Setting the Right Price
It is said that moving home can be one of the most stressful events in our lives. As moving often occurs as a result of births, marriages, deaths, divorces, job changes and money worries – all themselves highly stressful events – then it becomes doubly difficult.
The first thing to understand is that whatever price is put on a property the market will eventually determine its true level. Set a price that is too high and bidders will make lower offers. Set a price that is too low and people will usually try to out-bid each other. Whichever way you go the eventual figure will be about the same. That is the way a free market works. Property is worth what someone will pay for it, which might not necessarily be what an owner thinks it is worth.
So which way will you go? Most people argue that if they set a high price then others will make offers if they are interested. This is fine in theory but in a market with plenty of choice most buyers won’t even bother to look at a property that is blatantly over-priced. There will be many others to see that aren’t. This means that all your potential buyers will be busy looking elsewhere.
For those at the upper end of the market please don’t hold your breath for City whiz kids and overseas buyers with more money than sense. First, they have more money because they have a great deal of sense and secondly they have largely made their fortunes through an aptitude to buy low and sell high - whatever commodity they are dealing in.
Understandably few people price property too low, but those that do often will have been given poor advice. This type of faulty pricing can also set the stage for a bidding war between several buyers who recognise a bargain when they see one and are all prepared to offer over the low asking price to secure it. This sounds very exciting but it will be messy and someone is going to get cross.
Another pricing technique is to ask for offers, or for offers over a certain guide price. This is useful for property that is rare or particularly attractive or distinctive. This method encourages bids and can be done on a formal or informal basis. The formal method may involve sealed bids that will be opened at a pre-arranged time.
Auction is another way to find a buyer. But this is most suited to houses of exceptional interest or investment properties. Many lending institutions choose to sell repossessed property by this method and many feel it is a good way of doing so.
But whichever way you choose to set the price of your property there is one golden rule – be realistic. You will then invariably find that the people you deal with will be realistic too. Be unrealistic and you will soon find how unreasonable some people really can be.