The two most important requirements for people who want to sell their property are usually: “I want to sell for the highest price” and “I want to sell fast”. However, the problem is that those two goals often don’t go well together. In reality though, when selling your property you should aim for one or another and if a quick sale is not a must then achieving the best possible price should always be your priority. After all, there’s a lot of money on the line.
I sold my property in a few weeks, did I maximize price?
Not in most cases. To understand why selling fast does not correspond well with getting the highest price you have to understand how final price is negotiated. Usually the property is sold to the highest bidder so if you sell within a few weeks you’re betting that you’ve found the buyer who is willing to offer the most in a short amount of time. This could absolutely be true because when you first list your property for sale there’s a congestion of buyers that will see your property. However, even then only 50% of all potential buyers are likely bidding for your property which essentially means that you’re flipping a coin as to whether you’re actually getting the best offer or not.
Showing a property to more buyers will naturally take more time but will also very likely increase your chances of getting a higher offer as well. Of course there is a risk of holding off for too long and losing a buyer who inspected and actually made the highest offer in the beginning of the campaign. However, in most cases a seller can successfully delay their response to a bidder and give themselves more time to potentially get an even better offer or make the buyer come up. Best practice suggests that when selling property in one of the capital cities of Australia, preparing yourself for a 50 to 70 day campaign gives you enough time to acquire a large enough pool of potential buyers to maximize your chances of getting the highest possible price.
It is also interesting to note that research done in the United States discovered that real estate agents, when selling their own properties, keep them on the market for 9,5 days longer and get 3.7% more when compared to similar properties of their clients. This makes perfect sense because agents know that the longer you keep your property on the market the better your chances of getting more, however, when it comes to dealing with a clients property the sooner it sells the better it is for the agent because commission is paid only if a property is sold. What is sad is that agents in Australia often brag about their ability to sell a quickly when in reality that means vendors are likely missing out on thousands of dollars.
How should I price my property to get the maximum price?
As mentioned before, preparing yourself for a longer home selling campaign that lasts 50 to 70 days is recommended because it gives you enough time to get an optimal amount of interested buyers aware of your property but not too much time to miss out on offers made in the first couple of weeks. You can definitely go for an even longer selling campaign, however it is then very important to know exactly how much your property is worth to ensure you’re not wasting buyer interest with completely unrealistic expectations.
Research suggests that to maintain a good balance between the final selling price and the time it takes to sell your property, you should not list it for more than 5% to 7% over market value. This will allow you to have enough buyers inspecting and competing for the property to create urgency and get the best price. Properties that are overpriced by more than that will have problems in getting offers at all because the usual buyer has been searching the market for at least 3 months and will have a very decent idea of what your property is worth compared to the competition.
The goal of most home sellers is to maximize selling price which is completely understandable. Sometimes such emotional attachment means vendors overvalue their homes, but unfortunately often this happens because of an agents agenda. When agents come for an interview they know that owners will look for the best price therefore the agent who promises the most will have a better chance of getting the listing and the huge commission check. These agents know that the price they’re promising is too high and the property will never sell for that much, but they also know that the majority of vendors will be conditioned by the market and lower their asking price after a few months. They will still have you under contract and still collect the commission check, but you might miss out on great offers 5% over market value because your agent said they could get you 20% more. The best way to avoid this situation and know who’s lying and who’s not is to make the agent contractually guarantee that they will get you the price they suggest and if not you don’t owe them anything.
At the end of the day, each home seller is entitled to pricing their property however they want, but overpricing it by more than 7% is going to exponentially increase the time it takes to sell. There’s always a chance someone who falls in love with your property comes along and is willing to pay much more than market value, but that might take 6 months. In some cases this could actually be the best strategy for your individual situation, as long as you understand what you’re trying to achieve and don’t put yourself in a position where after months of trying to get an unrealistic price you suddenly have to sell quickly.
At Inreal, we follow the Smart Selling Blueprint™ to ensure the price of your property is maximized. Each campaign has to be adjusted to the sellers individual situation, but we often suggest to start by listing your property for 5% to 7% over market value based on current market conditions. In doing so, we can assure that we avoid valuation errors, sustain healthy buyer enquiry levels and give you the best chance of getting more than market value.
Inreal Property Advisory is a full service real estate agency – we take care of the whole home selling process for you, from start to finish, for a fee that is fair for everyone.
Get in touch with us to discuss if we could be a good fit for you as well, don’t settle for ridiculous commission fees. Give us a call at 1800 865 011, text to schedule a call for another time or simply check us out at inreal.com.au.
Inreal Property Advisory is a licensed real estate agency in New South Wales (licence no. 20237732).
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