Earlier this year, The Holme, a 40-bedroom Georgian property in Regent’s Park that was listed for £250mn in March 2023, finally sold for £138.9mn. After almost two years of failing to attract buyers, it had achieved a price cut of more than £111mn.
Sure, this is an extreme example of overvaluing at the very top end of the super-prime market, but it paints a picture of how overvaluations are out of control across the property landscape and how they not only put off buyers but stall certain segments of the real estate market altogether.
Why isn’t more property valued realistically from the start?
The sheer number of estate agents in the UK market — agencies alone totalled 25,155 in 2024, up from 24,965 in 2023, according to ONS data — has created a highly competitive environment where aggressive strategies and marketing gimmicks, including overvaluing, have become more widespread in the battle to win clients. Tempting sellers with the promise of a higher sale price is inevitably the low-hanging fruit.
I find it astonishing that still there are such low barriers to entry; you need no qualifications to become an estate agent. I once met an art dealer who had set up an estate agency on the side. New agencies and lone agents emerging only adds to an already saturated industry — and introduces cost-cutting business models. Hybrid or online estate agencies, which emerged in the UK in the 2010s, have added to the overvaluing frenzy, eschewing the commission-based model for a volume-driven one with fixed upfront fees, ranging from about £900 to £2,000.
The celebrity or influencer estate agent, rising to prominence through property-focused reality TV series or social media channels, has further transformed the property industry — particularly the ways in which real estate is marketed and perceived by both agents and clients. Overexposing properties online can be damaging not only from a sales perspective, but also a security one. When content is prioritised over credibility, overvaluing an eye-catching property is a way to create grabby headlines and engaging material — driving followers and listings, rather than actual sales.
While overvaluing is certainly not a new phenomenon, its visibility changes with the times — and it feels particularly exposed right now. In a rising market, its impact is less pronounced as with slight overvaluations, prices can eventually catch up over a short time. However, in a stagnant market — such as prime central London, where, according to Savills, prices have fallen by 20.7 per cent in real terms compared with the market peak of 2014 — overvaluing a property can be damaging. According to data agency LonRes, in January of this year the average discount (initial asking price to sold price) for properties priced £5mn and over stood at 9.7 per cent.
For vendors, an inflated asking price can lead to prolonged selling periods, excessive online exposure and seller fatigue, ultimately resulting in the property selling below its market value. Those price cuts are recorded on property portals, and when would-be buyers see a record of reductions, they can — often wrongly — assume a problem has surfaced, and reject what might be a good match. Reductions can also spook lenders, which rely on accurate valuations to mitigate risk.
One particularly striking case at the top end of the market involved a client who had been trying to sell their property for four years. They initially listed at £25mn, complete with a high-profile vendor-led video tour and £20,000 brochure. Two years later, a new agent took over, slashing the price by 35 per cent. Fast forward another two years, and I struggled to justify a valuation much above £13mn. But this figure was not enough for the seller, and ultimately, they never sold. The only real winner was the first agent, who gained significant PR exposure and high-value social media content.
In an overvalued market, vendors and buyers at all levels are left floundering. The industry needs to help right itself. We don’t see tax advisers, accountants or wealth managers plastering their day-to-day professional activities online, and the same should be the case with estate agents. We also need more independent advisers.
Vendors also mustn’t rush to list their properties. It is natural for every vendor to seek a premium price when it comes to selling, but it pays to take a beat. More vendors should get a RICS valuation, an internationally recognised framework that ensures valuations are compliant with ethical and regulatory standards. At the time of valuation, vendors should also ask for comparable sold prices — not asking prices. These can also be found on property portals or the Land Registry website (also a wise move for buyers).
While many agents push for sole agency agreements (and often agree a lower commission), vendors should ask: is the strategy tailored to suit my property? Is it worth paying a smaller commission to leave your property in the hands of just one company? Might more agents settle on a more realistic price?
Take advantage of the growing off-market trend to test that ambitious price; rather than listing your home on the portals first off, allow your agent to carry out a number of viewings with their hottest buyers. Vendors are most often swayed by the emotional value of their property. But the buyer will have a completely different view. Listen to buyer feedback so that when you do go online, you will be a lot more on the nose, and likely to attract more interest — it could even result in sealed bids.
Gross overvaluing doesn’t help anyone — at any level of the market. I recently met a couple who had just had a baby and were eager to upsize from their two-bedroom apartment in Clapham, south London. They listed their property for £700,000. Confident in their expected sale price, they secured a new home for around £700,000. However, as time passed, concerns grew. A year into the process, with only a handful of viewings and no offers, they reached out for a second opinion. We couldn’t justify a valuation much higher than £470,000. This left them unable to proceed with their purchase. Their setback had a ripple effect, disrupting the entire property chain above them.
What began as an exciting new chapter for many in this chain turned into one of the most stressful years of their lives. Overvaluing a property has widespread implications across the market — far greater than most people realise.
David Johnson is the managing director of INHOUS
Find out about our latest stories first — follow @ft_houseandhome on Instagram
