Inspiration

A Valuation Tip for you

RAT 38 (Rawlings Agency Tip)

As we know, the problem with valuation is not just getting the figure "right", but persuading the vendor that your figure is the one they should accept. The vendor's natural inclination is of course to believe the highest-valuing agent - and we know where that usually leads... a property that goes stale on the market, a disappointed seller, and an agent who delivers well below expectations, tarnishing the reputation of our industry!

Hopefully you will of course have a plan in place to encourage that unfortunate seller to come back to you once they have realised how ill-advised they were, rather than being too embarrassed to do so. Second-hand stock is usually profitable!

In the meantime, there are several ways of preventing the seller from instructing the higher-valuing agent in the first place. Here's an easy one:

Rather than simply giving the seller a figure I suggest you encourage them to get involved in the process themselves, by studying, with your assistance, the comparable evidence of other properties currently on the market. Ask the seller where they think their property is positioned in relation to these properties that are effectively "failing to sell". Don't just show them your own stock but other agents' instructions as well. Remind them that buyers are also making a comparative judgement using the same sources. So the seller's property therefore has to either be the best property for a similar price, or the best price for a similar property, or preferably both!

You can demonstrate this easily by showing the seller two pens - a standard biro, and a retractable biro. Ask the seller, "if these pens were both the same price, which one would you buy?" (they'll say the better one - the retractable). Then show them two identical retractable biros and ask them, "if one of these was slightly cheaper than the other, which would you buy?" (they'll say the cheaper one).

This demonstrates that in a competitive market there is no point in the seller pricing at the same level as similar (unsold) properties, nor in quoting a higher price because theirs is a slightly better house, (thereby offsetting their competitive advantage). If they understand this in the context of they themselves having seen what else is available (and a great technique is to physically show them some of their competition) then they will hopefully understand why they would be mad to simply accept the highest valuation. And of course, you tell them that this is the oldest trick in the book and if they are clever, they'll avoid such agents!

Quote of the Day: "A negotiation is a sequence of agreements that begins the day you take on the instruction"

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© Richard Rawlings 2010
Richard Rawlings is the founding director of Estate Agency Insight, which specialises in helping estate agencies harness opportunity through innovative method, marketing, publicity, and training. He can be contacted at or on 0845 838 1354.

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