Top 7 Selling Price Myths
If you’re reading this, you are probably thinking of selling your property, or you may already have your property on the market.
By now, chances are you’ve probably heard words of advice from well-intended friends and family about selling your property.
You should also know about some selling price myths doing the rounds; when the wrong advice is repeated often enough, it can easily gain credence with unsuspecting sellers.
Entering the market with a selling price that is either too low or too high can be an equally painful experience and can be equally disastrous to your bottom line, which is why it’s important to set the right selling price from the beginning.
Here are 7 of the most commonly repeated myths about the selling price. Try to avoid these pitfalls at all costs:
1. Set the selling price on the high side to allow for negotiation; the buyer can make an offer;
If your home is overpriced from the beginning, you risk losing potential buyers on both ends of the scale: on the one hand, with the selling price set above market value, potential buyers may be disappointed when they find the property does not match their expectations.
On the other end of the scale, you may miss out completely on attracting buyers who are in a slightly lower price range, who do not wish to stretch their search into an uncomfortable price range. These buyers may have been interested at a more realistic selling price.
2. Over time the value of my property will catch up with my (too high) selling price;
In fact the opposite is true. When viewing a property for the first time, buyers invariably ask: “how long has the home been on the market.” The answer helps to feel out the seller and provides a clue as to how willing he or she may be to negotiate.
Rightly or wrongly, the assumption is that the longer a property is on the market, the more realistic the seller will become and the more negotiating room there should be. Clearly it’s better to start at the right price and sell in the shortest possible time.
3. Any offer you consider should be close to the selling price;
Sellers are often disappointed with an initial offer if it’s well below the asking price and may ask “why so low?” In recent years buyers have gained more access to online information; they do more research and are better informed about market conditions than ever.
On the first time around, many buyers will try a low offer to get a sense of how flexible the seller is, before taking the next step. If the buyer’s offer is on the low side, try making a counter-offer that’s closer to the asking price.
4. Below standard or outdated finishes should not impact my selling price;
When outdated or below standard finishes are a factor, often the replacement cost will be “priced in” by potential buyers.
Most buyers look at how much they’re going to have to spend to bring the home up to acceptable standard and will adjust accordingly when formulating an offer.
When it comes to sprucing up your property for the sale, the highest return on investment comes from some of the cheapest areas to address with the highest visual impact: decluttering, painting and cleaning.
It makes sense to invest resources into areas with the highest Return On Investment: kitchens, bathrooms, and high-traffic areas like hallways and foyers.
5. The buyer’s offer is too low to consider;
If a buyer steps up to put pen to paper and makes a low offer, don’t despair. This indicates a firm commitment from the buyer and it should be welcomed as an invitation to negotiate; make a written counter offer that’s nearer to your mark.
6. You should never accept the first offer;
While there are exceptions to every rule, an old rule of thumb in real estate is that your first offer it usually your best offer. Experience shows that this is true more times than not, which is why the saying is so prevalent.
If the offer is close to asking price, finances are in place and the buyer is keen on your home, why not? If you turn the offer down, it could well turn out to be the best offer you’ve had. It may be prudent not to look a gift horse in the mouth.
7. If you get an offer too quickly, it means the asking price is too low;
When sellers expect to have to play hard ball, but get an offer right away, it’s natural to think your property is under priced. However, if you’ve performed due diligence and called for a Comparative Market Analysis, it probably means your home is fairly priced and is an attractive proposition to buyers; they’re ready to snap it up.
Comparative Market Analysis
A great method of determining your selling price and your property’s current true value is to make use of a Comparative Market Analysis (CMA), which is usually produced by an Estate Agent.
Working with a reputable, experienced real estate agent, who has the skills to determine the correct price from day one, can make all the difference.
Frans Theunissen of Fisherhaven Properties launched his estate agency more than 30 years ago and has the experience to help sellers to determine the right selling price for their properties. Frans is also skilled at helping sellers identify cost-effective measures to help make their properties more saleable.