Selling? Flip side of overpricing property

EVEN in the current residential market, with demand rising steadily and qualified buyers starting to outnumber sellers in many areas, there are homes that just “stick” in the market and take a lot longer than the average time to sell.

“Of course, some of these may have serious drawbacks, such as a bad layout or a position on a busy road,” says Jan Davel, the managing director of the RealNet estate agency group.

“And some may be suffering from deferred maintenance, so of interest only to those buyers looking for ‘bargains’ to renovate and resell.

“But the primary reason for a home not to sell, as always, is that it is overpriced in relation to similar homes in the same area, probably because the sellers have been too quick to raise their expectations in the face of the current positive market trends.”

Inexperienced agents may also be encouraging this thinking in some instances, he says, by agreeing to market properties at unrealistic prices just in order to secure mandates.

“Qualified and experienced agents, however, know just how much is to be gained by correct pricing, and just how easily buyer interest can be destroyed by over-pricing.”

For example, says Davel, it is a serious mistake to advertise at a much higher price than one is actually prepared to accept.

“Prospective buyers will generally not see this as an invitation to negotiate and are much more likely to simply exclude the property from their list of ‘possibles’.

“Even worse, they are unlikely to reconsider such a property even if it is subsequently advertised at a lower price.

“Any such reduction is in fact only likely to engender suspicion that there is something wrong with the property.”

On the other hand, he says, sellers determined to keep marketing their property at an inflated asking price run the real risk of it becoming over-exposed.

“Properties that stay on the market for too long also have a way of becoming ‘tainted’ in buyers’ minds and are then unable to attract even realistic offers.

“In fact, research has shown that interest in well-priced properties generally peaks in the period between three weeks and six weeks after it has been listed for sale, and that those which do not attract such interest but remain on the market will probably only fetch about 85% of their actual market value – eventually.”

This is another reason why, Davel says, it is in a seller’s interest to work with an established agent with the know-how and courage to help set a realistic asking price for the property, and the skills and resources to market it well and within the critical timeframe.