HOW AGENTS DETERMINE AN ASKING PRICE
While it is possible for homeowners to research certain information online, it is very difficult to accurately value your property without having the specific area knowledge, real estate experience and market savvy to set a realistic asking price.
Here are a few elements that real estate agents look at when determining the right, most competitive asking price for a home:
Interpreting past sales
Looking at similar listings online can give you an idea, but there are other aspects that come into play that could place your home at a different value in the market; this is where the services of an experienced real estate professional can be extremely important. Real estate practitioners can access the sales prices of homes in the area over the last six months, which will give them some insight into what buyers are prepared to pay for homes in that suburb. Careful consideration will be made to how long each property sat on the market, as well as how the initial asking price differed from the eventual selling price.
Comparative Market Analysis (CMA)
This is the accepted method to determine a property's value accurately. Information and statistics are gathered from various sources and compiled to determine the average price per square metre of property in the area. By determining the square metre pricing, the agent can compare apples with apples. Once this base has been reached, it is far easier to give an accurate appraisal of the property, taking into consideration any other factors that might have an affect the property’s exact value. These factors would include the condition of the property and its size, security features, finishes and fixtures, and any other features that could set the house apart from others in the areas.
Reviewing market trends
There are wider elements that will impact the property market around the country, such as interest rate hikes and access to finance – and this information is widely available to the public. But, there are unique aspects that influence the sale of homes in any particular area, including plans of new companies moving into the area or plans for improving local amenities such as parks or shopping malls. Real estate practitioners will look at what is affecting the market in the neighbourhood and consider the influence this will have on the perceived value of the home. Both countrywide influences and local factors will have an impact on home’s potential perceived value among buyers.
Considering the neighbours
While a home in the same neighbourhood – approximately the same size and age –could have recently sold for a high price, if the seller’s home is surrounded by run down homes or noisy neighbours, they may not have the same fortune. Unfortunately, it is largely out of the seller’s hands, but the neighbouring properties can influence how buyers value the home.
Arriving at the ‘Goldilocks price’
Finding the asking price that is ‘just right’ from the start is crucial to selling it within the fastest time frame and for the best price. Over-pricing can chase away buyers from the start while pricing the property too low will leave money out on the table. A property price that is inflated by around 10% above its market-related value is much less likely to sell within 30 days of it being on the market, compared to one that is priced within 5% of its market value. An inflated asking-price can have the opposite effect to what the seller intended, especially if the over-pricing leads to the property sitting on the market for longer than it should and becoming stale. There is often a negative association with a property that has been on the market for longer than the average time, which can lead to it eventually selling for below its actual value.
Get in touch with a reputable, experienced real estate agent to make sure the asking price is correct from the outset. This will ultimately make all the difference in achieving your goal.