31 July 2017
Many vendors are puzzled and upset when buyers find fault with their homes. But what does their fault-finding mean and how can the feedback be changed for the better?
Many vendors think it’s all about features and the lack of them – things like extra bedrooms or bathrooms or new roofs. And features are certainly part of the equation. But in many cases, it’s the other half of the equation that is important: the asking price relative to the features. The relationship between asking price and features is crucial; if the price for a house with a certain set of features is higher than other similar properties, purchaser interest is slower and those who inspect are likely to make negative comments. Basically, purchasers don’t see what they expect to get – for the money.
If the asking price is right, there will be lots of inspections, positive feedback and early offers. If the so-called “negotiation factor” is too big, purchasers will find fault and far from creating an incentive for purchasers to make an offer, it is a disincentive, because they think the seller is unlikely to accept a reasonable price.
Properties in a highly sought after category or in locations where there is a shortage of property for sale usually have more room to inflate the asking price, but most vendors need to be aware of the Catch 22 situation caused by serious over pricing. If the asking price of a property is more inflated than other similar properties on the market, the agent may have to puff the advertising copy, or purchasers will not be attracted to the property at that price. If the property’s benefits are exaggerated, purchasers will be disappointed when the reality doesn’t match their expectation. The irony will not be lost on most property consumers; the very strategy which less market aware vendors think will maximise their sale price could lessen market interest in the property, making it take longer to sell and ultimately reducing its selling price.
Overpricing targets the wrong market - purchasers whose expectations match their pockets in a way that the house does not match its asking price. Purchasers are quick to tell an agent if a property on their books is overpriced. They know that other buyers won’t be rushing to make offers. It’s not uncommon for purchasers to notice an advertisement or a signboard but not make their first inspection of the property until months later when the price has been reduced. By then they have the psychological edge which enables them to drive a harder bargain.
The right negotiating factor should make purchasers feel anxious that if they don’t get in quickly they will miss out to someone else. The resulting climate of competition in the first few days and weeks of marketing is usually the best way to find buyers who will love the house and want to buy it.