One of the biggest problems when selling in a falling market is trying to decide how and where to pitch your guide price. Too high and you can easily be mistaken for someone who has been on Mars for the past year. Too low and you spouse will accuse you of giving your kids inheritance away!
The balance between these two extremes is important to appreciate and essential to get right. There are still estate agents who are too scared of loosing an instruction to give objective advice so it’s more important than ever to get more than one opinion. The truth is that the market has fallen over 20% since it’s peak in the summer of 2007. If the smooth young man trying to convince you to give him your business suggest that yours is the only house in the country to have escaped the down turn then congratulations, you’re living in Buckingham Palace.
The asking price of a property is not a stipulation of what you will accept. Gone are the days when agents quoted “Price – £80,000”. These days it’s “offers around” or “offers in the region of”. A guide price is exactly that – a guide. When you are working out with your chosen agent what to quote remember that the guide is just another marketing tool. It’s there to show a potential purchaser that you are serious, that your property fits the profile that he has already got in his mind. When I was an agent, the best reaction I got to a guide price was “yup, I hope I don’t have to pay that much but that feels about right”. What I wanted to do was persuade the applicant that my client was serious about selling, that this house was a fair value and that since it fitted his budget it must be worth him going to see. As I have said, I was NOT saying that this was the price we’d accept.
What you end up selling your property for is never calculated using a formula where ‘x’ is the asking price. The price you achieve is down to negotiation. It depends upon the demand for the property and the alternatives that could be bought for the money. At the end of the day it often depends on how much the buyer ‘wants’ it. I remember pretty girls often saying that actually they don’t get asked to dance that often because men can be put off by their looks. They look expensive! The same is true of houses. Too full a guide price and buyers will walk on buy muttering under their breath how unrealistic the vendor must be.
One of the main concerns – for buyers as well as sellers in a falling market is just where to pitch an offer. Do you assume that the seller has priced ‘unrealistically’ and therefore hit him with a lower offer or if the price is already less than the vendor wanted to quote that low offers will reflect this? The answer is that if you have got an offer then the guide price has done it’s job. You have had at least one viewer and you are now negotiating. The guide price was never supposed to be the price you’d accept and you only sell if you get the deal you want. Equally, no one is going to want to pay over the odds unless you can give him a good reason to do so. Competition, even in this market, provides that kind of reason and if you and your agent have done their job and got lucky then, if you have two buyers you have competition. They aren’t as plentiful as they were 18 months ago but there are still stories of ‘best and final offers’ and of people bidding up prices.
The latest asking price survey from Primelocation actually suggested that asking prices had risen in December, year-on-year. My instinct was to ask for some of what ever they were smoking but the Hometrack survey that came out last week explained what was going on. Hometrack confirmed that deals that were being done were about 87% of asking price. Buyers and sellers were doing deals having knocked 13% or there abouts off the guide prices that had been quoted.
So, if you get three agents to come and ‘value’ your house (they actually come to advise you on “asking price” otherwise they would charge your for a valuation that you could rely upon and you could sue them if they were wrong!) and one says £400,000, the next says £380,000 and the third says £350,000 then don’t assume that you need only to consider the first two. The asking price is designed to get people through the front door and in this market, what you think feels about right today may well look expensive in four weeks. Prime London property values fell 3.7% in January alone according to Knight Frank. At this rate you may actually find you can afford Buck House!