How Critical is Pricing to Buyers?

Just how important a role is Pricing when it comes to selling your property?  Many sellers are tempted to list at a price higher than the market value of their home in the belief that they can always drop their price later if they need to.

The reality is that buyers know what a property is worth within a few minutes of viewing it. Image Buyers shop by comparison – which means they will look at a number of properties before making a purchasing decision.  They will weigh up the advantages and disadvantages of each property and have a really good idea of the market value.

Buyers respond to the list price and will typically look at properties listed up to 7.5% more than their maximum purchase price, anticipating that some properties may be slightly negotiable.

What that means is that, if you overprice your property by 20% you will attract the wrong buyers – buyers who are expecting a home worth more.  You will miss out on attracting the right buyers in the correct price range.

Pricing is very sensitive.  Even being fractionally overpriced could mean that a buyer chooses to negotiate on another property that he perceives offers better value.

Time and again it’s been proven that properties sell for the most money when they are correctly priced from the beginning of the listing.  That’s because price creates interest.  Buyers are attracted to the property, they compete against each other for the property, and they make good offers that are in line with market value.

So if you are a seller and genuinely want to sell your home it’s critical that you list at the correct price – a price that is at market value.  The longer you stay on the market, the less you will sell for.

There are two different marketing methods available to sellers:  Marketing with a price, and marketing without a price.

ImageMarketing with a price will usually attract the best response and generate the most buyer interest, but only if the list price is correct and attracts the purchasers.

If a property is listed at the wrong price then all it does is turn buyers away.  It’s not unusual for a property to be listed for a year or more.  Sellers don’t always appreciate how this damages the saleability of their home.  Buyers will almost always as the estate agent how long a property has been listed for.  If the property has been on the market for an extended time they often make offers considerably lower than the list price, even if the price has since dropped to represent market value.

So if you choose to market with a price, then make sure the list price is correct.

The alternative is to list without a price – and this method will be discussed in coming weeks.

However it’s important to appreciate that, irrespective of the marketing method used, the most a property will sell for is the Market Value.  No amount of marketing or clever sales talk will be a buyer to pay more than a property is worth.

Price correctly.  Listen to the market. The buyers will respond.

Steve Caradoc-Davies

Principal of Harcourts Platinum, and Director of Harcourts South Africa

Email your real estate question to steve.cd@harcourts.co.za.

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