Correct pricing is the major key to selling your property:
You have made the decision! Now is the time to sell and move forward with a new chapter of your life. So, what about your asking price? Without question, price is your most important sales tool to effectively market your property (photos are a close second).
The period of best opportunity for selling a home at a reasonable price is the first four weeks after it is put on the market. Serious buyers, who continuously research available listings, are waiting for just the right house to come on the market. If your house is priced correctly from the beginning, you are in the best position to attract the maximum number of potential buyers able to pay the price your property is worth – and to sell your home within your desired time period.
- If your house is under-priced, you may well attract many more viewings and perhaps receive an early offer, but you could lose money and doubt your choice to market at that price. Equally, some buyers may also be asking themselves – “Why so cheap, what is wrong with it?”, leading them to be over critical and distrusting.
- If your house is overpriced, viewers simply will disregard your advertisement when first sorting through online advertisements and you will have very little chance of any offers to pay your unrealistic price. You may lower your price later, but by that time you could have missed many of the most interested buyers and there is a bigger chance of it taking a considerable amount of time to sell.
How do you set the right price?
Arriving at an accurate asking price involves research and experienced judgment, with a good understanding current market trends. Besides thoroughly analysing current market trends, here are a few points to consider, to set the right price for your property:
- Compare your property against similar in the area which have recently been sold, or are currently on the market – not always easy when many traditional homes, in rural areas especially, are rarely similar, but there are always aspects of similarity for guidance.
- Determine what features make your house stand out among others currently on the market. Buyers are comparison shoppers. Also, consider spending a reasonable amount of money on cosmetic improvements that may enhance the marketability of your property, in order to earn the highest possible sale price. The correct price is usually within 5% to 10% of market value (itself a constantly changing factor), increasing your chances of selling within a reasonable amount of time. While there will always be properties which seem to attract no interest for no obvious reason, in general “price sells.”
Why is overpricing risky?
A price unreasonably over market value may well have these results:
- Buyers will be very reluctant to view your property because they can find better value for money elsewhere. Just think – overpriced houses tend to sell the competition first.
- Potential buyers who can’t afford the price don’t bother to look–or to make offers.
- Even if a buyer is willing to pay an over market price, they may have difficulty getting financing. Lenders don’t approve a loan if the professional valuation is lower than the contract price. The delay from a failed sale, because finance is unachievable, means you are missing out on a critical marketing period and you are losing more potential buyers.
- Your unsold property may begin to get “stale,” as the market place assumes there is something wrong with a property the longer it sits on the market
- Later, as your need to move becomes more pressing, you may be inclined to lower the price to below market price and the price of competing properties in order to achieve a sale, thereby losing money in the long run.
- You are putting your life changes on hold, simply by trying to achieve an unrealistic price for your property. Just by saying “I need x-amount to allow me to move to where I want to go” doesn’t make your property worth an amount exceeding market value and simply leaves you wanting to move forward, but being unable to. A better solution is to sell at the market value and adapt your plans to move forward, compromising on available cash to spend in the new chapter of your life.
Is under-pricing a good idea to attract a buyer?
Setting a price below market value usually isn’t preferable because you may be losing money. If time is more important than money and you need a quick sale, you may consider setting a bargain price to attract high potential buyer interest, but be aware, there may be mis-trust on the part of potential buyers as to why it is a bargain and despite lower than market price, a buyer will almost always still want to negotiate. Market value usually delivers the optimum balance of potential buyer interest and a timely sale.
How professional advice can help price to sell:
Ask a professional (actually, ask at least 2, preferably 3, for comparison) to give you the accurate, market valuation of your property. A professional will:
- Evaluate your property’s location and land size; the age, size and condition of the property itself; the number of bedrooms, bathrooms, total rooms; the extra features you have (such as improvements, dressing rooms, garage, pool, outbuildings, views, privacy, etc etc).
- Examine the condition and appearance of the exterior and interior. Advise on cosmetic improvements to maximise potential price.
- Compare your property with similar in the area, currently for sale, or recently sold.
- Look at the property and location as a whole, to evaluate the potential buyer criteria matches and understand the best marketing strategy to attract such buyers.
- Have an understanding of the market trends and fluctuations, affected by changing factors, locally and nationally.
- Be aware of current financing strategies adopted by lenders.
- An important part of a professional’s role is to be able to match potential buyers to certain properties, taking into account the buyer’s search criteria and needs and the lifestyle offered to them, should they choose to buy a certain property. If a property appears to be a buyer match, but as a professional, you know the seller is refusing to budge from an overinflated market price, then the potential to help both parties move forward with a suitable transaction is lost.
What if I am in a negative equity situation?
Being in negative equity can feel totally overwhelming to a seller who wants, or needs to sell, but it doesn’t always mean there is no hope of selling at all. Always speak with your loan provider, as often (although obviously not always) an agreement can be reached, whereby say, the property is sold and a new loan agreement is raised for the seller to repay the balance owed against the loan, over a set period of time. Should a seller be in the unfortunate position of being unable to pay the mortgage and needing to sell, in some cases, the loan provider may be willing to take a majority payment when the property is sold at market price and suffer the loss of the remainder.
Equally a qualified financial advisor can give sound advice on how to ease such a situation, so don’t assume immediately that you have no possibility of moving home.
Summary:
When considering marketing your property, don’t lose sight of the fact that the reason you want to sell is to allow you to make life changes, in whatever form they may be for you in particular. Pricing a property correctly, preferably from the outset, but at the very least, accepting you need a price reduction to a market acceptable price, if it is overpriced already, may not achieve the sum you would wish for, but would allow you to make your life changes, albeit perhaps adapted in some way, to account for less funds. Compromise is almost always better than being trapped in a stagnant situation.
Professional valuations should not be dismissed and ignored, as you will almost certainly find yourself in the same property for an unacceptable period of time after marketing, with a more difficult prospect of selling and moving forward with your life.