11 Jun VIDEO – How not to lose 60% of your potential buyers.
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It is quite a common practice to inflate the listing price of a property by a small or large amount to allow for some negotiations. Doing this also allows for fluctuations in the market created by temporary surges in purchaser numbers.
Strong buyer interest at the time a property first comes onto the market will sometimes result in a property selling at or even above the asking price. Properties in a highly sought after category or in locations where there is a shortage of property, usually have the ability to set a premium asking price.
However, for most properties, careful consideration should be given to the amount of negotiation room in the asking price. If a property is listed 10% above other similar properties in the area, you will be removing about 60% of your potential buyers immediately and the agent will have to resort to ‘puffing’ the advertising to attract attention to the property.
Overpricing is just the first in a series of events that will cause a property to go stale. It is a Catch 22 situation…. If the marketing does not have as much ‘puff’ as the price, the property will not attract inspections.
On the other hand, if the advertisement exaggerates the benefits, purchasers will be disappointed when they do have an inspection and will not be inclined to make an offer. Serious over pricing targets the wrong market. Buyers feel they have plenty of time to make up their mind because they know that the price is putting most people off.
Ironically, the strategy that ‘less market aware’ sellers use to maximise the selling price, ultimately lowers it. The strategy should be to have the buyers wanting to get in before someone else does. You have to create competition and a real desire in the buyer. This can be done through competitive pricing but can also be done by a skilled agent through smart marketing.
I have heard many sellers say that they can always come down in price but never go up. Well that is not quite right. When buyers have to compete for a property, it is likely that the original price expectation will be exceeded. Someone once said to me that there is a buyer for every property. All that will stop the sale is the price.