Getting the asking price right.
Posted on 13 November 2017
Online property portal Rightmove has reported that almost 40% of properties listed on the site have had their asking price reduced at least once: the highest proportion at this time of year since 2012.
The average size of the reduction is 6.3%, which is a decrease of just under £9,500 for an average £150,000 property.
This is being presented as evidence that the housing market in England and Wales is flat, and other statistics are used to back this up, but I feel that the real story here may be something else.
Very rarely should a competent estate agent have to reduce the asking price on a property. An agent who knows the area, knows the temperature of the wider market and is being honest with their potential client should be able to set an appropriate asking price.
Sadly, I think the business model for many agents is to claim that they can achieve an unattainable sales price in order to land the business, before suggesting to their new client after a few weeks that the asking price might be too high after all.
Whenever we are asked to go and value a property, we draw on comparable evidence of properties we have sold in the area, we discuss these with the client and arrive at a suggested, achievable asking price. This price will be based on facts: selling prices within the area, time of year, current state of the market and a marketing strategy are all factors.
We have found this approach works well, and we when we are asked to provide a valuation we win the business a pleasingly high percentage of the time, but it can be very frustrating to lose the instruction and see the property go on the market with a competitor at an unrealistically high asking price, only for that asking price to fall to the level we had suggested a few weeks later.
That’s not to say we have never had to reduce an asking price. Sometimes it is extremely difficult to set a price on an unusual property with very few market comparables, but I would estimate that we would have to do this in around 1% or 2% of our sales compared to the 40% being reported by Rightmove.
It must be remembered that buyers are usually extremely well-informed. They have become experts in properties in the area and price range at which they are looking to buy and will have seen all of the competition for your property and made their assessment of it.
Attempting to cajole them into making an offer on your property above its real value by giving it an optimistic asking price is unlikely to succeed, and even if it does, the sale is then likely to fail at the survey stage whenever a surveyor looks at the comparable sales evidence.
A realistic asking price saves time, frustration and, in my opinion, will achieve a better sales price than an artificially high one. Setting your initial asking price too high will mean you miss out on the initial surge of interest a property receives as it is first listed and even if the price is subsequently reduced the property will by then be perceived as ‘stale’ and a reduced asking price, which will show on local online property portals, is never a good sign for potential buyers.
Basing your asking price on evidence and getting it right first time will deliver the best outcome.
If you’d like to discuss the current market value of your property, please get in touch with Seamus McFlynn email@example.com and we’d happy to meet with you, with no obligation, to give you our professional advice.