When it comes to putting a property on the market some sellers believe listing the property higher than the market average is the best strategy because it allows for downward negotiation. “It is rare that this plan works and certainly not one an experienced property professional would recommend.
Pricing a property for sale needs to be done thoughtfully, with a number of factors to take into consideration, starting with clarity on the difference between price and value. “Warren Buffett famously said that ‘Price is what you pay. Value is what you Get’, which is exactly what happens in the property market. Price is based on a market-related estimate for your property, based on industry trends and research, demand in the area, as well as the features of your property.
Value is more subjective and is essentially determined by what a buyer is prepared to pay for a property – the well-known willing seller and able buyer economic model.
Why the right price matters
The right home pricing strategy could mean the difference between having your property on the market for two weeks or two years. Buyers know when a property has been on the market for longer than others in its class. “A ‘stale’ property quickly becomes unappealing, making it a far harder to move than if you priced it more accurately from the start.
Price it too high and you’re immediately out of the running, but price it too low and buyers question whether you’re hiding a heap of issues related to the property.
Also bear in mind that it’s a buyer’s market, which means buyers have the pick of the bunch.
Your property needs to stand out from the rest to make an impression and one of the first and most important ways to do that is to ensure it is priced accurately and relative to the market and associated value.
The property needs to speak to a serious buyer and ensuring it is priced right is key to appealing to that buyer.
Location location location
As always, location plays a key role in pricing your property. Potential buyers are likely to be very familiar with the market in which they are looking, which means the property needs to be competitive with other, similar properties in the area
Buyers are extremely savvy and thoroughly research the market before even going to view a property. Buyers know what the average for a given area is and what they can expect to get for that price. Your property may stand out like a castle among mud houses in the area but it’s unlikely that it will fetch the price of a castle - the best you can hope for is the price of a fancy mud house!