Two out of three homeowners overvalue their properties

Two out of three home sellers have an over-valued property, new research claims.

The findings by The Property Buying Company suggests that 65.6% of those looking to sell in England and Wales have a higher price tag than the market can carry.

A total of 3,725 deals in the past year were analysed in the research, with homes being typically overvalued by 4.3%.

Nearly one in five – at 19% – were overvaluing by more than 10%, while one in 20 – at 5.2% – were overvaluing by more than 20%.

The findings also suggested that one in five homeowners were undervaluing their property’s value.

Regional differences

Regional data revealed big variations, with Greater London seeing home sellers overvaluing their homes by the highest average amount at 6.9%.

This is based on county differences, and it is closely followed by Warwickshire at 6.7% and Lincolnshire at 6.1%.

Karl McArdle, co-founder of The Property Buying Company, said: “Our data demonstrates a clear disconnect between homeowners’ perceptions and objective property valuations, with just 14.1% of homeowners spot on with their valuations.

“The majority of homeowners are overvaluing their homes, compared to its value determined by the underwriting process.

It demonstrates a clear disconnect between homeowners’ perceptions and objective property valuations.”

“This can be due to a number of factors such as emotional attachment to the property, investment bias and limited knowledge of the property market.

“The problem with overvaluing your home and listing this as the sale price is that, while you may get an offer, the bank will not lend this amount to the buyer.

“This results in either the buyer needing to renegotiate to a lower purchase price or finding a way to cover the difference that the bank won’t lend.”