Over-valuing 'lowers' prices

Over-valued pubs are a massive problem for the industry, according to agents.

GA-Select managing director Graham Allman said that excessive valuations are occurring more often.

"As the market tightens, we are seeing this more and more and the practice needs to be regulated," he said.

Fleurets chairman Barry Gillham said that signing up to an agent that over-values pubs will have a detrimental effect on the price achieved.

"If a pub is priced realistically and two or more prospective buyers are fighting over it, you're likely to achieve the asking price or higher. But if an over-valued pub has sat on the market for a while, you are likely to achieve a much lower price for the outlet."

Allman added that several well-known agents in the industry over-value pubs to meet monthly targets.

"Some agents charge up-front fees and over-value pubs just to meet targets. Licensees should never pay an up-front fee," he said.

Stonesmith agency director Paul Reilly agreed with Allman that vendors should not pay anything until the deal is completed: "As more and more people try to do agency, we are seeing some agents effectively buying instructions by over-valuing them," he said.

"I don't believe vendors should pay up-front fees for agents to market their pubs. We don't get paid until a deal has completed," added Reilly.

All three agents recommend asking more than one agent to value your pub if you're thinking of selling.

"Go and have a cup of coffee with them, talk to them and see how busy they are. Ask them what they have sold lately and see what else has sold in the area and for what price," added Allman.