While there are valuations tools available to sellers online, to set the right market-related value, requires specific area knowledge, an understanding of the conditions surrounding the market and insight into the mind of applicants.
And according to Peggy Su, RE/MAX London Regional Directo, perhaps the most common mistake made by homeowners wanting to sell their property is incorrectly pricing their home for the current market.
Peggy says: “There are a number of factors that influence property pricing, which is why setting an accurate market-related price can be more difficult than it seems from the onset. Two properties could be located in the same neighbourhood, but certain distinguishing features could mean that the perceived value of one is higher than the other. Determining an ideal listing price can only be accurately done if all the external influences are considered and weighed in.”
She adds that pricing a home to sell is an art that takes into account market movement, buyer demand, the home's condition and yes, its location. Another important aspect that affects pricing is the term of the lease, as well as any restrictions it may contain. “An experienced, real estate professional who markets homes in the area will be a valuable tool in finding the right price to list the property.”
Why is the listing price so crucial? According to Peggy Su, if a home that is perceived to be overpriced it will be overlooked by applicants and will sit on the market for longer than necessary. An inflated listing price will also make comparable homes appear to be bargains – when actually, they are just priced correctly. Overpricing the property will help to sell your neighbours’ home instead of yours. “On the other end of the scale, pricing your property below its perceived market value means possibly leaving money on the table, sacrificing profit unnecessarily,” she says.
So what aspects do agents look at to find the ideal listing price?
The neighbourhood sales history
Reviewing the sales history of an area over the past six months will provide the agent with insight into what buyers are prepared to pay for homes situated there. Time homes spent on the market is also a consideration, along with the gap between the initial asking price and the eventual selling price.
Other factors that might have an affect the properties exact value include its proximity to excellent schools and other sought-after amenities, the condition of the property, its size, finishes and fixtures, and any other features that could set the house apart from others in the areas.
While certain elements such as government policy, access to finance and unemployment will impact the property market throughout the country; there are specific aspects that impact micro markets in particular areas.These aspects could include new companies moving into the area or plans for improving local amenities such as parks or shopping malls. Agents will look at the unique elements affecting the neighbourhood and consider the influence this will have on the perceived value of the property. Both the wider general influences and localised factors will have an impact on home’s potential perceived value among applicants.
Type of property
Is the home a freehold or leasehold property? If the home is a leasehold property, the length of time remaining on the lease will have a bearing on its price in the market. A home with a lease that is more than 80 years long will be more expensive than one with less. A property with 50 years or less on the lease is not generally mortgageable and can only be purchased with cash – this cuts down the pool of buyers and impacts the price.
Listing the home at a price that is ‘just right’ from the outset is key to selling within the fastest time frame and for the best price - it all about finding the sweet spot or the Goldilocks price.
Peggy Su concludes by saying that working with a reputable, experienced real estate agent to ensure the home is listed at the correct price from day one, will ultimately make all the difference in achieving the vendor’s goal.