THE DANGER OF SETTING A PRICE TOO HIGH
The first time your property hits the market is a unique moment, filled with potential. Alerts from realestate.com.au start to come in as buyers actively jump on fresh properties. It’s a period of peak interest.
There is a key danger you want to avoid in these early stages, and that is pricing your property too high. The risk is that buyers will immediately dismiss your property without looking any further at it.
Price can be the greatest motivator, but it can also be the greatest deterrent. Buyers will jump at the right price, or; they will discard your property if the price is too high.
Buyers carefully plan the open homes that they will attend, prioritising properties not only because they possess the features they desire, but because they are realistically priced within the marketplace. Maybe they plan to walk through ten open homes on a Saturday. If they’ve done their research and have found that your property is priced $100,000 above everything else in the area, they are highly likely to rule it out in favour of others that are closer to their price range.
So let’s now consider the opposite scenario. You’ve priced your property reasonably, and approximate to the market level in your area. The happy result is that you attract more interested buyers and more inspections, which naturally generates competition. Competition draws emotion from buyers; they begin to solidify their desire to secure the property and they become likely to offer more. This is how many properties are sold at a final figure that is above the initial list price. Competition pushes prices up. A conservative list price in the beginning drives competition and fills your property with multiple interested buyers, giving your agent the evidence they need to say: “This is a popular property. It’s reasonably priced and if you don’t buy it, someone else will”.
You may attract some inspections even with a high sale price, but the risk is that any interested buyers will be scarce, causing those who do arrive to look around wondering,“If it is such a good buy, where is everyone?” The knowledge that there is limited competition leads buyers to make a lower initial offer.
So don’t break out of the starting gate too strong; slow and steady wins the race. Listing your property at a reasonable price is a more effective catalyst for achieving a final sale price above your expectations than over-pricing and deterring buyers from the outset.