#PropertyReport: Price high if you want a below market value offer

If you are looking at selling your property there are two things you need to get right.

You need the right agent and you need to set the correct asking price. Both are obvious, but I want to discuss what is not obvious to a lot of sellers: If you price too high, you will walk away with a lower than market value offer or at least a lower offer that you could have got if you had been more realistic in the beginning.

A lot of people think, I can start high, see if I get any bites and then I can always take a lower offer in the future or drop my price because I’m not in a rush.

That might be possible, but invariably you will walk away with less.

It is understandable that a seller wants the best possible price for their biggest asset and therefore it’s understandable for them to up the asking price “just in case” the “perfect buyer” walks through the door.

But here is where the challenge comes: selling a house is part science, part art and part psychology.

First of all, the first 2-4 weeks are crucial.

This is where all the excitement for a new listing is.

Genuine buyers are actively looking and qualified to buy and quality agents are on top of their best buyers at all times.

If you list a property too high in the beginning, the buyers will either miss the listing altogether or decide not to view it.

An educated buyer has a good understanding if something represents fair value or not and an agent, who should definitely know what fair value is, may choose to not even waste their hot buyer’s time on something that is overpriced.

So you will be off to a bad start in a period where you want the most action.

Secondly, this all now results in fewer viewings than there should be and with no or very low offers.

This is where the psychology part comes in. It’s hard to explain this any other way but what nearly always happens is if the buyer feels the seller is asking a ridiculous asking price, they in turn make a ridiculous offer.

This is not accepted and because the gap starts too big, you will hardly ever reach an agreement.

Once this period is over and the time starts to drag, buyers start to see what they consider to be an old listing, one that is overpriced and they will start to think the seller may now be desperate to sell.

At this stage the seller is now no longer able to wait for his price and will inevitably start to have to look at some of those lower offers and take one below the agent’s original valuation.

The temptation will always be there to try for that little extra but unfortunately it’s often a high risk strategy that backfires.

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