Why you may be being duped – Average asking prices v Average selling prices – Beware

lies damn lies and statisticsA number of estate agency firms (including my own firm, PDQ) use average asking prices compared to average selling prices in their marketing. But, there is a very real danger of confusing and abusing these statistics and consumers can easily be duped by impressive sounding claims if they are not careful.

Example: “Our figures demonstrate we achieved 99% of the asking price compared to 96% of the average UK estate agency firm. This means we might achieve £6,000* more for you if you sell through us .

*based on a selling price of £200,000.”

The claim is clear. Sell with us, and you will sell your home for more money! But does it really mean the average seller will sell for more than with the average estate agent? In a word – No!

An explanation: Many UK property statistics suppliers, including Zoopla (and some agents) calculate their average asking to selling figures by the price the property is being marketed at when it is taken off the market with them and NOT (as many assume) the price the property actually sold at.

Example: A property comes onto the market at £200,000, reduces its price to £190,000 and a sale is then agreed at £180,000. In this case, the selling price would be recorded by Zoopla as £190,000 and not £180,000.

But there’s more! Now let’s look at the how you may be being duped by the average asking price / selling price claims even further.

Assuming an agent takes on two properties; one at £500,000 and one at £100,000. His average asking price will be £300,000.

Assuming neither of the properties drop their prices before being taken off the market; if the agent then sells the £500,000 property at the asking price, his average selling price will be £500,000 – £200,000 above his average asking price. To the average reader, this appears to suggest that the agent achieves £200,000 over the asking price for his customers. In fact, of course, this is not true at all.

However, if the agent had sold the £100,000 property at £100,000 then his average sale price would be just £100,000. £200,000 BELOW his average asking price. Not something he will want to shout quite so loudly about, perhaps?

This is the interpretation that, I believe, many agents quite unwittingly use. Of course, it MAY be the case that they genuinely achieve above the asking price for most of their customers properties BUT, my belief is that they have misinterpreted the figures and are misleading customers (unintentionally or intentionally) as a result.

There are, in fact, three possibilities to explain statistics that show average sale prices below or above an agents asking price:

  1. As in the example above, the agent takes on a wide range of property prices but sell more stock of one (higher or lower) price sector of the market than another.
  2. That the agent tends to regularly overvalue/ undervalue properties when they come onto the market. This can manifest itself in selling percentages either very close to, or over, the (artificially low) asking price boosting the agents statistical claims or; they sell for well below the average asking price and the agent keeps quiet about his average sale price.
  3. That the agent genuinely does achieve close to the asking price by using well-trained negotiators who know how to obtain the best price for their selling customers in the current local market. To verify whether this is the case, customers should compare similar property sales in their locale, to the ones the agent is using in his or her statistics*

*There are numerous sites where you can check an agents average sale price, area sale prices and, actual sold prices for your property type, style and area. Try Zoopla, Mouseprice, NethousePrices and home.co.uk

Having checked all of the actual sold prices of all of our customers who sold through us in 2014 against the original asking prices of the same properties (the gold standard for this comparison), PDQ achieved an average of 98.55% of the original asking price for them (a figure we are happy to have verified by two independent trade journalists of our choice if requested).

One national agent who uses a high asking to selling price success rate percentage in their advertising doesn’t do so well when their local sale statistics are looked at. In 2014 in West Cornwall their average percentage was just 90%, ‘losing’ their average customer over £45,000 (using their own interpretation of average sale to average asking prices).

As always, these statistics need to be viewed carefully, are from a statiscally small data set and, may well be genuine on a national basis, however; having checked our figures and like for like comparable sales in the area, we are fairly certain that this particular agents claim needs further scrutiny.


 

I welcome feedback so please feel free to leave constructive criticisms or ask questions below. If you could also take a second to rate my blog and pass it on to others who you think may find it interesting that would be great. Thanks.

Chris Wood of PDQ Estates Ltd

PDQ Estate Agents website

About Chris Wood: Chris is an estate agent with over 25 years of property experience. His business, PDQ Estates Ltd is based in Penzance and Helston, West Cornwall and was included in the Daily Telegraphs’ list of the UK’s top 20 best small estate agents “who go above and beyond to help their customers” in 2013.

He has worked with all sizes and types of businesses from single office independents to the management team and board of RBS and Tesco.

A former President Elect of the NAEA and board member of NFoPP until he resigned in 2009, Chris has always championed the highest professional standards forestate agents in the UK.

No stranger to the media, he has appeared on various programs including BBC, News 24, ITV, independent and BBC radio and is a regular contributor to trade journals, local and national Newspapers. Chris is on KloutLinkedIn Ecademy Facebook and Twitter Married to Amanda, they live in Penzance with their children who are slowly flying the nest, along with their three spaniels. In his spare time; Chris likes to keep fit and is a long-standing member of the Territorial Army.

In 2010 he mobilised for a tour of duty in Afghanistan with 1 Rifles as part of 3 Commando Brigade but was medically evacuated back to the UK before deploying to his forward base with his unit and is now being medically discharged from the army.

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