This dispute underlines the importance of considering all material information when providing market valuations and advising on asking prices.
The Sellers were the executors of their late mother’s estate. As part of that process, they received a personal presentation from the Agent which included a valuation of the Property at £120,000 and advice to place it on the market for an asking price of £119,950. Three weeks after instruction, the Agent contacted the Sellers to advise that the asking price was too high and that it should drop by over 15% to £99,950. Five weeks after the price reduction the Agent again advised the Sellers that to gain more interest in the Property the price should be reduced by a further £5,000 to £10,000. At this point the Sellers raised a formal complaint, feeling that the Agent had misled them by overvaluing the Property in the first instance.
The Agent responded stating that it was not unreasonable for the Property, purchased five years previously for £98,000, to have appreciated in value by 20% over that time, adding that at the time of marketing the market was extraordinarily strong. The Agent also pointed to the feedback from viewers which they said demonstrated that the issue was not necessarily price related but also related to matters such as the size of the Property, the lack of outdoor space and the difficulty of on-street parking on a busy road.
In accordance with their obligations under Paragraph 4b of the TPO Code of Practice, any figure advised by the Agent, either as a recommended asking price or market valuation must have been given in good faith and must have reflected available information about the Property and current market conditions, supported by comparable evidence.
The Agent’s file included a best price guide which compared properties within half a mile marketed over the previous 18 months. This included three one bedroomed cottages that had sold for £104,000, £90,000 and £89,950 and one was being marketed at the time for £107,000. It was also noted that Agent had sold the Property to the Sellers’ mother five years previous.
The Agent’s viewing records showed that 12 different potential buyers had viewed over the marketing period. Prior to the price reduction there had been three viewings where feedback had been obtained from two who provided scores of 1 and 2 out of 5 in relation to the price.
Following the price being lowered, there were nine further viewings with one party rating the price as 1 out of 5, two parties rated the price as 2 out of 5 and one party rated the price as 3 out of 5. There were no other records of factors that may have influenced the viewers’ opinions about the Property.
The adjudicator concluded that while there may well have been factors other than the price that put off viewers from making an offer, as the professional the Agent was required to take issues such as parking and the lack of outdoor space into consideration when advising about market value and the asking price. Furthermore, the adjudicator was not satisfied that the original marketing price sufficiently reflected the comparable evidence or what the Agent knew about the Property and market conditions. The Sellers were asked to reduce the asking price by £20,000 within a short timescale which was a significant reduction relative to the asking price, which had clearly caused them avoidable aggravation. Furthermore, it was also considered that during discussions on the price, not discussing factors that would impact the sale price and that the Agent should have been aware of, had caused the Sellers avoidable distress, particularly in the circumstances of the sale.
An award of £300 was made which the Sellers accepted as a resolution to the dispute