Sell your home, by increasing the asking price!
A number of home sellers have failed to sell their properties, yet are raising the asking price. Is there a method to their madness?
If you're looking to buy a property, watch out. Homeowners are getting greedy again, and unwitting buyers will pay the price.
I've been perusing property websites over the last year, and I've spotted a curious trend, one that flies in the face of reason and good taste.
Properties that have failed to attract a buyer after months on the market have suddenly got more expensive. Bizarrely, the vendors have responded to complete lack of interest by actually hiking their prices.
In a sane and rational world, they would be doing the opposite.
How greedy can you get?
Up, down, up
The first was a one-bedroom conversion originally listed for sale in April 2012 at £235,000. It's in an attractive Victorian building in popular south-east London street, but carved out of the rear of the property, the side that doesn't get the sun.
While neighbouring flats sold within days, this one didn't shift. This month, the vendor and their estate agent decided the best way to stimulate interest was to hike the price to £250,000.
Crazy, but this isn't an isolated incident.
I have also been tracking a two-bedroom Victorian conversion that went on sale last August for £275,000. It didn't sell, because it was carved awkwardly out of the loft, and the communal areas were scruffy. In February, the vendor made the sensible decision to slash the price to £250,000.
It still didn't sell, but instead of knocking off, say, another £10,000, last week they banged it up it to £259,995.
Nobody said the UK property market was rational, but this is extreme. Usually, if a product can't find a buyer, the seller will slash the price until it does. Now that logic is reversed.
If nobody is willing to buy something at the advertised price - ask for more!
Gimme gimme gimme
I can guess what's going on in the vendors' minds. When they first marketed their properties, London house prices were lower. Now prices are higher, they conclude their property must also be worth more.
No matter that any property is only worth what people are willing to pay, and nobody was willing to pay their asking price. Greed trumps reason every time.
History is on your side
Or this could be a bold and cunning marketing ploy. By asking a higher price, the vendors can seduce potential buyers by later agreeing a generous discount.
If you're property hunting, watch out for tricks like this. Property portal Zoopla helpfully sets out when each property was first marketed, and its subsequent pricing history.
Traditionally, this was a good way of spotting a discounted bargain. Now it helps you uncover curious cases of vendor greed.
Reassuringly expensive
Or maybe vendors are doing a little reverse psychology, calculating that a higher price will make their property seem more desirable, rather than less.
This logic is traditionally reserved for luxury goods, which makes sense, because these days, owning property is a luxury.
This reminds me of the Russian joke about two obscenely wealthy oligarchs. One is boasting that he bought his new tie for $500 in the store across the road. The other replies: "You got conned. You could have paid twice as much over there."
This joke is coming to a residential street near you.
Help! I'm a buyer
I blame increasingly desperate attempts to reinflate the housing market, such as the Bank of England's £80 billion Funding for Lending Scheme, and the Chancellor George Osborne's £130 billion Help to Buy mortgage guarantee.
Estate agents are no doubt telling clients that a tsunami of Government-backed lending is set to wash through the property market, and they should grab their buckets
If I'm right, we can expect a lot more house price mark-ups.
It'll only get worse
Asking prices are rising across the board to hit an average of £244,706, up an astonishing £15,717 since the start of the year, according to new figures from Rightmove.
This isn't just a London thing. While asking prices have briefly stalled in the capital, they are accelerating around the rest of the country.
Suckering people into overpaying for properties is a desperately short-sighted way to revive the UK economy, but this is a desperate Chancellor.
And it is working. Lending to first-time buyers increased 3% in February, the best start to a year since 2008, new Council of Mortgage Lenders figures show.
Greed is God
You might think they can't sell houses where you live at any price, but that doesn't seem to bother people anymore. If a home hasn't sold, there's only one thing to do. Ask more for it.
Greed springs eternal in the UK property market. And that's exactly how the Government likes it.
Please don't feed it.
More on buying and selling properties:
What's your property worth?
When should you break the property chain?
How to save for a deposit
Getting a property survey will save you thousands
The pros and cons of online estate agents
Dealing with estate agents
The questions you must ask before you buy a house
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Comments
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When advertising our house a few years ago, we looked at the prices of similarly sized bungalows in the area and priced our place between £10-20K below them. Most 2 bed semi-bungalows were advertised at £240-250K, so we put ours on at offers over £230K, expecting to achieve the asking price. We thought that would ensure a quick and hassle-free sale. We did get an asking price offer initially, but the 1st buyer was in a chain that collapsed. A couple then viewed who had sold their house and moved into rented accommodation, so they were cash buyers. The problem was they wouldn't pay the full asking price and wanted another £10K discount on the asking price! Their argument was they had to drop the price of their house 3 times to achieve a sale, so they wanted to get their next house at a bargain price to make up for their "loss". The same week another couple viewed and they loved the house. They offered the asking price, which we accepted so the other couple lost out. After a couple of weeks the people who were buying the house came up for a 2nd viewing and to measure up for furniture etc. They discovered that their dining table was going to be too large for our conservatory and they decided to pull out of buying our house. The EA went back to the original cash buyers who made us the low offer, but they wouldn't respond to his calls - I don't know if they had found another place or if they went in the huff when our house "sold" to somebody else. We decided to change EAs and the new EA suggested tat we should be advertising at £235K, so we followed their advice. They didn't have any success and we hardly had any viewings for the next few months. By this time it was getting towards October and the market was really quiet. We just advertised the house ourselves until the next Spring (we had our own website advertising the house and had it listed on Tepilo, Gumtree etc). This wasn't much of a success - we had lots of time-wasters to deal with. People would make an appointment and just seemed to want to look around and use the loo. Other people would ring up and say they were outside and could they view right now!? I was working clearing out the garage and had the garage contents strewn across the back lawn and the house wasn't tidy, so I said they would need to give us 2 hours notice to view. They were obviously time-wasters, as they didn't set-up another viewing - I think they were in the area maybe looking at another place and just wanted to have a quick look around our house. We then put the house with a 3rd EA and they suggested £230K. We finally sold the house through that EA for £225K. We could have probably held out for another £5K, but we were so fed up having our lives on hold.
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Interesting. There is always great uncertainty about establishing values in PRICE terms because the market is small. There is always the chance that someone might pay over the odds for some reason or other - eg it is exactly the house they want, where they want it, or they have sold a property and need to settle quickly. Rental values are much more stable. The agent can estimate to about plus or minus 2%.
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In the example above, when the price got down to £360k, people using a 'net search would have been looking in the range £350-£400k. However, when the price went up to £450k a whole set of new people would see the property (those searching £400-£450k and those searching £450-£500k). Simple really, just make sure you go into a different search band!
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02 January 2014