How to avoid seller’s worst mistakes when selling your home
This blog is going to discuss how to determine the final sale price of your home. This topic is separate from the campaign strategy to achieve the sales price i.e ‘Offers over $XXX’. There are three opinions that matter when arriving to a specific sales price. These three opinions are; what the market is willing to pay, Real estate agent’s appraisal and Vendor’s bottom line. Let’s delve into these further.
This involves research on the seller’s part. Leading up to putting your home on the market, I would suggest you research other homes on the market. The market price is almost completely out of your control and is essentially what the buyer is willing to pay, this is the most important part of determining the price to set on your home. When doing your research go beyond just looking through pictures on the internet and actually attend the open homes. This is because when you get inside the home you’ll understand how different each property can be, the sense of space, the feel and the flow of the floor plan and then you can directly compare it with your own home. You would be doing the same thing as your potential future buyers as they attend each open home. When doing your research these are the things you are taking note on;
- Property attributes – Pool/no pool, renovated/unrenovated, bedrooms, size of rooms, fixtures & fittings, low set/high set, car parking,
- Floorplan – This one is important especially to renovators. Usually, a property with a better layout and floorplan will be snapped up in preference because the are easier to work with for renovations and less work would be involved.
- Location – Check proximity to local schools, shops amenities etc.
- Land size and House size – sq footage of home is equally as important.
Real estate agent appraisal
When you invite a real estate agent into your home for a pre-listing meeting they should bring with them a CMA (comparative market anaylsis). This report should detail research the agent has recovered from current homes on the market, homes that have sold but not yet been updated on public real estate portals. A real estate appraisal will also probably give you a guide on a price the agent thinks may be achievable for your home. Hint – If you have done the research your own range should be within 5 – 10% of the range that the agent gives you.
…if the competing homes are priced higher, your home will stand out and your home will attract more attention.
Your Price/Vendor Price
This is usually the figure that is your bottom dollar. This is where I urge you not to be too overambitious. Sometimes sellers and buyers are on polar opposite ends in terms of the sales price. This may be because the seller has invested an $X amount in renovations and wants to recoup that money, but unfortunately the buyer doesn’t see value in a certain aspect of the renovation. To explain even further, you may have imported tiles from Italy and the buyer doesn’t care where they’re from.
Setting the wrong price for your home is just like getting a false start at the starting blocks in a race. Setting the property price too high, could potentially put your property in a situation of staying on the market too long and ending up on the back pages of real estate search portals. This makes buyers suspicious that there could be something wrong with the home, contracts have fallen over, the property value doesn’t match the price or the vendors are unreasonable on price. Being on the back pages could also attract buyers that perceive the negotiating power to be in their hands because the property has become stale and the sellers have become desperate.
If the idea is to set a high price and then take a 10% hit when negotiating then this sometimes fails, because Buyers will have high expectations.If your property disappoints the perceived standard your property should be at, you could potentially deter buyers. Holding out for the market to meet your price could also incur costs to sellers by ways of holding costs (mortgage repayments) throughout the campaign.
Is there such a thing as pricing the property too low?
Absolutley not. This is because if the competing homes are priced higher, your home will stand out and your home will attract more attention. This usually means, a higher number of offers and better quality of offers not to mention, competition. The end result should be the highest price the market is willing to pay. This is ultimately achievable by hiring a good negotiator that knows how to convey the true value of your home to the buyers and therefore drive the price up in negotiation.
Everyone has a dream of achieving a record sales price for their home, after all, it’s your own personal blood, sweat and hard work that was poured into it. With this at the forefront of your thoughts I urge you not to get carried away with the agent that seems to over promise and and gives you the highest property appraisal. It’s important to remain level-headed and realistic. Choose an agent you can truly trust and believe has the best negotiation skill set, not an agent who will lose buyers well after they have guided you to use the wrong campaign strategy too. Most importantly choose an agent who you will feel valued with even after signing the listing agreement.