How to set the right asking price when selling property
An important aspect of selling a property is setting the right price. That sounds obvious. What is not obvious, is how to go about determining the “right price”. Many sellers simply set a price based on what they want or need, however this strategy often leads to under- or over pricing a property.
How to do it right
Assuming that it is not a stressed sale, but you do want to sell within a set time. You are, what we call in the industry, “a serious seller”.
- Find out what a similar property (or properties) in the same neighbourhood sold for (not on the market for) in the last 6-9 months.
- Compare your property with those. Try and be as objective as possible and rather find a reputable agent to help you with this; there may be information on those properties that you do not know about. Interesting facts related to this for example: the amount of time a property was on the market for and how much the selling price differs from the initial asking price.
- Once you found a sold property that compares favourably to yours in most aspects, you should know that you will stand a good chance of finding a buyer for a similar price at that moment in time. (Remember that the market might change and you will have to be prepared to repeat this exercise every 6 months)
- If you want more for your property, be prepared to give good reasons why.
- Do not make the mistake to look at asking prices – there is a huge difference between people’s hopes of what they can get and what they can get in reality.
If your asking price is too high
- Guaranteed: you are going to get very annoyed with your agent, this relationship is going to get sour, the selling experience can turn into a nightmare for all of you.
- Your property will actually be used to get the other properties sold, because it will be used for comparison.
- A newly listed property gets a lot of exposure and attention within the first 1-3 months. After that it might get stale and a reputation if the price is too high, which will make it all the more difficult to sell at the asking price. In the end you might have to settle for far less than what you could have gotten if it came on the market at the right price
- Keep in mind that the bank will also play a role in the valuation of your property if the prospective buyer needs a bank loan, and if a bank declines a loan due to the price being too high – you as homeowner will have endless problems finding an interested party at an inflated price!.
- Waiting and hoping for a buyer at a too high price might cost you dearly if you want to move on and fry other fish. People often lose sight of the fact that time can also be equated to money and to lost opportunities