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Setting a Price for your home
There are several options for determining what price you should market your home at.
Similar properties may
have sold nearby which gives an indication what you could expect, coupled
with your own knowledge of the respective properties condition and benefits
or features. Local papers usually carry property adverts that can again
boost your local pricing experience.
Your neighbours will usually need little encouragement to offer opinions on
local pricing. As a belt and braces option the Land Registry offers pricing
statistics via the internet which although averaged and a few months old
provide a comforting guide.
It is often said that the price advertised does not accurately reflect the price accepted, but at this stage as you are advertising rather than setting a contracted price, you can leave some margin for either negotiation or inflation.
The most frequent method is to ask a local firm of Estate Agents to suggest the price that they would market your property for. Again they will not know the exact price you are going to get. That is the Holy Grail in Property Marketing. They will give an opinion based on all the appropriate local factors, what your property offers and its condition. The answer they give will also be influenced by their own firm’s position and how hungry they are to get the sale. You should do the research already mentioned, to help you determine whether to accept their recommendation or not.
A third method is to
get a surveyor to provide you with a valuation. This does have an associated
cost, but the benefits are that you have a documented figure provided by an
independent third party who has no interest in massaging the figure to
secure a contract. Also if there are any unpleasant shocks, you will be
prepared and have the option to rectify the problem, or make buyers aware of
it and confirm the price reflects this.
If buyers come back asking for a reduction to do
their own rectification you have had a chance to determine a fair reduction
for the work, although this last silent approach may cause bad feeling with
your buyer.
A refinement to the process is the expected introduction of seller’s packs with a Draft Bill planned for February 2003. The pack aims to provide copies of
• Draft consents and approvals regarding planning and
listed building consents and building regulations
• Current warranties and guarantees
• A specimen draft contract
• A home condition report based on the current
homebuyers report and the full structural survey
• An energy report on the property
• If leasehold, details of the lease, service charge
details and receipts, insurances, details of the landlord or management
company and current & future works planned.
Finally, there are websites that allow you to get price comparisons for properties in different areas. You can input your specifications and location and find the number and value of properties sold of the style you select. Please be aware that this information is backward looking rather than forward looking and is only an indicator. Do not use it as your prime source of information. It is a backup facility to give comfort.
As a rule of thumb a higher price is better than a lower one. The reasoning that you can accept a lower offer is sound. It is always difficult to say with any integrity to a buyer “thanks for the offer, but I want a higher price than I originally asked for”.
The downside, isn’t there always a downside, is that if you set the price too high you may miss out on serious buyers.
In addition if you get no interest after a while you can always try a price reduction.
It is true that time is money. There’s a relationship between the price you set and the time your property takes to sell. You may wish to trade off cash for time. By reducing the price initially you get more interest, however remember that you are showing buyers round. You need to ensure that a viewing results in an offer.
In sales terms you have to begin to close the sale. This is relevant whatever price you set. It’s your time is spent on viewings, so make them effective.
Conversely, there have been situations where so much interest has arisen on a property that several offers have been received at the full asking price. The vendor will either choose the first to view or offer, or the buyer in the best position to proceed or try to get a higher offer to clinch the deal.
An Estate Agent’s tool in such a situation could be inaction, expecting a buyer to become uneasy and break ranks with a higher offer to secure the property, or to suggest to all parties that they make a higher offer or offers or finally to ask for best and final offers. Of course there is nothing stopping a buyer making such an offer and then increasing it. This is the territory of gazumping, an action frowned on by most parties involved and only the seller's conscience can dictate the choice of this route
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The-PropertyLadder.com. All rights reserved.
Revised: 20 March, 2003.