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March 26, 2008

Sellers should be realistic when pricing their homes

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by Kay Mitchell

Sellers should be realistic when pricing their homes

Property portal, Rightmove.co.uk, said sellers need a ‘reality check’ when pricing their homes for sale.

According to Rightmove, last month new-to-the market sellers raised their average asking prices to £239,655 – a rise of 0.8%, despite the credit squeeze resulting in tighter mortgage lending.

Rightmove warned that some properties could become unsaleable if sellers do not drop asking prices and the Government does not take action to strengthen funding markets.

Rightmove advertises 90% of all homes for sale via estate agents across the UK, measuring an average 35,000 properties coming to the market per week. The organisation said the UK housing market was in danger of stagnating, as house price growth nears 0%.

Miles Shipside of Rightmove said most sellers coming to the market seem to be ignoring the increased competition from other unsold properties and the challenge buyers now face in obtaining a mortgage.

As many of these sellers are likely to be buyers themselves, they seem to be trying to bank a higher figure for their home but want a bargain when they buy. It’s human nature, but in the current market, sellers should price below their competition to achieve more interest now and avoid a larger price fall later this year, added Mr Shipside.

Smart pricing is needed and should take into account recent comparable property sales, buyers’ affordability constraints and competing properties on the market. With lower levels of sales transactions, competition is growing, he continued.

Average unsold property stock per branch has increased from 56 a year ago to 67 currently, up from 64 last month and support forecasts that completed transactions will be below a million this year, commented Mr Shipside.

If sellers were to price more realistically at the same time as lenders were able to normalise lending criteria, we could see a speedier harmonisation of seller expectations and buyer affordability. Until then, there will be a lot of sellers who can’t sell and a lot of buyers who can’t buy, and everyone sitting on their hand, concluded Mr Shipside.

The news follows an announcement by The National Association of Estate Agents who said the number of house-buyers on estate agents’ books fell 12% in February, to 243 per agent from 276 in January. This represented the lowest figure in its monthly housing market survey to date.


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