Once you have chosen your agent, the next biggest decision to make revolves around what price to set.
Generally, there are three options:
This is where properties are advertised as 'expressions of interest', 'Market Preview' etc. We reckon buyers universally hate this approach. Buyers rightly want to know how much something is worth. From our experience, not setting a price will lead buyers to ignore the property and result in fewer enquiry and inspection numbers. This is a huge mistake and the reason why 98% of times we don't use this approach. The only times we do is where a property is due to auction, which is usually just for the first week.
If buyers hate this approach, it begs the question, why do agents do it? We believe it is because agents are too scared to tell owners what they think about the price. As an agent, if you believe a property is worth $700,000 but the owner thinks it is worth $800,000 there is a pretty strong chance the owner won't decide to sell with you. Without properties to sell, we don't make a living. All agents need to find listings, i.e. properties to sell. Often this leads them to do unscrupulous things to secure their future income.
The next agent then comes along and says 'Yep, I think $800,000 sounds fair. Let's not put a price on it and let the buyers decide'. They might add, 'if someone thinks it is worth $900,000, we don't want to undersell the property'. This logic is pretty sound if the objective is to win your business, rather than secure you the best possible sale price.
In reality, what happens is fewer buyers turn up to your open homes. The agent then collects 'feedback' from the buyers. Because they have no idea, inevitably buyers with a lower budget may turn up and tell the agent they think it is worth $600,000. This news comes back to you as a way of 'conditioning' you, as the owner, to price the property lower. Eventually, you set the price and the property sells. But, we think you lose the critical momentum of the first week, which could lead you to undersell the property. Importantly for the agent, they aren't the bad guy. They never set the price, the 'market' did. But you could have given the property away.
When you look online at property, do you like seeing 'no price' displayed? Then why would your buyers? Failing to set a price is annoying and in our opinion, deceptive. Whether you chose another agent or us, don't fall into this trap!
This is the old fashioned way of buying property. The logic being that you set a price of $749,000, then buyers will offer you $720,000 and you may end up around the $730,000 - $740,000 mark. So, if you want $750,000, just set the price at $769,000.
This was a good strategy until the internet became the gold standard to find homes. Now, buyers will use the search filters to help weed through the hundreds of listings online. One of the most used search criteria's is the price filter. If I wanted to buy your house in the above example, but I only wanted to spend $700,000, I wouldn't see your place at all. This is a big mistake. Buyers buy up. They almost always spend more than they want once they've seen their dream property.
If you set a price of $695,000 - $750,000 then your place will pop up in their search. If they see your property and fall in love, they will find the extra funds. If not, they might make a lower offer which helps create the additional competition needed to push another buyer higher.
This is the most commonly used form for advertising price. You will notice that almost all of listings are advertised this way.
In the above example, if we advertised your property with a guide of $695,000 - $750,000 you are not under any obligation to sell for $695,000. Even if you get an offer of $800,000 you aren't committed to selling.
Sellers will routinely say, 'If I saw the advertising price as $695,000 - $750,000, I wouldn't pay more than the bottom'. From our experience, these comments don't fit with reality. These sellers often haven't been in the market to buy for some time. We can review hundreds of sales and show you that more often than not, the price ends up at the top of our range and sometimes above it.
Most sellers get hung up on the asking price. Our recommendation would be to not focus on this when interviewing agents. Work out who has the best plan and is the right fit for you. Then work out the asking price just before it hits the market. That way you can take into consideration all the other properties on the market at the time.
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