Posted on 24/08/2017 by Todd Pearce
It is common practice to inflate the projected selling price of a property by a small percentage to allow for purchasers to negotiate. It also allows for fluctuation in the market created by temporary surges in purchase numbers. Unprecedented levels of competition at the time of releasing the property onto the market sometimes result in a property selling for the asking price.
Properties in a highly sought alter category or in locations where there is a shortage of property for sale usually have more room to inflate their asking prices. However for most properties careful consideration should be given to the amount of negotiating factor. If a property is more inflated than other similar properties on the market, the listing agent will have to “puff" the ad to attract purchasers to the property.
Over pricing is just the first in a series of events that causes the property to become stale on the market.
It's a Catch 22 situation, If the ad is not as "puffed” as the price, the property will not attract Inspections. On the other hand if the ad exaggerates the property's charms, purchasers will be disappointed when the reality doesn't match their expectation and the property will not sell.
In fact serious over pricing targets entirely the wrong market and gives any interested party a psychological advantage.
Purchasers feel they have plenty a time to make up their mind because they know that the price is putting most people off. Properties that stay on the market for a long time at too high a figure often fail to attract offers. Ironically, this very strategy which the less market aware vendor uses to maximise the selling price ultimately lowers it.
The right negotiating factor should make purchasers feel the need to get in before someone else does.
Astute pricing is crucial to generating the kind of excitement and competition that will ensure the house sells in the shortest possible time for the highest possible price.