Local Real Estate Comments from Peter Cooke and the Team at Richardson & Wrench.

> Setting the Right Price.

A vendor has two critical decisions to make when selling a house. The first is to select the right agent, which I covered in my January article, and the second is to set a price that enables the property to sell within a reasonable period of time.

There is an old saying in real estate that there is no such thing as a ‘wrong’ price, it is simply a matter of time. Of course, eventually everything sells. We once bought a property at the full asking price after only one short inspection. Unfortunately for the vendor it had taken five years of marketing to get it!

Price and time are proportionally related. That is, generally the higher the price the longer the time to sell. It is vitally important for every vendor to think about how long they want to have their property on the market before considering setting a price.

If a quick sale is needed, then the price will need to reflect that requirement. Conversely, if time is not an issue a vendor may elect to wait 12 months or so to achieve their desired outcome.

Vendors need to recognise that most buyers are becoming increasingly well informed about what is selling in their area of interest and at what price. The internet continues to be the research tool of choice and empowers buyers as never before.

The key to a quick and successful sale, apart from superior marketing, is the notion of VALUE. Vendors need to recognise that this is the key motivation for virtually all buyers in all market segments.

What is value? Purchasers will look at a number of comparable properties within a price range to see which one suits their needs best. A switched-on vendor will do the same research. They will price their property to represent value when compared to what else is on the market at that time. This is where your real estate agent should assist you by providing comprehensive comparable sales and on market research. They should suggest a selling range and be able to fully justify that recommendation by reference to comparable recent sales.

The comparable properties used should ideally offer the same level of amenity (type of construction, standard of finish, number of bedrooms, number of bathrooms, car accommodation, etc), be relatively close to the vendor’s property and have occurred ideally within the last three months or at most six months.

Sometimes it is not appropriate to set a price when marketing a property. The property may be unique or highly desirable, it may offer significant development potential, the market may be rapidly rising or the vendors might be highly motivated to achieve a sale within a specified time, and will meet the market to achieve it.

In these circumstances an auction or expression of interest sale may be the most appropriate. The important issue for vendors to recognise is that only a small proportion of property is sold in Armidale is by auction. Therefore, you need a really good reason to use this method, rather than a reason not to.

In summary, a correctly priced property will create buyer interest because of its perceived value. The increased competition this produces reduces the buyer’s ability to negotiate on price. In turn this enables the agent to vigorously defend that selling price and the vendor ultimately benefits.

Was it Confucius who once said “Price it right and watch it bite. Price it high and see it die”? Probably not.