Comment: How to set the asking price for your property
- Credit: PA Photo/thinkstockphotos
Simon Gerrard, MD of north London estate agents, Martyn Gerrard, offers advice on pricing your house to achieve the best possible result
When it comes to deciding on an asking price, it is easy to get caught up in the excitement. Going for the highest figure could mean being able to buy a bigger house, or afford that holiday, and we all naturally hope to make the maximum possible profit when selling.
However, listing your property at a price even slightly too high could actually be a costly mistake. In recent years we have seen rising reports of properties being sold, often after being on the market for long periods of time, for significantly less than the initial asking price. In 2017, properties in London on average sold for around 4% under the asking price, with the average UK home selling for over £10,000 less than the asking price; which can seem like an extremely depressing prospect for anyone trying to sell their home, and a concerning sign for the UK property market.
Industry commentators are quick to suggest this signals an overall downturn in activity in the market, particularly when you consider our capitals volatility. However, there is actually a much more logical reason. Some agents, keen to entice sellers to market their property with them, are providing home-owners with unrealistically high prices. Once on the market buyers are put off by the price, and homes take a long time to sell. Having enticed the unsuspecting seller to market at an overinflated figure, tying them into a long term agency commitment, sellers then become inpatient. This is often because they may have found the home of their dreams themselves, and prices inevitably have to be dropped, generally below what would have been a more realistic level at the start. This in turn can impact on other potential sellers in the area, who are put off selling after researching any recent transactions in their area.
Agents are effectively telling sellers what they want to hear to secure the instruction (and fee for them) and it is not helpful to the overall health of the market. If asking prices were realistic in the first instance, properties would attract more interest earlier on and more movement would be seen throughout the market. Increased transactions leads to increased market activity, ultimately preventing periods of stagnation.
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Responsibility for fixing this issue lies partly with agents, but also in educating sellers of this possibility and to look into the services and reach an agent has rather than just the asking price and commission charged. When homeowners look to sell, they are drawn to irresponsible estate agencies who lull them into a false sense of security and let them believe their property is worth a higher asking price. Agents that are fair and realistic with their pricing strategy are being undermined by agents who are only concerned with hitting monthly targets, rather than what really matters, which is making your sales process as smooth as possible.
The biggest impact your home will have is in the first week it comes to the market, that is when it attracts the most interest from potential buyers. However these buyers are increasingly price sensitive and a property that is over-priced will be simply over-looked.
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When it comes to choosing an agent to market your home, be realistic with your pricing strategy. If a price proposed by an agent seems too good to be true, it most likely is. Ask three agents who have sold property in your area to offer you sales estimates so that you can identify any outliers, and don’t be tempted by higher figures. A competent agent will provide comparable evidence to justify the price they are proposing and will have a well-thought-out marketing plan to achieve it, they won’t just tell you what you want to hear! If you can, choose a frank and straight talking agent who will effectively manage your expectations while still working to get you the highest possible price, as it’s in their interests too. As agents, we do come close to being miracle workers, however there is no magic wand we can wave to make your property fetch above and beyond what it is really worth.