In a buyer’s market, it’s critical that the seller gets the price right. All vendors want the highest possible price for their property — and agents should share that objective. But the price can only be determined by two factors: recent local sales and listings, and buyer feedback.
Here are some important points to consider:
- Think locally. Market conditions can be vastly different in neighbouring areas. Even if a comparable home is located just 15 minutes away, if it’s in a different suburb, the perception of value may be very different. Place the most weight on sales in the immediate market.
- Focus more on sales than listings. Sure – a similar home may be listed for a very impressive price. Whether or not it sells for that price is another matter. Sales tell the full story on the market temperature.
- Listen to your prospective buyers. We arrange as many inspections as possible before setting a price guide, and we get detailed feedback from everyone that comes through. This gives invaluable information about what purchasers are prepared to pay.
A good agent will show you the price using the principals above, rather than telling it to you. Too often, we see other agents overvalue homes in order to win business from the vendor. The house doesn’t sell and after a while, the price is lowered. Unfortunately, by that point, there’s a perception in the market that there must be something wrong with the house. This hurts the final value. Beware the agent who quotes you a price that is much higher than other estimates.
There are also agents who undervalue homes to encourage competition. The idea is that the price can later be hiked up when there are many offers. This is certainly frustrating for buyers — it basically amounts to a “bait and switch” — but it is also disadvantageous to the seller. A lot of time and marketing spend is wasted courting buyers who just don’t have the budget for the property.
Ideally the price of the home is set right where the market dictates it should be. This stimulates maximum interest from the market, leading to competition (through negotiations or a bidding war at auction) and ultimately, a quick sale with the best possible selling price.