The price equation – What determines the price you receive for your property?
The price you will get for a property depends on the level of interest from buyers (pretty crazy, right?). If at your first open home you have 50 people turn up, chances are that you will receive multiple offers and end up walking away with an amazing price. If two groups turn up, buyers will know that there is minimal interest and will think they will have the upper hand in the negotiations.
So, why don’t 50 buyers turn up at every open home? Chances are there are more that 50 buyers looking right now for a home like yours. In fact, in the first two weeks on the market you should expect to get well over 1000 people click on your property on the various real estate websites.
Buyers will turn up if they see value in your place. What is value? I see this as four things, the first two of which you can control pretty easily.
Presentation – is the property furnished correctly, does it appear well maintained and clean
Promotion – how good do the photo’s look online? Are enough buyers finding the property on the internet? Have you got the right marketing mix for the property?
Floor plan and attributes – how many beds, bathrooms, living areas and car spaces does the property have? Is it positioned on a big block of land? Does the floor plan flow well for today’s living?
Location – what school zone is the property in? How desirable is the suburb? Is it in a tree-lined street? How close is it to services, main road, shopping and workplaces?
As they scroll through the real estate websites and in just a few short seconds, buyers will judge these four things and compare them to the price you are asking for. If it stacks up, they will turn up.
If the price seems unrealistic or out of their budget, they won’t waste their time. The trick to buyer numbers is to nail the presentation and promotion and set the price as fair compared to the market.
If you want to set a higher price, improve the presentation and in some cases, upgrade the attributes. Don’t set the price because that will help you buy a better house once you’ve sold. I hate to break it to you, buyers don’t care how much you need to purchase your next place or even how much you spent upgrading the plumbing a few years back.
They will look at your place, what it offers and then compare it to everything else on the market. No property exists in a market by itself. It is foolish not to consider what is selling around you. If a property down the road represents better value, it will suck the life out of your campaign. Starving you of buyer numbers and the excitement that really pushes prices up.
I have seen buyers spend 10-15% more than what is rational because of the fear of losing the property to someone else. The secret to getting that dream price is finding emotional buyers and putting them in a competitive situation. Pricing is critical. It gets people through the door. Without that, its’s impossible to get them hooked.
The worst thing that can happen is for a real estate agent to be starved of buyers. The way I see it, in the end the more you ask the less you will get. Set a fair price, do all the small things right and you should walk away very happy.