Choosing an agent to sell, let or manage your property can be a tricky one.
At Regent, many of our clients come to us via a referral, and often after having a less than positive experience with another high street agent. Many of them have done the sensible thing and approached two or three agents to request their valuation and their advice on the property – and to allow them to make an informed decision on the best agency to use for their property. But that can be where the trouble starts.
In an ideal world, all the agents who have been asked for a valuation would give a similar figure, proving both their knowledge and expertise in their local market. But heavy competition amongst agents has meant that over-valuing is a pitfall that agents and landlords can fall into. As an investor it can be hard to ignore the possibility of a rent which is significantly higher than that proposed by other agents. However, for many the experience sours, as the same agent who has proposed the higher rent begins to ask for reductions in asking price – often citing ‘the market’ or other complicating factors.
Recent research by Lonres, the London agents’ property portal suggests that almost half the properties on the market for sales (49%) and lettings (45%) in London during the first quarter of 2016 had their asking price reduced before a sale or let was agreed. In the London prime letting market, their figures suggest that agreed prices were (on average) 8.9% below the initial asking prices. Over a third of properties eventually let for less than 90% of their original asking price – so a reduction of 10% or more. But what does this mean for landlords? Marketing a property at an inflated asking price at worst slows the marketing process – a week or two can be wasted while ‘testing’ the market this way.
If you have time to spare – for example if you have two months before your tenant vacates, and, knowing that one bedroom flats are scarce in your market – this can be a useful tool to ensure you achieve the maximum possible rental for the property. Reductions can also make a flat appear attractive to those tenants looking – giving them the impression that they might be bagging a bargain. It’s a fine line to tread. The property portals track changes in asking price, so tenants can spot a mis-priced property from a mile away. While it won’t necessarily put them off, it can give the impression that there is either something wrong with the flat, or that the landlord will not be desperate to get the property let – leading to cheekily low offers.
At Regent, we are keen to work with our investors during the life of their investment, and that means building a relationship of trust with them. We give our clients the most pragmatic advice – whether that sometimes means accepting that a rental increase isn’t achievable, or wondering if that amazing valuation you were given is too good to be true.