Finding the best pricing strategy has always been a vital part of selling a property, but it may be more difficult than before thanks to the events of the past year.
A market in distress
As the country continues to adapt to the events of 2020, the market remains volatile at best. When real estate activity became permissible under lockdown regulations, renewed market activity brought with it a more optimistic outlook. But as the initial rush settles and the country comes to grips with the long-term effects of the pandemic, buyer interest has slowly been diminishing more and more. This means that the number of potential buyers who will see your property listing is also diminishing.
This is why pricing right from the get-go is more vital than ever. Studies have shown that 85% of potential buyers will see your listing within the first 21 days. During this period your listing will have the most traction it ever will. When the price is dropped after this 21-day period, the listing will have lost its initial traction, resulting in less visibility from thereon out.
In a market where distressed properties often get the upper hand, retaining this traction may be difficult. As more distressed properties enter the market, novel buying opportunities are presented to buyers, with lower prices than usual becoming more abundant. Distressed properties are most often classified as properties that are being sold due to the homeowner falling into some form of financial peril. If distressed properties are listed for prices lower than the market norm, and even lower than their actual value, in times of financial distress, buyers may be presented with bargain buys you cannot compete with. This makes pricing right even more difficult.
The wave of distressed properties will, however, taper off as the market and the country adapts and the economy stabilises. This means that one of these days a truly competitive price will once again be able to be just that, competitive.
Considering the gambit
When it comes to researching property prices, buyers have all the information they need at their disposal. Even without the assistance of an estate agent, buyers are able to identify over-priced properties that should be avoided with ease.
There is a belief among many sellers that a property should be listed at a price greater than the property’s actual value. The hope with these inflated prices is that the buyer will try to negotiate a price closer to the price the seller had actually been bargaining on, allowing the buyer to feel like they “got a good deal”. However, due to the accessibility of information, this is a gambit most buyers will see through immediately. Inflated prices also quite often result in price reductions, leading to a loss of the valuable traction mentioned above.
This same accessibility to information is also what allows buyers to find out just how long a property has been on the market as well. And more than losing traction, having a property on the market for too long can result in doubt regarding the value of the property. When a property’s price is reduced continuously, it raises red flags for prospective buyers, quite understandably. While the primary reason behind any price drop is usually simply a readjusting to market activity, it may also seem to indicate instability and unreliability on the seller’s side.
Pricing a property as competitively as possible without the risk of running a loss is not a simple task. That is why you should always enlist the advice and guidance of a trusted real estate agent as soon as you plan on entering the real estate market. At Meridian, we will stand by you throughout the changes that are yet to come and ensure that your property is priced right from the start.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your adviser for specific and detailed advice. Errors and omissions excepted (E&OE)