George Berry, Residential Area Manager, looks at why realistic pricing is key to selling your house in today’s market.
Listen to the market
Why do shops and retail outlets have sales on and off throughout the year? The simple answer is to sell stock that has been lingering and make room for new stock.
So, flipping that question on its head, why didn’t it sell at its full price to start with? The most common answer is that buyers could not justify the price of the items and only when they were reduced, saw them as good value for money.
With disposable income being low due to the cost of living being high, every penny counts. Items in sales look far better value and more people can afford them. This increase in demand means people feel they will lose out and as a result make quicker decisions to buy.
The same principle applies to the housing market. If a property is not selling, then it is for largely two reasons. It either has compromises that are putting buyers off or they cannot justify the price. The higher the price, the more significant those compromises become.
Properties are our homes and our biggest investment. They are where memories are made, both good and bad, and as a result there is a lot of emotion in the mix. This is what causes an issue.
Detach from emotion
We naturally all want the maximum we can get for our homes when selling to enable us to have more flexibility with onward plans. However, when detaching from emotion, we all know something is only really worth what someone will pay. In a tough market where a lot of supply and demand is hampered by mortgage rates, affordability and incomplete chains, this can cause problems agreeing sales.
Retailers reduce prices because it will be the make or break of their business. They need sales and money in. If vendors are able to take a more commercial view when selling their homes and look more objectively at the bigger picture, then they will achieve better results.
Be flexible
The key is listening to the market rather than being rigid on what they want to hear. We agreed a sale this week where the buyer floated a lower level and wanted us to discuss with the sellers before submitting a formal offer. The vendors’ response was: “well of course that seems fair, we all need to take an offer”.
In a high-end boutique, one-off garments can command ultra-high prices and buyers will ultimately pay for the exclusivity. That is also the case for certain properties that are so exclusive. They can only appeal to ‘high net worth’ buyers. The issue is, most of our homes do not fall into this category so it is wrong to keep prices unrealistically high in the hope that someone will pay over its market worth. Most buyers are ordinary folk like us with limited supplies of money so they will only pay what they can afford.
I hear it so often on valuations or in conversations: “I don’t want to reduce my price as it makes it look like there is something wrong with the house.” This is not the case at all and mindsets over reductions being a stigma need to change. There is no science to confirm prices other than letting the market determine them. As agents we look at comparables to give a guide but ultimately the market will decide.
If you want to sell, listen to the market and be prepared to reduce. Remember that if you are dropping the likelihood is your onward purchase will also drop as it is all relative. If you can’t afford to take less then what the market deems it is worth then you really should give serious thought to whether you need to sell now. If you can’t then take it off the market as you will only be left frustrated.
This article first appeared in the Diss Express.
