Getting the price right
A little analogy for you to think about if you are considering marketing at a higher price than you honestly think the property is worth:
I have a ten pound note here and I think I would like to sell it…
I have taken a photograph of it and measured it, 5.10″ (14.2 cm) x 2.15″ (7.49 cm) so now I am going to put it on the internet ‘For Sale’.
The trouble is, how much do I advertise it for?
Of course I want as much as possible, I mean, it is far better than the £10 note recently sold by one of my neighbours, and I have even ironed it, so it’s immaculately presented.
I have decided to market it for a little more than I actually want to achieve, because, let’s face it, everybody wants to negotiate nowadays, and really I am not in a major rush to sell it…
OK, so now let’s think about this logically. Nobody is going to give me £12, £11 or even £10.50 or £10.02…
but then this £10 note does have it’s value printed on the front, so even somebody really stupid would know that I was trying my luck if I put a higher price!
If however, I put it on the market at £8 or even £9, I think that the response might be a little bit different. Chances are that I would achieve very close to the £10 I want, I would probably have lots of interest – because my £10 note is NEW TO THE MARKET & IT IS CREATING A BUZZ… People might even be fighting over it and that, surely, will make me very happy indeed!
So let’s be honest, you are reading this on an Estate Agent’s website, so obviously I am not selling a £10 note.
But if I am selling this house instead…
There are about half a dozen similar properties for sale at the present time, slightly varying prices but I also know that if I look online I can find out what has actually SOLD in the past 6 months too. All of the properties are relatively the same age, they are similar in size, they are all in a similar location (maybe once someone has moved in they might discover that one side of the road is a bit sunnier than the other, but unlikely to affect the price at this stage). All of these factors could make SOME difference to the price achievable, but, let’s face it, if a mortgage is required then ultimately the value will be made by the surveyor (and he will just ask local Estate Agents for comparable sold properties, and he or she probably won’t give too much consideration to which side of the road gets the afternoon sunshine, or whether the property has been recently redecorated or has new carpets).
So there is a PRICE for the property, and that is the price a purchaser will pay, AND a price that a mortgage surveyor will lend against. It really does not matter whether you want to ‘TRY for a bit more’ because all that happens is you lose the INITIAL BUZZ, the time when your property first comes available and all those waiting applicants see it on the internet or in the newspaper for the very first time or are phoned or contacted by the agent because it is
‘New to the Market Today’.
By missing out on that first flush of excitement you have to now rely on the ‘new’ applicants registering bit by bit and that will never, ever be as many as you would have reached on day one of marketing or anywhere near as exciting as reaching the initial lot in one go!
Don’t miss the initial BUZZ, statistics show that after 2 weeks of marketing the interest in a property starts to wane and after 6 weeks the property is likely to be worth less than you were initially told to market it at in the first place. That is simple economics, demand for the property will be much lower because it’s no longer the prime property for the applicants looking, they will now be focused on whatever is ‘New to the Market Today’.
So you might want to try the property for a few weeks or a month at a higher price, then reduce it down when you realise it isn’t going to sell….. By then you have wasted time, you have lost the impetus and you will, undoubtedly end up getting LESS than you would have done, if you’d marketed during the BUZZ PERIOD at the correct price.
Please listen to our sales valuer carefully, check the comparable evidence (as this will be exactly what the surveyor sees) and check what else is on the market, maybe even investigate how long it has been on there [remember that our average length of time from initial instruction to under offer is only 6 weeks, so if a property has been on the market for much longer than this time, it could very likely be over-priced]. Most of all, use your gut instinct and don’t think that ‘trying for a higher price’ is worthwhile, it is a false economy and rarely works out in your interest..!
Oh and by the way, I just sold my ten pound note for 20p extra… I swapped it for someone with a pocket full of coins, but money is money after all.