Initial asking price, why it really matters.
It has to be said that the Derby property market is buoyant, with properties selling quickly and usually achieving asking prices, however, it’s still important to remember that even in a buoyant market, setting the right asking price can be the difference between achieving a sale and sitting on the market for a long time. Of course achieving as much as possible for your property is top priority, but even in a rising market, over valuing can be an issue. Whilst asking prices have been rising fast over the past 2 years, some signs are pointing to a levelling up of supply and demand, meaning asking prices and achievable sale prices are more finely balanced than ever before.
Getting the initial asking price wrong not only delays finding a potential purchaser, but it can mean that you are basing any onward purchase on a figure that might not be achievable, putting your whole move in jeopardy!
So what can go wrong?
Well, as Rightmove say, you will get the most interest in your property in the first 2 weeks of marketing, so, going on the market at a price that is too high means you could be wasting the most valuable ‘marketing window’ If your property is getting overlooked, especially if other similar properties are getting interest, it could be a sign that your initial asking price is too high.
Boosting your competition.
All properties are visible now, whether we like it or not, on every property portal and on every agents website. If your property stands out as being perceived to be ‘more expensive’ than comparable properties in the same area, you not only miss out on potential purchasers viewing your home, you actively drive them to view other properties in the area which will seem to be a ‘bargain’ Buyers have access to a wealth of information on the sale price achieved of local properties, so going on at a higher price, unless your property is significantly different from comparable properties, really wont do you any favours.
So what is over valuing to win business?
It’s no secret that in this market, new stock is a rare thing, agents are desperate for property and buyers are at an all time high, prices have been steadily rising to record levels. However, there are only so many properties to go around, this is where some agents use a tactic called ‘over valuing to win business…’
List and drop...
We’d all like a little bit more money wouldn’t we? So, if an agent came to value your home and suggested you could sell for £50,000 more than another agent had quoted, you’d jump at the chance! The difficulty is, as with any marketing valuation, there’s no guarantee as to what the final selling price will be.
The problem comes when you take a look at the agents contract or agency agreement. Some agents will ‘tie you in’ to a 12 week, 20 week or even a 24 week contract, meaning you can’t take the property off of the market with them, or market the property with anyone else for a very long time.
Reduce…Reduce…Reduce
During this tie in period, you will most likely receive calls from the agent suggesting that, after initial interest but no offers, the price of your property might need reducing in order to achieve a sale, now, this can happen naturally, if the market changes, demand for properties in an area drops or if similar properties are struggling to sell. However, it could be that you end up eventually being on the market for a lower price than initially suggested, or selling at a price that other agents had suggested was right at the beginning…
Time is money…
By this point, several weeks will have passed, other properties in the area may have sold and you may have missed out on the property that you really wanted to move to. However, your agent will have effectively stopped you from going on the market with another agent and sold your property for much less than they initially suggested you could achieve.
The good news.
You can make sure that you get the best price for your property in the quickest time possible by asking one simple question: “Do You Have Evidence to Support Your Valuation?”
A good estate agent will provide you with plenty of well-researched comparable evidence to support the valuation of your property. Ultimately, it is the price of similar local properties that have recently sold which will dictate the price you can achieve for your own (plus adjustments for any increase in demand for similar properties) If your agent presents you with a surprisingly high valuation and cannot provide evidence to support it, they may have an ulterior motive that is not in your best interest.
We hope this article has been informative and if you want to find out more about what to ask during a valuation to make sure your move goes smoothly, you can check out our ‘Choosing The Right Agent’ article here.
As always, if you need any advice about the moving process, buying, selling or renting, just pop in and speak to Derby’s local agent! You can find your nearest Hannells branch HERE.
