Selling a home comes with plenty of challenges but one of the biggest is this: How do I set my asking price? Getting great advice from a trusted local agent is important but it’s good to have some simple guidelines you can fall back on too. And here’s a very reliable one:
1. If you’re on the market but receiving no enquiry and no inspections (and therefore not a nibble of an offer) you’re probably at least 10% over the market price. Yes there’s some exceptions to this rule. If you haven’t advertised the home, not put up a sign (the best value marketing by a mile) or your agent is a turkey who doesn’t return calls/emails, that’ll make it hard to get enquiry. And if your property is something genuinely unique, that will only ever appeal to a small slice of the market, your enquiry might be thin on numbers. But provided you haven’t kept the sale a secret, and have done at least the basics of promoting it, you should be getting inspections.
Why won’t buyers take a look anyway, even if they think the price is well over the odds? Buyers are like the rest of us – time poor. They have a world of choice right there on their Ipad and your place only gets them off the couch on a Saturday morning if it’s at least a bit compelling with its appeal. This 10% guide isn’t something we’ve dreamed up, but a common industry guideline that’s proven its validity over many years.
One good example: we track the margin our clients reduce their asking price by to secure a sale. In the past six years at Bees Nees we found a buyer with a 10% or bigger drop from asking price to sale price on just 8 occasions. That’s not to say we didn’t test the market at a higher price – we do this very regularly. But from final asking price to actual sale price we average just a 2.8% reduction. If you can only hear the sound of crickets at your open home there’s a good chance you need a 10% price adjustment.
2. So maybe you’re getting inspections. There’s the occasional promising nod or comment about bringing a partner back. But nothing eventuates, no offers and despite a positive approach you’re left feeling unloved by an uncaring marketplace. The guidelines suggest you may be 5-10% overpriced. Consider this: very few buyers who come to an inspection are really “tyre kickers” as your agent may refer to them. They chose to inspect it, it must meet at least some of their criteria, and they took time to fit it into the crazy Saturday schedule so many of them rush through. If they don’t like it enough to make an offer there’s a good chance you’re attracting the wrong buyers. They’re expecting, and finding, something better for that money. You’re actually helping them see better value in something else.
You might still get an offer.. In 12% of our sales we’ve seen a 6-9% reduction. But this is also the point in the market when many sellers give up in frustration. If agents had a dollar for every seller-client who said “they can always make an offer”. Lots of inspections but nothing happens. The good news is it that it doesn’t take a big change in price to get some action.
3. Offers will come with good regularity once you’re within 5% of that elusive “market value”. This is the sweet spot when you’re often able to create some competition through multiple offers at the one time. Often better than an auction for the seller, this sees buyers asked to submit their best offer without knowing the details of the others. Our job is to maximise the sale price for our seller clients and this is one of the best opportunities. In 21% of our sales we’ve met or exceeded the asking price. A good agent knows how to do this.
Buyer interest is highest when you’re fresh to the market so it’s no surprise that the best sales prices we ever see are when a client puts their place on the market from the start in that 5% range.