It goes without saying that homeowners who put their property on the market are looking to get the best possible return on their investment.
According to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, a key element that will sell a home is the asking price, so having a sound pricing strategy is an absolute must for sellers in order to find the right buyer for their home.
“Even though we are currently in a seller’s market, homeowners still need to have a plan of action if they want to get the best possible price for their home. Home buyers have a vast amount of information at their fingertips and most have a good idea of fair market value. As such, sellers need to price their property accordingly to ensure that they will attract the right buyers to the property,” says Goslett.
He notes that there are six common pricing mistakes that sellers should try to avoid:
Probably the most common mistake that sellers make when it comes to pricing is inflating their asking price to make room for negotiation.
“Due to the emotional attachment homeowners have to their home, they will often see it as the best in the neighbourhood and will set a price that is relative to the value they perceive. However, sellers need to remember that it is important to appeal to the value that the buyer sees,” says Goslett. “An overinflated price will leave out strong potential buyers, especially if statistics and recent sales figures of other properties in the area don’t support the asking price. The seller will run the risk of multiple price reductions, which could have the home sitting on the market for longer than necessary.”
2. Disregarding recent home sale prices
There is often a difference between what homes are listed for and what they actually sell for. Goslett says that in order to arrive at an asking price that will generate buyer interest, a seller cannot merely base their assessment on what other homes in the area were listed at, but should rather consider what price they actually achieved. An experienced real estate professional will have access to this kind of information and will be able to provide valuable guidance to sellers in correctly determining a fair market value.
3. Not considering online search parameters
Around 90% of all homebuyers will first search online before using any other form of media to look for a property. As such, it is extremely important to consider this when setting an asking price.
“All online property search portals will require the user to enter a price range in order to narrow down their search options. If the asking price is R755,000 and the buyer’s price range is from R700,000 to R750,000, they won’t see the home in their search. By listing the property at R750,000, there will be a far greater chance of capturing potential buyers in the ranges above and below the asking price,” advises Goslett. “While the final decision will rest with the seller and their agent, it is worthwhile considering the search portal price ranges that the property will fall into when setting the price.”
4. Being overcreative with the price
Choosing a round number is far easier for all the parties involved. There may be some distinguishing features of the home that could lead the seller to list their property at an unusual number, such as R715,544. This may divert the buyer’s attention from the property and onto to seller’s intentions. It is far better to stick to simple figures and leave the creativity to the home’s marketing.
5. Being closed to negotiation
The fastest way to kill a deal is by not being negotiable on the asking price of the property.
“Depending on the circumstances, a seller may be less or more inclined towards negotiation. This will largely be influenced by how quickly they would like to sell, as well as how much money they require to get out of the sale. Staying steadfast on the asking price and not being open to negotiation on either the price or other conditions, could mean that the seller is in for a long and bumpy ride during the selling process,” says Goslett. “Sellers may need to decide whether is more important to get the full asking price and have the home on the market for longer or whether they could make a few concessions and close the sale.”
6. Not taking the agent’s insights into consideration
Choosing a reputable agent with area experience will put the seller on the right path to setting the correct asking price. An agent will have access to resources and information that the homeowner will not. They will also be able to base their assessment on facts and figures, without bringing emotion into the equation. An agent will be able to provide an unbiased opinion, looking at the situation from all angles, such as the home’s features, the local market, recent sales and more.
Goslett concludes by saying that avoiding these common mistakes and setting the correct price for a home at the outset will ensure that it will attract the right potential buyers, which will result in the seller achieving the best possible price for their home, within the best possible time frame.
This article “Avoid These Home Pricing Mistakes!” was issued by RE/MAX of Southern Africa.