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TODAY'S OTHER NEWS

Landlords looking to sell-up and cash in on property need to be realistic

Thousands of landlords plan to sell their buy-to-let properties as a result of tax and regulatory changes, but those offloading homes are being warned of the dangers of overpricing.

Trying to sell your property has become a much trickier endeavour in more recent times, as political and economic uncertainty places downward pressure on property prices across many parts of the country. 

Many buyers have built up the courage to make ever more audacious offers, given existing market conditions, with new research from Zoopla revealing that residential properties brought to market overpriced sell for £12,000 less than their listing price on average across England and Wales. 

The study found that over-valued properties can remain on the market up to 58 days longer than their accurately valued counterparts. 

In London, overpriced homes took an average of 60 days longer to sell than those which were keenly priced.

Evidence suggests a propensity to overprice higher value homes in southern England and the Midlands in particular.

In its analysis, Zoopla compared the difference between the listing and sales price of properties that were not discounted, but rather fairly priced, and those that were discounted because they were overpriced. 

The insights highlight the importance of accurate pricing and the potential repercussions of valuing properties aggressively – either to win instructions or test the market.

Zoopla research also pinpoints the towns where homes are selling closest to asking price, which is where accurate pricing prevails. 

The study suggests that properties in Salford, Driffield and Dronfield, on average, each achieved 100% of the initial asking price.

The success of sellers in these towns compares to the English and Welsh average of homes achieving 96.3% of asking price.

By analysing the price that properties were initially listed at and cross-referencing them with sold prices from the Land Registry database across 12 months, Zoopla has also established that the city of Sheffield, South Yorkshire, is next in the list of areas where homes are sold closest to asking price. Homes in the city achieved 99.6% of the price they were first listed for.

In London, homes achieved an average of 94.6% of asking price, with the London borough of Waltham Forest performing the best; homes there sold on average at 97.9% of the initial asking price.

Charlie Bryant, Managing Director of Zoopla, commented: “Our research highlights the importance of accurate pricing and reveals the areas where there is the healthiest alignment between a seller’s expectations and what a buyer is willing to pay for a property. When a home is valued too ambitiously at the start, or simply overpriced, the sales process can be derailed. Homes can languish on the market for much longer than they should and the vendor loses control of the sale, often leading to price reductions.

“Agents in Salford, Driffield and Dronfield stood out in our report in aligning their vendor expectations with the realities of the market, and what a potential buyer is willing to pay for that particular house, in that particular location. The English and Welsh average sold price, which amounts to 96.3% of the asking price, indicates a market realism, and moreover a market that is transacting good values, despite wider macro-economic and political concerns.”

TABLE 1: TOP 10 POST TOWNS ACHIEVING CLOSEST TO ASKING PRICE

Rank

Town

% of asking price to achieved (median)

% difference from asking price to transaction price

Average Asking Price*

1=

Driffield

100.0%

0.0%

£175,000

1=

Dronfield

100.0%

0.0%

£223,000

1=

Salford

100.0%

0.0%

£160,000

4

Sheffield

99.6%

0.4%

£160,000

5

Droitwich

99.5%

0.5%

£240,000

6

Hailsham

99.4%

0.6%

£263,000

7

Willenhall

99.0%

1.0%

£150,000

7

Altrincham

99.0%

1.0%

£350,000

8

Wednesbury

98.8%

1.2%

£130,000

8

Brandon

98.8%

1.2%

£186,000

TABLE 2: TOP 10 LONDON BOROUGHS ACHIEVING CLOSEST TO ASKING PRICE

Rank

London Borough

% of asking price to achieved (median)

% difference from asking price to transaction price *

Average Asking Price**

1

Waltham Forest

97.9%

2.1%

£475,000

2

Bexley

97.8%

2.2%

£375,000

3

Barking

97.1%

2.9%

£325,000

4

Havering

96.9%

3.1%

£375,000

4

Newham

96.9%

3.1%

£400,000

4

Redbridge

96.9%

3.1%

£470,000

7

Greenwich

96.6%

3.4%

£390,000

8

Sutton

96.3%

3.7%

£425,000

9

Enfield

95.9%

4.1%

£430,000

10

Croydon

95.3%

4.7%

£395,000

* Price rounded to the nearest £1,000

TABLES 1 and 2: Zoopla analysed historic listing data and matched it with Land Registry data for the period of 1/06/2018 to 31/05/2019. The annual medians have been calculated for areas where more than 100 pairs were matched.

TABLE 3: IMPACT ON SALE PRICE ACHIEVED: OVERPRICED VS. FAIRLY PRICED HOMES (ENGLAND AND WALES AVERAGE)

 

Overpriced homes

 

Fairly price homes

Median Zoopla listing price

£235,000

£199,995

Median Land Reg Price / achieved**

£223,000

£200,000

Difference between listing and price achieved

 

-£12,000

+£5

Average time to sell

 

77 days

19 days

Average time to sell – difference between discounted and non-discounted

 

58 days

**The table shows that overpriced homes, on average, sell at £12,000 less than their asking price. In Southern England and the Midlands, it is the more expensive properties that are prone to being overvalued, hence the higher median initial listing price for the overpriced homes.

TABLE 3: Zoopla analysed historic listings data and matched it with Land Registry data for the period of 1/01/2018 to 31/12/2018. Zoopla then compared achieved and listing price for both discounted and non-discounted properties.

  • icon

    It very simple really the buyer has no intention of covering all this mad SD, so he wants to knock it of the purchase price.

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    Well we all have to do that now when buying, and knock off the auction house buyers fees to come up with a max all inclusive price we will pay.

     
  • Paul Barrett

    Everything is really on hold until BrExit occurs.
    With so much uncertainty few will commit to making major purchases at a time of turmoil.
    Once this BrExit thing is resolved confidence in the market will return with prices increasing.
    Only the 3 D's will be generating sales.
    Everyone else is firmly sitting on their hands!!

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    All depends how serious you are about selling, place it with an estate agent and you will be messed about by every dreamer in the world, put it in a good auction with a fair reserve and the deal is done when the hammer hits the table, no messing.

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    Yes the Auctions can be a good place to sell if you have a good property, the big boys are there and for them it’s only a matter of write the Cheque, if it’s in bad condition it will be factored in. To me Brexit is small beer in comparison to Osborne’s mad tax. I won’t be buying for sure, if I am buying a property I want to know I am buying an acid not Stamp Duty. Even an Investment property on outskirts of L’don
    £500k then another £30k Osborne Stamp Duty, so 30k is not part of the acid it’s a debt. I certainly am not going to buy £30k worth of debt with my money as well as the fact I am a 40% tax payer and will have already given £20k on this to the Revenue in order to have £30k clear funds, (£50k x 40%= £30k) in other words it will have cost me £50k.
    What School did he go to ?, it’s along time ago I learned 10% of nothing is nothing .

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    I agree that Osbournes mad tax is more of a problem than Brexit IMO. Thing is rents have increased in my area and I think this is the main driver

     
  • Paul Barrett

    Too true the SDLT issue is a major impediment for normal buyers.
    Cash only buyers are by implication NOT normal.
    They can afford the SDLT surcharges.
    Normal mortals can't or refuse to do so.
    It is as you suggest a massive amount of debt to amortize.
    Many LL don't have the physical time on this earth to faciltate all that SDLT amortization.
    Rather better to sell up reducing debt and try and pay cash for another residential property where lodgers may be taken on.
    Then no CGT or S24 taxes.
    Reducing to several residential properties with hopefully very small residential mortgages makes far more business sense than having multiple encumbered BTL properties.
    Even more so if you factor in the possible Labour threat of RTB and rent controls!!

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    Trying not to be negative but even with your Lodger business plan a Corbyn gov will try to control that eventually eventually. More so than ever before I'm interested in opps beyond the shores

     
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    Re The SD idea from Boris. Ive said before I think its a great idea as it will be financed by new purchaser over 25 yrs. It just becomes a cost to add in.

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