Wed 05 Jun 2019

Kay Fogg, Benfleet Sales Administrator

Why it is important to set the right asking price

A common mistake among sellers is to set an unrealistic asking price for their home. RE/MAX London offer their advice.

Although there are valuation tools available online, setting the correct value requires specific area knowledge, an understanding of market conditions and an insight into the minds of buyers.

A number of aspects affect property pricing which is why setting the best price can be more difficult than it seems. Two homes could be situated in the same neighbourhood across the street from one another but certain distinguishing features could push the perceived value of one much higher than the other. Determining the listing price can only be accurately achieved if all external influences are considered.

Pricing a home to sell takes into account market movements, buyer demand, the condition of the home and of course, its location. Another vital aspect that impacts pricing is the term of the lease, as well as any restrictions within it. An experienced, reputable estate agent with specific area knowledge will be a valuable asset when trying to establish the correct listing price.

Why is it crucial to price the home correctly? If buyers view the home as overpriced, it may be overlooked and will sit on the market for longer than it would otherwise. If an incorrect price has been set, you are simply making other comparable homes seem much more attractive. Why help the neighbours sell their home by setting an unrealistic price on your property? On the other end of the scale, pricing the property below its market value means possibly leaving money on the table and sacrificing profit unnecessarily. 

What aspects need to be considered to find the right listing price? RE/MAX London’s Regional Director Peggy Su points out three crucial aspects that must be considered when setting a list price:

Past sales in the neighbourhood
Looking back can sometimes provide some insight into the future.  Researching the area's sold prices over the past six months will provide you with insight into what buyers are prepared to pay for homes in a specific town or village. Time spent on the market should also be considered, along with the gap between the initial asking price and the eventual selling price.

Other factors that might impact the property’s exact value include its proximity to excellent schools and other sought-after amenities, the condition of the property, its size, finishes and fixtures, and any other features that could set the house apart from others in the area.

Trends in the market
While elements such as government policy, access to finance and unemployment will impact the property market throughout the country, there are specific influences that impact micro-markets in particular areas.These include new companies moving into the area or plans for improving local amenities such as parks or shopping malls. When setting a listing price, estate agents will look at all the unique elements and consider how they influence the perceived value of the property. Both the wider general influences and localised factors will affect the home’s perceived value among buyers.

Type of property
Is the home a freehold or leasehold property? If the home is a leasehold property, the length of time remaining on the lease will have a bearing on its value. A home with a lease that is more than 80 years long will be more expensive than one with less. A property with 50 years or less on the lease is generally not mortgageable, so will only be able to be bought with cash. This will reduce demand for the home which will lower the price.

Listing the home at a price that is ‘just right’ from the beginning is key to selling within the fastest time frame and for the best price to a ‘quality’ purchaser. Working with a reputable, experienced estate agent will help to ensure that the home is listed at the correct price from day one which will make all the difference in achieving the goal of selling your home.