risk of overvaluing?
There is a potential massive cost to putting your Southampton home on the market at too high an asking price. Your estate agent will tell you that your Southampton home is worth a certain figure and then lock you in to a 16-week sole agency agreement (sometimes longer) which you cannot get out of early. If you are getting around two or three viewings a week, and the pictures and marketing material are half decent, then your pricing is about right, meaning in this market you should be sold (subject to contract) within a month to six weeks.
Yet, if your Southampton home has an over optimistic asking price (i.e. it is overpriced), you might only have a handful of viewings in a month and no offers. As the weeks and months go by, your overpriced Southampton home makes similar homes to yours (i.e. your competition) look really good value for money. That’s when you will get the price reduction call from the agent.
How many times have you seen a property that has been on the
market a while and you have wondered what’s wrong with that? Also, to add
insult to injury, the portals tell you how long a property has been on the
market, adding weight to that argument.
The longer your property stays on the market, the
desirability
of your Southampton home drops.
You will end up selling your Southampton home but only after
a handful of price reductions, yet at what cost? Firstly, in those lost months,
you would have missed out on many properties that you fell in love with, yet
couldn’t buy because your home was languishing on the market with no interest (this
is backed up by consumer champion Which, who said that if you have to reduce
your asking price by 5% or more, it adds an extra 64 days to the sales process).
Secondly, you will end up selling your Southampton property
for less than if you had placed the property on the market at a realistic
asking price from day one (again backed up by Which). This is because buyers
think there is something wrong with it, so as the homeowner gets fed up, they accept
a lower offer to get their property sold.
Finally, because you take less for your property, your
choice of the next property to buy will also be curtailed, meaning your dream
home move might be more of a nightmare?
The best advice I can give you is to search the portals,
make sure you look at properties that are also sold stc (which can normally
be found by clicking on the filter section of the search on the portal).
Then ask a couple of straight-talking trusted friends to do the same and compare
your property to the competition that is both on the market and sold (stc).
Compare their locations, number and size of the rooms and
size of plot and ask them where they see your property against those. Carry out
the same exercise yourself (of course you will be slightly biased) and take a
bellwether from all those figures. Then ask a number of Southampton agents to value
your property and if you feel any are being overly optimistic challenge how
they get to their figure and get them to qualify their belief in that figure –
is their valuation realistically achievable in the market at the time? As we
all know markets change and property prices go up and down and ultimately a
property is only worth what a buyer will pay for it – this all requires careful
consideration.
I can assure you most of the estate agents in Southampton
are decent people, who want to do the best for you. All I ask is you do your
homework and look at the sale of your Southampton property through the eyes of
a cold-blooded buyer.
If you would like a chat about selling your Southampton home
do give me a call.
CLICK HERE TO FIND OUT HOW MUCH YOUR SOUTHAMPTON PROPERTY IS WORTH
If you would like to pick my brains on the Southampton Property Market – Just drop me a line on social media or email me @ brian.linehan@belvoir.co.uk you can also call me on 023 8001 8222.
If you are looking for an agent that is well established, professional and communicative, then contact me to find out how we can get the best out of your investment property.
Don't forget to visit the links below to view back dated deals and Southampton Property News.
Blog, http://southamptonproperty.blogspot.co.uk/
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LinkedIn, https://www.linkedin.com/in/brianlinehan
Website, https://www.belvoir.co.uk/offices/southampton
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