There are only two types of property on the market right now those that are correctly prices and those that will never sell. This is one of the most profound truisms in real estate.
Over ambitious sellers often parrot the phrase “There’s a buyer for every home”, which is true enough if it meets the market. The “market” that everyone talks about is literally the prospective buyers looking to buy property at that very moment. Market Value is the price that a buyer is prepared to pay – no more, no less.
Sellers have every right to expect and get the highest possible price. So how does a seller truly identify their property’s real maximum market value and the right price to offer it to the market?
Ignore and beware of any agent that quotes you a set price, because nobody living on the planet can pick the exact price a property will sell for (unless it’ a lucky guess)
Ensure you receive an up to date Competitive Market Analysis (CMA) or Property Appraisal from your agent, detailing compatible properties in your neighborhood that have sold within the last six months, for what price and how long it took them to sell along with comparable properties on the market which will be competing with you for the same buyers. At best, agents should only offer a qualified price range estimate.
Keep in mind that the asking price of comparable properties for sale is no indication of value – it’s the ultimate selling price that counts. So be careful not to set your price based on the asking price of the odd over ambitious seller – don’t go any higher than the average asking prices for comparable properties on the market.
Stay in tune with your competing sellers by monitoring the internet, property magazines and the newspaper to ensure you are competitive
MOST IMPORTANTLY, listen to the buyer feedback. Insist your agent asks all buyers inspecting your property for their opinion of price, whether they are interested in buying or not. They are out there looking at everything that’s available in their specific price range or budget so nobody is a better gauge of competitive value than active buyers.
Whilst buyer feedback is the ultimate measure of market value, many sellers complain that they can’t listen to buyer feedback because the agent doesn’t bring enough buyers through their property.
There are only 2 reasons why this occurs :
The property is overpriced and/or under marketed.
Even if a property is well marketed, overpricing sets in motion a process that often works against you and may even devalue it. Buyers generally ignore or reject inspecting overpriced properties. Here’s why:
The first 30 days is the most important selling period. When a new listing hits the market, it will be noticed by almost all active buyers in the marketplace at that time, with their attention attracted from agency contact, advertising, signage, window display, magazine etc. If that first impression is negative, it will be overlooked even if overpriced by as little as 5%.
If the price is adjusted later, buyer reaction may improve, but the best selling opportunity will have past, because most of the initial big pool of ready buyers is likely to have purchased. Whilst there is always a trickle of new buyers entering the market, older unsold listings now have to compete against fresh new listings on the market.
Overexposure is every seller’s nightmare!
90% of buyers ask ‘how long has it been for sale?’ when viewing a home for the first time. The longer a home is on the market, the greater the risk to its market value. Often the achievable price when first listed can be seriously reduced; because the property is seen by buyers to be one that’s been rejected by everyone else, indicating that there must be something wrong with it.
Sellers often say “but we are negotiable” or “just get them to make an offer”. The simple answer is that motivated buyers are reluctant to waste their time because, unrealistic prices signal unrealistic sellers.
It also attracts the wrong buyers. If a home worth $350,000 is listed for $400,000 then $400,000 buyers reject it because there are better homes for $400,000 to choose from. Conversely, $350,000 buyers don’t get to see it because they are not looking for homes priced at $400,000. Hence, the wrong buyers reject it and the right buyers don’t see it.
There is another major point to beware.
Up to 85% of sales are conditional upon finance approval. This means the purchase price must represent a realistic market value as it will be subjected to an independent bank valuation. By chance, if a sale is secured at an inflated price and subject to finance, it is unlikely to proceed; meaning time, money and other selling opportunities will be lost anyway.
When setting or adjusting a list price, it may be prudent to consider the way in which buyers search for properties, particularly on the internet. A $390,000 buyer will view properties within a price block of $350,000 to $400,000 for example. So if you were considering offering your property at say $405,000 negotiable to $390,000, you may be better to choose to increase buyer appeal by listing at $399,000
Every home has a buyer reaction zone that will attract attention, generate enquiries, inspections and offers. If your asking price is outside of this buyer reaction zone they will simply not respond and will move on to something else.
At Nerang First National, our experience and records show that once we commence marketing and advertising a property, if we go two weeks without an offer; or we go more than a week without an inspection outside Open Home times; or we have less than two inspection groups at an Open home then an URGENT discussion should be held between our agency and client to review where the property sits in the market.
As a seller, the secret is to LISTEN TO THE MARKET.
To achieve a sale and at the best possible price we must market the property and meet the market. If the market does not meet your expectations then you have a choice to withdraw from sale and wait until market conditions change.
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