Estate agent told us to list our home for £1.05m – but four weeks later want us to reduce it by £75,000

We put our home on the market four weeks ago with a local estate agent for £1.05million but they have just advised us to take £75,000 off the price.

The agent had previously assured us that £1.05million was the best price to list at, claiming that he would list it at £1.1million but by going a bit lower we would attract buyers.

We took the advice that is widely given to get three agents round. While this one put forward the highest listing price, he also talked up his strong local experience, track record with sales and how he successfully built his own agency, off the back of all this.

We hardly got any viewings and after being advised to lower the price, we have since spoken to friends and acquaintances and discovered this agency has a reputation for pricing homes high and then advising a big cut.

I realise this is our mistake and we should not have been swayed in the first place, but what is the point of an agent getting people to list too high? They only get paid if a property sells, surely it is in their best interest to be realistic.

False promises: The estate agent said our reader could list at £1.1 million but are now saying they need to cut the price to £975,000 

Ed Magnus of This is Money replies: It sounds like you have been schmoozed by the wrong agent – and it’s easily done. 

Some estate agents have a bad reputation for overvaluing homes – a tactic that is proving even more damaging in what has become a buyers market.

For estate agents, the benefit of over valuing is simple. They claim they’ll sell for a higher price than their competition to win the instruction. 

Then, they claw the price down during the contract’s time period with the hope of selling the property before the seller either jumps ship or withdraws from the market altogether. 

It is a trick sellers need to avoid falling foul of. Doing your own research into what is selling in your local market is the best way to not become easy prey for an agent. Check Rightmove and Zoopla for this. 

You should also ask any estate agent to back up their suggested listing price with evidence of what they have previously sold.

Our reader should also be wary of cutting the asking price until after the Budget next week with constant rumour resulting in many buyers and sellers adopting a wait and see approach. 

Higher rates of stamp duty alongside new fears of council tax reform, mansion taxes and the potential introduction of a capital gains tax on all homes selling for more than £1.5million have formed dark clouds over the housing market.

However, if you do decide to cut the asking price of your home, it would probably be wise to do it once, and do it quickly.

Sellers often wait months before they make a reduction, according to Rightmove analysis.

Not only does this mean it will take longer to sell, but it also reduces the chance of selling the home when the price is eventually reduced.

Almost 60 per cent of homes that reduce within two to four weeks go on to sell. But as for sellers who wait eight weeks or more before they cut the price, fewer than 53 per cent go on to sell.

That may not sound like a big difference, but it equates to a 13 per cent increase in successful sales among those who opt to reduce within two to four weeks.

Any price reduction has to be big enough to widen the pool of potential buyers.

Knocking £25,000 off a £1,050,000 asking price, for example, is unlikely to result in a sudden flood of viewings.

Rightmove found there is 15 per cent more chance of selling following a reduction of between 5 per cent and 7 per cent, than there is of selling with a reduction of less than 2 per cent.

For expert advice, we spoke to Jeremy Leaf, north London estate agent and a former Rics residential chairman and Angela Kerr, director and editor at property advice website HomeOwners Alliance.

Angela Kerr, a director at property advice website HomeOwners Alliance

Angela Kerr replies: It is frustrating, but unfortunately, some agents do overvalue homes to win the instruction. 

Sellers often feel flattered by the highest suggested price, and agents know this can sway their decision. 

Once the contract is signed, the agent has secured your business, which helps them build their portfolio and attract more sellers, even if the property itself doesn’t sell quickly. 

A few weeks later, when there’s little buyer interest, the agent advises a price reduction to a more realistic level.

You would think agents would want to price houses right from the start, especially as recent Zoopla data shows that homes priced too high tend to linger on the market and take 2.4 times longer to sell than those priced correctly from the start. 

But I assume that doesn’t bother the agents – they are banking on the fact that you won’t switch agents because it’s far too much hassle.

It also may not be entirely the agent’s fault you’ve had no interest. Speculation about potential tax changes has been dampening market activity, with buyer demand, new listings, and transactions all down in recent months.

Jeremy Leaf, north London estate agent and a former Rics residential chairman

Jeremy Leaf adds: Property overvaluing in present market conditions will almost certainly prove to be counterproductive. 

Other than in certain ‘micro markets’ where demand may exceed supply – for example, sought-after roads in school catchment areas which rarely become available – there is a general oversupply, mainly of flats.

The asking price is not the value of a home and will determine if buyers are interested so it’s important to get it right. 

Rightmove found that a property which receives an enquiry on the first day of marketing is 22 per cent more likely to find a buyer than a home which takes more than two weeks to receive its first enquiry.

We often find price reductions mean homes can take twice as long to sell. The longer a property stays on the market, the weaker the seller’s bargaining power.

Agents may inflate the asking price in order to attract your business but it’s a risky strategy. 

When choosing an agent, try to establish the selling pattern of similar property at a price close to your own and check out the history of the sale – what was the price reduced and after how long. 

Also how long was it on the market before attracting interest. However, it can be hard to establish such details.