Jun 29, 2023 8 min to read
As an estate agent, your role is not only to connect buyers and sellers but also to provide professional guidance and support throughout the sales process.
One crucial aspect of your job is to ensure that the initial asking price reflects the current market value of the property.
Why is it so important to get the price right?
Reduced properties face numerous challenges in the market. In fact, properties that have had a price reduction, of any amount, are 10% less likely to sell, take twice as long to sell, their fall-through rate is double and there is a much higher chance of losing that instruction to a local competitor.
Next time you meet a seller who’s adamant on trying ‘their’ price (or another agent’s stratospheric price), simply repeat the last sentence back to them (except for maybe the last point).
If your seller’s need to hear more, take note of the following.
When a property is initially listed at a higher price and then reduced, potential buyers begin to perceive it as a less desirable option. They may question why the property did not sell at the original price, leading to doubts about its value and condition and even if the price is right after the reduction.
Timing is everything. When a property stays on the market for an extended period (more than 6 weeks without a successful offer), it creates a negative impression. Buyers might assume that there are underlying issues with the property, leading to fewer enquiries and limited interest.
Deals are already hard enough to hold together. Don’t give yourself more of a battle. When a property goes through even just one price reduction, buyers may question the seller’s motivation and negotiate more aggressively. This can lead to an increased fall-through rate, as the deal may fail to meet the expectations of either party during conveyancing as the ‘honeymoon’ period after the offer is made and accepted wears off.
So how can you help your sellers see the market for what it is?
There’s no secret sauce or new tactics here, it’s just old fashioned, honest, courageous advice and guidance. It’s being a professional estate agent.
Conduct a comprehensive analysis of the local property market, considering all comparable properties both recently sold and on-market (using a property that has been on the market for a long time, and reduced, is a great way of showing a seller a glimpse into the overpriced future they want to avoid).
Be super up front. Open and honest communication is crucial when discussing pricing with your clients. As we’ve already discussed, run through the points above, almost as a script if you need one, to help them truly understand the potential consequences of overpricing.
And finally, educate clients about market dynamics. Most sellers may have unrealistic expectations about the value of their property. As the professional, it is your responsibility to educate them about the current market conditions and after you’ve walked them through the challenges that come with over-pricing, you should then talk to the benefits of nailing that asking price first time around.
Explain to your clients that accurate pricing can lead to a competitive advantage. Properties priced correctly from the start tend to attract serious buyers who are more likely to make strong offers early in the campaign (within that first 6 weeks).
Bringing it all together, every estate agent working today knows how important it is to get the asking price right the first time around, yet so few are willing to have those crucial conversations up front with their sellers. Use the facts, strategies and dialogue listed in this article to differentiate yourself from these other agents and watch your business grow.