Pricing

How Do I Make Sure The Price On My Home Is Correct?

There are many factors that will help your home sell somewhere within the average time it takes to sell in the current market.

Such as:
  • Presentation
  • Situation
  • Aspect
  • Area
  • Promotion
  • Marketing
  • Advertising
  • Terms Offered
  • Location
  • General Condition
  • and there is PRICE!
The most important thing you will do to get your home sold is price it correctly before it goes on the market.

Most of the above are either points that we can't do anything about (location, aspect, area) or that we have taken care of already(advertising, terms offered, general condition).

Price on the other hand is something that needs a lot of reflection and preparatory work by both you and your consultant.

It is crucial to your home selling for the following reasons.

  1. It is natural for any seller to want as much as possible for their home and it is our job to get you the maximum the market will pay.
  2. In the end it is not what your consultant or valuer believes, or in fact what you think, that determines what your home will sell for. It is the market, or the buyers out there, that will decide what the price is for your home. The buyers shop around (research says 14 homes on average) before they choose the home that represents the best value to them. No amount of promotion or advertising will sell your home if it is placed on the market at too high a price.
  3. It is logical that the best buyers currently in the market for your home will most likely be the first people to inspect. If you price it too high they may reject it immediately. These buyers only occasionally will return to a home weeks later and buy.
  4. Also of relevance is the fact that from our experience you get more prospective buyers through in the first stages of marketing than you do later in the program.
  5. We know from research that buyers visit 14 homes on average before purchasing the home they believe is best value.

So How Do We Go About Making Sure The Correct Price Is On Our Home?

  1. You work with your consultant to explore comparable homes that have sold in recent months, i.e. homes that are similar to yours that have actually sold in your area. Beware of any agent who trys to “buy” your listing by shooting from the hip and giving you a price way in excess of what you know it is worth. In the end this could cost you money, not make you money.
  2. You must be as objective as you possibly can in doing this exercise. It is very easy for us to become emotional about something as big and close to us as our home. If you have deadlines to meet or are keen to sell, you must be as objective as you possibly can.
  3. Quite often one of the things that leaves a home "for sale" for several months is simply the emotional difference between what a vendor thinks the home is worth and what the market portrays that it is worth, i.e. what it’s market value is.
  4. You work with your consultant, you do not allow them to simply give you figures and tell you what they think it is worth. To a certain extent it is irrelevant. What is important, is what the comparisons say your home is worth on today's market. Get involved, go and look at the other homes if necessary and in a lot of cases it will be crystal clear where your home should be priced.
  5. If you do not have a price on your home then you must listen to the market feedback. If you are marketing under Auction or with no price, listen to what the market is saying in terms of where it places your home. Discuss this feedback with your consultant and if you eventually do have to put a price on it, use the feedback as a guide.
  6. A decision to sell, is the decision to meet the market. The reason why some houses sell and others don’t is quite often a matter of the vendor being realistic in meeting the market's appraisal of the value of their home.
  7. The Market Place Realty have a 12 minute video available to you on how to price your home on today's market. It is called “Pricing Your Home To Sell" . Your consultant can supply you with a copy of this to watch and it may help you get a guide on the value of your home.
  8. Gone are the days when you had to price your home high and you would accept low offers. It is interesting to note that in previous years property history as shown that the difference between the list price and sale price ran at approximately at 5%.What it says, is once you establish the market value you need to keep your asking price as close as you possibly can to it..
  9. Several factors that do not relate to the value of your property are as follows;
    (a) The Government Valuation
    It is done for rating purposes only and does not relate to market value.
    (b) Improvements to your home that you have carried out do not necessarily add the same amount of value as you have spent. There is a valueing adage that says “Cost Does Not Equal Value”
    (c) What you paid for a home may not necessarily be what you receive for the home. It depends what has happened in your market, in your area “since you purchased your home” and you are at the mercy of these fluctuations.

Summary of Problems That Can Be Caused By Overpricing

  1. It reduces the viewing by people who immediately recognise it has been overpriced from the kerb and drive by.
  2. It can reduce advertising response educated buyers.
  3. It can attract prospects in a higher bracket who see the home as being bad value in that bracket.
  4. Some buyers do not feel comfortable making too low an offer. Overpricing can cause people to walk away instead of trying to purchase.
  5. It can help sell the competition. If your house is priced at $350,000 and there is a house of similar size and specifications to yours at $325,000, the buyers will go for the lower price one first.
  6. In many cases a buyer may actually sign up for a higher price but valuations will very quickly show the buyer he/she is wrong. This can cause financing problems which may lead to a sale falling over.
  7. The biggest problem with overpricing, is that it can lead to your home being on the market longer and waste valuable time until the market catches up or you eventually drop your price.
  8. The last and most important problem, is that if you have to chip away at your price, you could end up selling for a figure less than the original market value indicated.

Don't Shoot the Messenger

The market is the buyer for your home - not your consultant!

We believe we don't do you any favours by giving you distorted information just so that you "think we are great."

To get your home sold in as short a time as possible and for the most amount of money there are some decisions to be made.

To help you make these decisions, we prefer to tell you what's happening every step of the way. You can then decide with your consultant, or with management's involvement, what strategy to employ next.

If the market reacts to your home in a specific way, realise it's the market's reaction - not theirs.

DON'T SHOOT THE MESSENGER - WORK WITH THEM

Checklist for pricing your property Correctly

Sheet A

Information needed...

  1. The average time it currently takes to sell a house in your area.
  2. The average difference between the listing and sale price in your town or city.
  3. The average difference between the listing and sale price in your suburb (if possible).
  4. Which market are you in, i.e., a buyers or sellers market.
  5. What competition have I got? Are there many homes for sale which are of a similar style to mine, or is my property unique in the area?
  6. Does my property have any special features that buyers will compete for?
  7. Of the houses that have sold recently in my area, which ones are similar to mine?
  8. How many homes are for sale in my town, city or area? (approximately).
  9. How many houses are selling each month in my town, city or area? (approximately).

If my Home is Already on the Market

Sheet B

Questions to Ask Myself Before I Make a Pricing Decision

  1. All of the above questions on Sheet A.
  2. How long has my property been on the market?
  3. How does that relate to the average time it takes to sell a house?
  4. How many people have been through the property?
  5. Have any offers been made?
  6. Have any valuations been completed? If so, what were they and how do they relate to my asking price?
  7. Have I compared my home with the best comparable sales made recently?
  8. If so, how does my price compare with the prices of those homes that have sold?
  9. Having determined the market value by looking at other homes that have sold, how far above that indicated market value have I set my asking price?
  10. How does my price relate to the difference between the list and sale price in my area?
Having investigated all the above and taking it all into account, what should my asking price be?