Sellers – beware of Price Trap
February 10th, 2015 by Geoff Baldwin
Asking several agents to provide appraisals then establishing an asking price based on their opinions is costing sellers thousands in time and money according to RE/MAX WA Managing Director, Geoff Baldwin.
“Many prospective sellers invite three or four agents to provide appraisals of their property so as to ascertain a likely selling price and often fall into the trap of adopting one of the highest prices quoted however this can actually cost money rather than gain more”, he said.
“The biggest driver in the buying process is emotion however it is impossible for a buyer to fall in love with a property if he or she never has it on their list to view and the biggest barrier to viewings is incorrect pricing.
“The records show that buyers invariably spend five to ten percent more than they initially budget and this is because they are often disappointed with what they are seeing or because they see a house above their budget, fall in love with it and simply pay what they need to pay to buy it.
“Choosing a price based on agents’ opinions and then adding another $10 or $20 thousand for “negotiation” will only ensure that the wrong pool of buyers are viewing the property and that the correct pool are simply not putting it on their shopping list.
“In addition, it is often the case that the agents’ opinions are wrong because they can’t take into account the emotional attachment of a buyer.
“It is common when several buyers are interested in the same property, especially where there is no price indicator, for those buyers to make offers that differ by tens if not hundreds of thousands of dollars.
“For this reason, using the age old approach of placing a fixed price of a listing and then hoping to attract multiple viewings simply no longer works and for that reason, sellers should be looking for agents who offer a more strategic approach.
“Adopting a fixed price above the expectation will also ensure that at the start of the listing when interest is at its highest, the wrong buyer pool are viewing the property, if anyone at all.
“Auction, Buyer Feedback Ranging, Set date sales, etc are all invitations for buyers to view the property without the barrier of a fixed price that often scares them away.
“Once a buyer has seen the property, if they are attracted to it they will pay whatever they need to within reason, to make it their own.
“Sellers should steer away from a conventional fixed price and appoint an agent who can sit down with them and construct a marketing and pricing strategy that will ensure the sale price is maximised through eliminating barriers and maximising competition”, Mr Baldwin said.