When it comes to shopping I love a reduced sticker – it's always good to think you're getting a bargain. But I'm not quite sure how I feel when it comes to houses.
In Hartlepool recently I walked past an estate agent whose window display was littered with "reduced" labels – homeowners appeared to be regularly lopping £20,000 or so off the asking price for their home. Other estate agents in the town had mixed feelings about this: one said she never displayed reduced signs as it could put off would-be sellers; another said she felt it could pique their interest.
Estate agents with long lists of reduced properties can look like they are overvaluing properties, or give the impression that the market is tumbling and prices are falling almost as quickly as they put houses on the market – or both. I am sure buyers will never discount a property purely because it has been discounted, but maybe they will opt to delay a purchase if lots of properties in the area have had prices chopped.
The size of the discount is another thing to consider. I looked round a property last year that I felt was overpriced by at least £30,000. It has now come down in price – by £5,000. At a time when few homes in the area are making the asking price, that suggests the seller is being unrealistic about how much it is worth, and is very unlikely to take an offer in the near future. But would a massive discount set alarm bells ringing and put off potential buyers? A hefty price cut could also suggest desperation and lead to offers much lower than the new price.
Of course, now that sites like Property Bee exist there is no hiding the fact a price has been cut. It lists every price change on a listed property, as long as it remains with the same agent. Seasoned watchers of a particular neighbourhood will probably notice if a seller switches agent and be alert to any simultaneous price change. But should a seller advertise the fact they no longer expect to get what they first hoped?
