In my personal experience, and talking to agents and vendors, many people blow their best chance of selling well by going to market with an inflated asking price. This is especially true in falling markets, like the current one.
‘Selling well’ means getting the best price possible reasonably quickly, given your property and the state of the market. It’s much more challenging to do this in a market downturn. Almost anyone can sell well in a boom.
Agents often get blamed for advising clients to ask too much, but vendors are also partly to blame. They tend to go with agents who dangle a high price before their eyes, so agents who are more realistic about prices get nothing to sell. Consequently, all agents have an incentive to start high, on the assumption that vendors will be ground down by reality. The real problem is the lack of transparency that obscures market prices from buyers and sellers. The Spanish State is responsible for that.
I have bitter experience of going to market with too high a price. I did it with the only two things of value I have ever tried to sell; a motor boat, and an island.
That sinking feeling
Back at the start of the last crisis, around 2010, I decided to sell a motorboat I had been given as a wedding present. I hardly ever used it, because my wife didn’t enjoy going in it, and it was costing me more than 1,000€ a year to maintain out of the water. Best thing to do was sell.
But it’s not easy selling boats in a crisis, especially not in a small market like Formentera, where my boat was kept. I had no idea how hard it was going to be.
My boat coast €25,000 new, and was in perfect condition. I asked the owner of the local boat shop how much to ask, and he advised 13,000€. I was shocked how low that was compared to what it had cost, but went with his advice as I knew nothing about the price of boats, or the second-hand boat market.
Three years later, having spent more than 3,000€ to maintain the boat out of the water, I sold it for €4,999. Dealing with the boat, managing ads at different portals, and trying to find a buyer had taken up a lot of my time. I would have been much better off selling in 2010 for 4,999€ when I first put it on the market, but of course, hindsight is a wonderful thing.
In fact, I think I could have sold it for more than 4,999€ had I hit the market with the right asking price in 2010. At the time 13,000€ was not the highest asking price, but it definitely wasn’t at the low end. I should have started at 9,999€ to attract bargain hunters at that moment (prices only went down). It would have been a bargain at the time, but it would have been painful for me to feel like I was giving it away. As it was, I had to go through years of frustration to get my expectations beaten down. In the end I was ready to sell for 1€.
In 2013 I decided enough was enough. Having dropped to 10,000€ in 2010, I decided to reduce the price every month in 2013 until I found a buyer. In February I dropped to 7,900€ (no enquiries), in March to 6,999€ (no enquiries), in April to 5,999€ (no enquiries), and in May to 4,999€, at which point I was bombarded with serious enquiries, including people from far afield. I had finally hit the price at which buyers were interested. Had I gone to market at the price of buyer interest in the first place, I probably would have ended up at least 5,000€ better off, if not more.
Desert Island
It was a similar story with a private island I was charged with selling just after getting the boat of my hands. The owners were offered €30m in the boom years by a billionaire who desperately wanted the island, but one of the owners refused to sell, so they went to court for about 10 years, spending a fortune in legal fees, before finally agreeing to sell in 2013, when the economic situation was dire. Boats and islands are not easy to sell when times are bad.
I had just learnt a painful lesson in asking prices with my boat, but the owners of the island had not yet learnt the lesson. It’s not easy to value private islands, as the market is small, and each island is unique. Advised by a big-name international agency, they kicked off with a price of €46m, much higher than the €30m they had been offered in the boom, and sold five years later for €18m. They would have been much better off going to market at €25m, and closing quickly for anything above €20m, which I believe they could have done. In both the case of my boat and the island, much time and money was lost with an unrealistic asking price at the start of the sales process.
Valencia City Flat Today
It is easier to value a city flat than an island, because there are many more comparables. But like I said earlier, that lack of transparency in Spain means you only have asking price comparables, and what if asking prices are all too high? A reader called Chris with a flat to sell in Valencia has fallen into the same old trap.
“My flat in central Valencia went on the market at the beginning of February 2020,” he explains. “Two weeks later came the first ‘lockdown’, and the world ground to a halt. Since then I have had not a single offer. One reason being that not one, but two agencies, got the valuation badly wrong.”
He put his 2/3-bedder on the market for €205,000 on their advice. “I got valuations from three agents, two said €205,000, and one said €155,000, so guess which figure I believed?” Chris told me. “Now I’ve reduced the asking price to €160,000, but much time and sales visits were wasted.”
Anyone interested in a flat in the charming Old Quarter of Valencia city should get in touch with Chris, who will have more room to negotiate the price in a private sale. Registered users can reach him by direct message here. Pictures of his flat below.
So what’s my point? That it’s natural to want to get the best price possible when you come to sell your home, but don’t make the mistake of asking too much in a market like this, as you will blow your best chance of finding a buyer quickly, and have to reduce your price anyway. Best go with the agent offering you the lowest valuation.
grs says:
Absolutely agreed with these sentiments.
As a cash buyer, I have been try to buy a property in Spain for 20 months now – of the 17 agents I have had this misfortune of dealing with, 5 sales were lost as a direct result of the incompetence of the agent. The deliberate missrepresentaions and inaccurate pricing were the the result of the other lost sales, 70% of the properties I was willing to buy on still online. I now avoid ALL properties that are being sold through agents. An offer was made on 5 out of 15 properties. The other 10 I would have made offers on but poor service from the agent, I just walked away from thoise properties and agents.
All my enquiries now go directly through to sellers found on Facebook – they are much more motivated than agents and give you the correct information up front. However, once again here, many ares till trying to sell for the price recommended by the agent they were once with.
In my experience of the last 20 months, agents do more harm and and no value to the selling process – the buyer, like myself, will never be the customer. ( although its my money that will make the sale happen). I think the time for estate agents is over and we need to be looking at technology to filtering serious buyers and sellers with the aim of bring the parties together.
I have three properties ( all bank properties ) that I am currently trying to buy – Once again, agents are blocking these properties – not returning emails/ phone calls etc – I have not even been able to make a offer!!!
Christopher Nation says:
When I first started looking in VLC I was told that banks were the very worst – positively obstructive. And so it proved. A Spanish friend called the number on banner across some flats and was basically told to sling his hook.
I must say, as a seller, the two agencies I used were assiduous in getting viewings. don Piso, once the 3rd phase had opened things up, produced two or three visits a week. Engels Volker likewise. The problem being the price, vis a vis one aspect of the flat and the shabby, off-putting lobby which the old ladies who were the last of the original [1960] residents had no interest in improving.
Christopher Nation says:
“many ares till trying to sell for the price recommended by the agent they were once with.”
Indeed. I started looking at flats in VLC in the early 2000’s. As time went on and the crash developed, it became clear the the Spanish attitude to a sink-hole opening up under property values was to ignore it, pretend it wasn’t there.
As for agents and their mind-set, I still have a cut and paste of a section of a newsletter published by an English estate agent, specialising in VLC city and surrounding areas, “I am calling the bottom of the market.” A check of a graph of aggregated valuations, such as Mark might publish, show that a steep downward slope went pretty much vertical/freefall at that very moment! The same agent described properties as ” X minutes from the F1 circuit/America’s Cup marina” for two or three years after those events ceased in VLC/moved to Abu Dhabi.
A g/f, whose only experience of estate agents was the purchase and sale of her house in Port of Spain, Trinidad, had seen enough of them to describe estate agents as “pond scum”. Strong stuff. Perhaps they are particularly inept/mendacious in Trini.
edward711 says:
I can’t believe there are no property registrations covering sales of property. In Ireland if I was interested in a property I can check the property register and see what prices all the others around the same were sold for.
Lack of transparency is a huge negative and turn off for potential buyers.
Mark Stücklin says:
I couldn’t agree more. The lack of transparency means everyone is a loser, including the Government.
edward711 says:
Are there any portals, websites that allow buyers deal direct with sellers?
Mark Stücklin says:
You can do it here through Creative Property Marketing and Think Spain, see Spanish property for sale by owner direct.
edward711 says:
Thanks Mark. I do keep an eye on that section. Just waiting for area we are interested in to appear with right property.
Paul says:
I’m amazed at how immature the Spanish property market is on multiple scores. Many agents are terrible; the off-the-books money exchanges are ridiculous; seeing a property listed by multiple agencies is silly and counterproductive; and the mystery surrounding what things actually sell for means nobody knows what anything is truly worth.
Mark Stücklin says:
And no sign of things improving with technology, though I think the cash under the table payments are now a fraction of what they used to be, though, I can’t be sure.
John Barclay says:
Alternatively, go to a fully qualified RICS Chartered Surveyor and get a true value arms length Valuation of the property before you sell or buy in Spain.
John Barclay MRICS – Survey Spain
edward711 says:
Thanks Mark. I do keep an eye on that section. Just waiting for area we are interested in to appear with right property.