Why Real Estate Listings Aren’t Usually Priced

October 25, 2019
Posted in Blog
October 25, 2019 Elissa

Why Real Estate Listings Aren’t Usually Priced

As a Real Estate Agent, a regular question I get from the families, couples and individuals interested in selling is why not putting a price tag on your listing is common practice. It’s a great question and one worth understanding if you’re thinking about selling your property. So, I decided it’d be a good idea to write this blog to detail the logic behind not putting a price tag on your listing.

Before we go any further, I must mention that all great techniques for selling real estate should be tailored to your exact situation and goals. Each property will usually be suited to a certain buyer group in the current market. If your goal is to get rid of the property as quick as possible or it’s more suited to investors, then a price tag may well be your friend here. You’ll likely get under the max price the market would pay for it but the sale will tick over faster because the price tag will allow buyer groups to quickly identify whether or not the property is within their budget.

This is where the beauty of engaging a Real Estate Agent comes into play as we’re able to provide otherwise unattainable tacit information as to where the opportunities are for your property in the current market.

Even with a well-executed value appraisal and C.V, the figure is unlikely to be bang on the value the market is willing to pay for your property. This is because of factors like the psychological effect of competition (or FOMO) and the personal circumstances of each buyer.

However, selling with a price tag on your home will avoid unearthing the true market price through competition. This effectively puts buyers at an advantage as they are fully ‘in the know’ as to what price you want and are more likely to haggle down the price if there is little interest. Additionally, If the buyers are willing to pay more and you have actually under-priced your house, then the price tag also will usually put a cap on the amount he/she would be willing to offer above the value as there is little incentive to do so. Even with buyer competition, the price tag is still likely to hinder your final sale price as both competing buyers are going to be discouraged to compete far above the price tag given as they will feel they are not getting value for money.

By not putting a price tag on your property you also reduce the risk of ruining the ‘magic’ first two weeks of your sales campaign. Almost all sales campaigns have a reasonable amount of buyer interest die off after the second or third week. This is a problem for properties priced above the true market value as people will quickly discount the property and not bother attending open homes.

While you could just incrementally lower the price tag, this will mean you’re unable to capitalize on your ‘magic period’ of the sales campaign where attendee count is the highest (and will create the strongest sense of competition for buyers). Finally, older listings indicate to buyers that there is little interest which will decrease value perceptions and may actually encourage them to haggle on price.

But some buyers say they won’t even click or view an unpriced listing?

While true for some, as a Real Estate Agent I have found this to be mostly a fallacy. This is because buyers who aren’t clicking on unpriced listings usually aren’t at a stage where they’re invested enough to actually put in a serious offer anyways. Buyers that are ‘primed’ and ready to put in an offer usually will be invested enough to view the property as they’re motivated by the hope of finding the best option for themselves.

Furthermore, the buyer group who are usually discouraged the most by unpriced listings are investors. While more buyer competition is better, investors are not your most ideal buyer if you’re looking to achieve the very best price. This is because investors usually work within a specified yield/return they need to achieve and will not pay the premium homeowners will for the perfect ‘family home’. However, this, of course, does come back to what buyer group your property is most suited to.

While not having a price tag listed publicly is generally a good idea, I usually advise putting some structure around your sales method e.g Deadline, Tender or Auction. If you’re asking yourself which of these structures is best suited to your property, good question! Unfortunately, I won’t be able to answer that here but that will be the subject of an upcoming blog (or you can contact me directly for a discussion).

Hot Tip: If you’ve decided to not put a price tag on your listing and it’s been on the market for 3-4 weeks, consider giving your listing a price. The reason being, at this stage it is possible that some buyers may believe you want too much for your property and won’t bother engaging at all. 

Although I hope the above information has provided you with some valuable takeaways, I can’t stress enough that it really comes down to your property, your goals, and the current buyer market with selling.

If you are thinking about selling, I’d love to get the opportunity to sit down with you for a chat about what sales strategy might be best suited to your goals. Just reach out below or via my contact details on the home page and let’s get the ball rolling!

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