Price reduction - advice for sellers

Once you have decided to sell, it's crucial to market your property at the right price from the start. Unfortunately, many sellers often advertise their properties at higher prices, creating problems a few months down the line when they fail to sell.

Online property portals are full of listings with Price Reduced tags. This may make property owners who are thinking about selling in the near future hesitate to list their properties. But, on the other hand, buyers looking for bargains may get the wrong message.

Price Reduced tags don’t always mean what people might think they do.

People assume that if a property’s price is reduced, the sellers are desperate. This may sometimes be true, but it’s not always the case. Buyers and sellers need to understand all the possible factors that influence price reductions.

Right price

For sellers, it’s always preferable to list at the ideal price from day one. However, it may be tricky balancing expectations with fluctuating market conditions.

The number of days properties are on the market before selling varies from one month to the next. The same applies to the actual sale prices, which can vary from 5% to 20% below listing prices.

An experienced agent that has access to comprehensive current and historical data, and a thorough knowledge of your specific neighbourhood, should still be able to accurately price your home for sale, despite these changes.

However, these recommendations don’t always coincide with seller expectations, and negotiations can lead to properties being overpriced when they are first listed for sale.

Ideally, sellers should insist on evident and detailed reasoning for the price recommendations agents provide. In addition, agents should include details on other similar homes for sale in the area, a suggested positioning strategy - high, competitive or aggressive for a quick sale - and activity projections for weekly viewings as well as expected time on the market.

Sellers need to be quite clear on what they can expect from the sales process and where their property fits into the market," says van der Merwe. “Agents should also regularly update this information so that sellers can make informed decisions if their listings aren’t performing as expected.

Adjustments

If marketing efforts don’t follow the expected path, all is not lost. Instead, you can recover by simply assessing why a listing is underperforming and adjusting its position by the correct amount.

This process is more effective when agents are backed by support staff who are actively monitoring in-person and online activity. For example, if online viewings are high but aren't converting into enquiries, it usually indicates that the price is too high.

Changing to a competitive price doesn't mean you've failed or your home is unwanted. Instead, it's a sign that you understand the market and are serious about a sale.

Buyers

Buyers should never assume a ‘price reduced’ property is automatically a bargain. However, he says, you can take it as a sign that the sellers are more than just market testing.

Buyers should still do their due diligence to make sure they're getting value for money. But, they also need to be prepared to make a quick decision if the property has been accurately priced to sell.

Information

The key to good choices - for buyers and sellers - is always information.

Buyers and sellers both need to make full use of their agents. Ask questions, get supporting information, make sure you understand precisely what they're recommending and why.

If they don't have answers for you, or you're not satisfied with their reasoning, it may be time to search for a different agent.

The ultimate goal is to sell the property at the right price. You need the correct information and well-planned marketing efforts that an agent can provide to do this.

Courtesy of Private Property & Schalk van der Merwe, Rawson Properties Helderberg Group