Many vendors come into the home selling arena like they’re going into the ring.
They’re defensive and ready for an attack by cheeky buyers who aren’t going to offer them a fair price. It’s not the perfect start to a relationship, is it?
Instead, arm yourself with knowledge and enter with a reasonable price in place and you’ll find selling your home is pretty pain-free.
Buyers are the market. They are the ones who purchase properties and, the ones who write the cheques.
How to price your home
Use the market as a guide
It’s a simple question. Is the price that you’ve set going to appeal to the market? Firstly, you need to know what the housing market is doing. The market falls into one of three categories:
HOT – Great news for sellers as few houses are for sale and buyers are confident and eager. One of the best indicators that a market has heated up is when it appears first home buyers are out there competing with investors.
Knowing how the market is performing at the time of sale is crucial to pricing your home. If, for example, when the market is hot buyers are ready to compete against each other, and often spend over the odds to buy their dream home.
EVEN – an equal number of houses to buyers – both sides of the fence are happy and in a good position
In times of an even market, buyers are in the game but they have a little more choice, and competition is not as prevalent. The risk of buyers paying over and above the odds doesn’t happen.
COOL – Buyers are in control yet cautious – a surplus of houses for sale
In a cool market, buyers are cautious and looking for a bargain and the best value. They can be choosy and take their time as there are more properties to choose from. If you’re selling in a cool market, it’s the sellers who compete against each other – go with the wrong price or scrimp on presentation, and you’ll be out of the game.
Compare to similar properties
There’s a straightforward way to know how to price your home: look at similar homes to yours that have SOLD in your area in the three to six months and note how much they sold for.
The prices that these homes sell for is the best indication of what you can expect to achieve. Similarly, don’t price your property against a property that hasn’t sold.
All too often, I learn that a seller has decided that their home is worth more than what the market dictates, sometimes way more than that similar property did or didn’t sell. I know why they do this; they let their emotions get in the way of the price. They built their house, or they loved living there, so surely a buyer will pay more for that, right? Wrong.
Remove the sentiment and see your house for what it is – the number of rooms, the land, the location, the age, the condition, the amenities and, the ticket to your freedom.
Of course, the other emotion that gets in the way is greed. While it’s tempting to overprice your house and see what happens, it tends to backfire. Buyers know the market well; they’ve spent weeks researching and can smell an overpriced house a kilometre away. You’ll receive a lukewarm reception at best with few people turning up to your open home or even be greeted with the dreaded ‘deafening silence of the market’.
Another typical ‘game’ that sellers like to play is spending time researching the right price by looking at similar homes, asking an independent valuer or real estate agent to price the home and then adding another five figures to the price for negotiating or ‘wriggle room.’ Adding an extra $10, $20, or $50k of negotiation space overprices your house. Buyers won’t be interested.
Ensure your pricing sits in the right place
Some sellers are adamant that they want just that little bit more for their home, and tweak the price so that it falls into a new price range. For example, a seller tries to push his house into the $500,000 price range (even though it’s worth a high $400,000).
The problem here is first that most buyers who search for a property online will use a search field that allows them to search by price range, so guess whose property isn’t going to appear? Secondly, it’s the psychology of numbers. For buyers who are busting a gut to raise $490,000 going over in the ‘5s’ is way too much.
I know of a seller in South East Queensland who was stuck selling his house. He had it on the market for four months at $500,000+, and he didn’t get any serious bites. Then, he adjusted the price into the ‘4s’ and bang, suddenly people showed up, and he ended up selling for $490,000.
If you price your home on the cusp of two big numbers, take care to pick the price that you’re happy with but will also attract a happy buyer. Buyers can smell an overpriced house from afar, and they won’t come near it.
So, as pricing is a bit of a game, is it a good idea to leave the price off your listing?
Let me think about this one. NO!
Save yourself a lot of aggravation and time spent answering the ‘how much is your home?’ question by including a price. Failing to do so will do one of two things:
Buyers will become suspicious because they’ll wonder why you haven’t shown an amount and suspect it’s too much.
Nothing. Buyers will look elsewhere.
It’s your job to entice buyers to your home, so make it easy for them to like you and your house.
“Sellers set the price, but buyers determine the value.”
Is it a good idea to get a property valuation?
Everyone has an opinion on house prices, especially those who have no idea what they’re talking about.
Tempting as it might be, I advise you not to take advice from everyone you know.
The sage butcher and Ted across the road are wonderful for meat and sharing footy tips, but they are not qualified, property valuers. Unless, of course, the butcher’s side hustle is in real estate, or Ted happens to have sold ten houses in the last six months – let their advice waft over your heads and stick with the experts and your research.
If you want a reliable and legal valuation of your home, it pays to use an expert. The first option is to use a certified property valuer. These experts are required by law to price your home correctly; and would not risk ruining their reputation and livelihood by doing otherwise.
Property valuers will compile a pre-sale report which shows how the market is performing and justifies the pricing of your home. To begin with, they undertake a thorough investigation of your property, from the inside and out. They will measure, they will poke, and note any faults and improvements. They also do the basics, such as recording the number of rooms, bathrooms, layout, fixtures and fittings, carports, garages, sheds, decking areas, and so forth.
They will also look at the property from outside, noting the topography and positioning from the frontage and its locations and zoning (crucial if you want to show that you’re in a catchment zone for schools). Finally, they take photographs that are dated to identify when the inspection took place; this assures buyers that the pictures aren’t years old or doctored.
The property valuer will then compile a legally binding report. It will include details about the property title, the land and all their findings in regards to measurements and layout. A pre-sale report will also identify the local market, recent sales and current listings, and use this as evidence to support their valuation.
How else can you value your property?
Why not ask a few local agents to come to your home and give their opinion on its price? I will warn you though; you should make it clear to agents that you are selling your home, NOT your listing. ‘Buying’ a listing is still an unfortunate industry practice.
Some unscrupulous agents will ‘beef up’ a price to inflate their own bulging pockets (and your ego). Don’t fall for it, because the buyers certainly won’t. If you ask three or so agents to come and value your home, you can lay all the estimates on the table and use these as a gauge.
For your research purposes, as well as following the local market and seeing how much properties are going for (online, agents’ windows and in papers), you can use online platforms such as Price Finder or Core Logic.
Core Logic has developed a Hedonic Price Index which measures the day to day property market movement and prices. It can be a little confusing, so I take my hat off to you if you can understand it!
What the right price means (and doesn’t mean)
If you’ve done all your research, you’ve used experts and followed their advice, and you’ve marketed your property at the right price – everything looks set.
Now, it’s a matter of holding your open homes and by appointment inspections. What it’s not time to do is PANIC.
Yes, you want to sell your home quickly, but you also don’t want to lose unnecessary amounts of money, and by unnecessary, I mean thousands and thousands of dollars. That’s why I advise clients to remove the word ‘DROP’ from their vocabulary.
If you find that your property is not selling and from feedback from viewers it appears that you may have ‘overshot the runway’, you can consider adjusting the price. Note, the the term ‘adjusting price to meet the market’ rather than PRICE DROP is far more palatable. The latter suggests bargain basement and desperation, while adjustment shows you’ve reassessed based on market research and feedback.
Remember, marketing using professional and carefully chosen wording is essential to your price and getting a sale!