"Hear me I'm graphically yours”
Michael Maloco is Senior Partner of maloco + associates, Dunfermline, one of ESPC’s member firms. Here he explains why it’s so important to set the right asking price from the outset.
Clients often try to persuade agents and surveyors to take home report valuations to the maximum which the surveyor feels able. They reason that this will allow them to set their asking price more or less at a level which affords them "wriggle room" and downward negotiation to a price they are prepared to accept. The premise of this argument is fundamentally flawed and here's why.
The first few weeks
The first two to three weeks of a property’s exposure to the market sees the greatest number of viewers. Advertising and agent pro activity should ensure a steady number of viewers. It is vitally important that this number be maximised and that the skewed logic of setting an unrealistic asking price does not dissuade viewers. Most buyers will be viewing multiple properties and will quickly suss the going rate for the type of property they want to buy. New property coming to market at an unrealistic price suffers and seldom reaches expected viewing levels.
This is neatly illustrated in the graphic above. The dotted line represents true value, the horizontal scale time on market and the vertical, price. The yellow line shows the upsurge in early viewing and the peak of activity occurring a few weeks in to marketing. It is here that a seller must harvest interest and secure an offer. Chase off buyers by setting unrealistic asking prices and viewers vanish. The purple line represents the falling expectations of the disappointed vendor now pitching to a dwindling number of viewers, eventually selling at a price below that which could have been attained had the property been correctly priced.
Prices changes are sometimes unavoidable but…
Repositioning in the market by dropping price is sometimes unavoidable, but the need to do so can be reduced by a realistic asking prices. Price changes are picked up on by buyers. They often know the price at which a property was previously advertised. The home report tells them how long it’s been on the market and they smell fear – real or perceived! The chances of securing home report value or asking price at this point are frankly slim.
Be guided by the experts
You’re paying for their expertise so listen to them. After all you wouldn't tell your dentist what to do and how to do it and using their services is even less fun than dealing with solicitor estate agents!
Michael Maloco is Senior Partner of maloco + associates, Dunfermline, one of ESPC’s member firms. maloco + associates have won a number of industry awards and since 2006 have been the number one selling ESPC agency in West Fife and Kinross.
(Oh and the title of this piece in case you were wondering rides the current Bowie Zeitgeist, being a line from “Big Brother” from the 1974 album Diamond Dogs.)