By Perry Power, property sales specialist at Perry Power
Have you ever stopped to ask your estate agent exactly why they’ve decided to market your property at a particular price? Not the value itself necessarily (which should be based on the current market and sales prices for similar properties in your area), but the way they’ve presented the price. After all, when it comes to selling a property, setting the right price is crucial.
There’s a fine line between listing a house at the right and wrong price. One will help your property attract lots of attention, which will normally result in a large number of viewings. The other is likely to lead to deafening silence, so it’s important to get the price right from the start.
You’ll know very quickly if your estate agent has it wrong by lack of enquiries. If it has been set at the wrong price and your house begins to stagnate on the market, it’s likely the estate agent will ask you to reduce the price to attract more viewings. Make no mistake; this can have a devastating effect on the property’s saleability – and your profit.
It’s common, but not always advisable for an asking price to be based simply on the figure you hope to achieve, and a few thousand pounds added on for good measure in the expectation that a potential buyer will haggle. Unfortunately, it usually results in the buyer offering a lower price than that stated.
The most common pricing strategies used are:
- an asking price
- a guide price
- an ‘Offers in Excess Of’ price, and
- no price at all – ‘Price on Application’.
The approach you take depends on your individual property at the time it goes onto the market. Don’t always assume that listing the house with a straightforward asking price is the best way to market your property.
If you choose to use an asking price, make sure it’s set very close to the actual value of your property. Buyers aren’t fools, and if you set an asking price 10-15 per cent above the value, you’ll struggle to secure viewings. Buyers will think from the outset that your property is above their price range.
A guide price presents more opportunity, offering the buyer a little more hope that they can afford the house. This style of pricing can take two forms:
- A figure that is close to the value of the property, for example ‘guide price £500,000’.
- A price bracket, for example ‘£480,000 – £520,000’.
Be aware that a price range tends to encourage potential buyers to offer the lowest figure. And by adding the words ‘guide price’ instead of price bracket gives the impression that sellers will accept offers either above or below this range.
Where the price of the property needs to compete visually with other properties in order to attract viewings and encourage potential buyers to appreciate what the property has to offer, the ‘Offers in Excess Of’ phrase can prove very effective – particularly if your home is validly priced higher than other neighbouring houses.
The ‘Offers in Excess Of’ phrase is also useful in discouraging low offers. It ensures the house shows up in online property search engine result pages up to, and including the given figure, while making it clear from the start that you won’t consider offers any lower than this.
‘Price on Application’ tends to be used for properties at the higher end of the market This can be a good approach for properties where the level of demand is expected to be less than usual, perhaps due to a very high price. Its main purpose is to entice interested parties into contacting the estate agent to ask the price. This allows the agent to begin a conversation with them and encourage them to view the property.
On the other hand, if you have a house with a value of £500,000 and market it at £600,000 you’ll receive little interest. Viewers will quickly decide that it doesn’t appear to offer good value compared to other £600,000 houses on the market.
Image credit to Perry Power
