Getting the asking price wrong when selling a property is probably one of the easiest mistakes to make. Naturally, everyone wants to achieve the highest price possible (and rightly so). But did you know…that often lowest priced properties sell for a higher price than the highest-priced properties.
You may be thinking I’m mad but it’s true. If a property appears really good value, everyone is going to want to view, and likely, offer on it. That competition will drive the price up to absolute market value.
Think auction. Think eBay.
When selling anything, especially a property you want to price for the majority and hope the minority buyer attends the block viewing.
In contrast, if all the thorough research (recent comparable sales, price per square foot comparables, competition assessments, and so on) suggests that your property is worth £500,000 and you decide to market at £525,000, what do you think will happen?
Firstly: You will have limited interest as your property will appear expensive compared to the competition (and it’s important to note here that 70% of the interest, and so the best price, in a property will come in the first 3 weeks of marketing).
Secondly: You are justifying a buyer buying a competing, correctly priced property. In other words, you’re helping your competition sell.
Thirdly: It’s likely after 6 weeks your property will start to stagnate on the market. It’ll become “oh, that house is still on the market, there must be something wrong with it”. No-one wants what no-one else wants and everyone wants what everyone else wants. It’s human nature. Unfortunately, there is only 1 solution to the third and that’s a price reduction.
Fourthly: You’re going to have to reduce the price, but there’s an issue…Do you think a price reduction to £500,000 will do it? Probably not! Your house is now stagnated on the market and you’ve missed the prime market launch period to get competing offers and so the best price. You’re going to need to reduce your £500,000 house to £480,000/£490,000 in-order to re-invigorate the marketing and make it appear in searches where people wouldn’t have previously seen it.
So, what started out as ‘let’s just try a bit higher and see what happens’ has actually cost you £10,000/£20,000 and 2 months of wasted time.
Remember, you can’t under-price a property (as long as you don’t sell it to the only buyer who views it) but you can very easily over-price a property and kill the crucial early interest.