Valuations by estate agents lambasted as 'stabs in the dark'

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Property valuations by estate agents are more "stabs in the dark" than professional opinions, leading to huge variations in the asking price for the same house, according to new research.

Property valuations by estate agents are more "stabs in the dark" than professional opinions, leading to huge variations in the asking price for the same house, according to new research.

The reputation of estate agents is again in the spotlight as Which? magazine reveals today that valuations on the same property can vary by up to £125,000.

The report warns that overvaluing properties is a common problem, while some agents undervalue homes in an effort to make a quick sale.

Researchers posing as sellers invited 56 estate agents to value 14 properties across England in locations including London, Tyne and Wear, Suffolk and Worcestershire, in December last year.

They found that on six occasions the top valuation was at least 25 per cent higher than the lowest, while in one case it was 63 per cent greater.

The reports said: "Property valuation is not an exact science, but we've found that valuations can seem more like a stab in the dark than a professional opinion."

The biggest discrepancy occurred in Tyne and Wear, where Halifax Estate Agents valued a property at £200,000, and Moody & Co suggested it it was worth £325,000. In Liverpool, Bradford & Bingley valued a house at £125,000 while Halifax thought it was worth 44 per cent more at £180,000.

Pete Tynan, the author of the report, said that touting for business by deliberately overvaluing was a common problem.

"Some agents give high valuations to get a customer's business, then suggest a more realistic price once they've locked sellers into a contract."

The research warns that undervaluing can also be a problem. The report said a property in Exmouth was valued at under £250,000 by two estate agents, but a third recommended a price of £325,000. The property eventually sold for £320,000.

Which? said the research added further evidence to its claim that the Ombudsman for Estate Agents scheme was ineffective at monitoring the industry.

In a campaign last year, the magazine called for estate agents to be regulated, and for a proper system of redress to be established.

Malcolm Coles, editor of Which?, said: "For two years Which? has been demanding that all estate agents are members of an independent redress scheme. This new Government must put legislation in place to protect consumers when making what is the biggest purchase of their lives."

Unreliable valuations could cause other problems, such as lenders refusing mortgages if the property is considered overvalued. Bernard Clarke, from the Council of Mortgage Lenders, said: "The greater the difference between the lender's and the estate agent's valuations, the less comfortable the lender will be about securing the loan."

Phil Spencer, who presents Channel 4's Location, Location, Location, and runs a property company, advises sellers to choose an agent who knows their area and is used to selling their type of property. "If you've got a small flat, there's no point getting an agent who is used to selling country houses."

Finding three agents to value your home is recommended, as well as putting your home on the market at an initial higher estimate, which agents give sellers along with a more realistic price. If the valuations vary widely, it is advisable to check local newspapers and property websites for similar homes in the area and compare prices.

A Halifax spokesman said its agents received frequent training and had access to property databases to aid the correct valuation. He added: "Overvaluing isn't in the interests of estate agents or clients as estate agents only get their fees once the property is sold."

Peter Wright, a partner at Moody & Co, said: "My valuers are told under no circumstances to overvalue."

Meanwhile, Robert Scarff, sales director of Countrywide Estate Agents, which now owns Bradford & Bingley Estate Agents, said: "If I thought for a moment that there was any truth in such allegations, I would be looking into them personally."