Your property's asking price - is a price drop right for you?
8th June 2020 posted in Sellers Landlords
If you have had your house on the market for some time without success, dropping your asking price may seem an inevitable, if unwanted, next step. Your estate agent will often suggest this move if they have run out of ideas, motivation and most importantly, confidence in your asking price.
But is dropping your asking price really the answer to selling your home more effectively?
It’s true that for some properties, reducing the asking price can generate new interest from buyers who would have been previously unable to afford your home. It’s also a step that for some sellers is, unfortunately, necessary – if they have an urgent move, for example, or are facing repossession.
However, with many houses – particularly premium homes – dropping your asking price is not always the answer, and it can even harm your chances of attracting a committed buyer.
Whilst recent weeks have seen a pause in viewings, the buyers have simply been waiting in the wings for an opportunity to view homes, and now they can once again. Since we re-opened, albeit with safety measures in place, we’ve noticed an increase in buyers who are ready to offer, and willing to move quickly. To take advantage of this current heightened demand, now is the time to review your asking price and decide whether to stick to it or reduce.
To help guide you, we’ve compiled the DOs and DON’Ts of dropping your asking price to help you get the result you want and move on with your life:
DON’T drop your asking price by less than 10% – Or it just won’t make any difference to the interest you get. Buyers will usually look at homes 10% either side of their budget anyway, so you’ll need to reduce your asking price by at least that to get your home noticed by a new set of buyers.
DO ask your agent why you need to reduce – Your home was originally valued based on sound research and by an expert in the local property market. What’s changed? Understanding whether your agent misjudged the market, or the demand has changed for houses like yours, will help you make the right decision to either reduce or to stick it out.
DON’T keep making small drops in price – A price drop can cause suspicion amongst buyers who may wonder; what’s wrong with it? Why have you lowered the asking price? A buyer may not want to risk buying a house that seems to be falling in value. A property with lots of historical price drops is inherently unattractive to a buyer, as each drop can signify a red flag, so make your price drop big and impactful, but make it just once.
DO drop to the next Rightmove price band – You can find these by going to www.rightmove.co.uk and entering a search. The list of price bands that comes up is your guide as to the price your house should be marketed at. For example, there’s no point in having an asking price of £399,999 when the Rightmove price band is £400,000. By positioning your asking price in alignment with the search bands, your house will effectively show up in up to twice as many buyer searches.
DON’T try to break the price ceiling for your road or area – Not only does this make buyers jittery, it will also make a surveyor nervous too. Unless you really can’t avoid it, try to price your home at less than the highest price sold in your neighbourhood.
[Note: we have previously sold homes at prices that have broken the area ceiling, but they do need careful positioning to reassure buyers and surveyors, so please ask our advice if this is your situation too.]
DO ask your estate agent the right questions before you drop your price – If you’re feeling pressure from your estate agent to reduce, or you have a moving deadline looming and can’t afford to drop your price, ask your agent what else could be done to secure that sale, other than reducing your asking price? Have a review with them and look at your marketing critically. Could it be improved? Maybe new lifestyle photographs would attract new buyers. Or showcase your home better with a ‘twilight’ image or aerial shot, to show your home in a new, imaginative way.
DON’T give your buyers an excuse to make a low offer – Make sure your home is wonderfully presented, with every room polished and attractive, otherwise you’re literally leaving money on the table. Home styling can dramatically increase the ‘saleability’ of your home, and really helps buyers envision the lifestyle it offers.
DO give yourself some negotiation room – but not too much – On average, you can expect to achieve around 95% – 97% of your asking price, with 3% – 5% ‘given away’ in the negotiations with your buyer. This will depend on other factors of course, like how fast your local market is moving, the confidence in the housing market while you’re selling and how long your home has been on the market. Taking 96% as an average, losing 4% of a £400,000 asking price means you will eventually receive £384,000 on completion. But if you reduce the asking price to £375,000 say, you’ll only get £360,000 – a significant drop. Not only have you reduced by £25,000, you’ll also have lost an additional £15,000 in negotiations, putting your total ‘lost’ sale monies at £40,000, a substantial ‘loss’ of 10% of your original asking price.
DON’T forget to calculate your price per square foot – It can be a more accurate way to value a house than other methods. Not only this, but a surveyor will use a price per square foot analysis to provide a valuation to your buyer and to your buyer’s lender. If your agent hasn’t already done this for you, make a spreadsheet of the other properties for sale and sold in your area and calculate the price per square foot of each, then compare it to yours.
DO remember that sometimes it’s more valuable to you to be able to move on – with your life, than to hold out for months – and sometimes years – for a few thousand pounds more. If time is not on your side, whether it’s a selling deadline, or a pressing personal reason for selling in a particular timescale, it may be time to let go of your price expectations, and time to start your new life chapter. Only you can make this challenging decision, but if you’d like to talk it through with us, we’re here to listen and guide, if that would help.
When your home hasn’t sold and you’re wondering if it’s the asking price to blame, use the above DOs and DON’Ts as a checklist to see if you’re doing everything you can to get your house sold. If your price per square foot is about right, you’re not trying to break the price ceiling for your area, and your home is presented in the best way possible, if your photographs showcase the lifestyle of your home, and you have time on your side to wait for the price you really want, then have confidence in your asking price. Because if you don’t, no one else will.
Your asking price isn’t the end of the story; it’s the opening chapter. Having a strategy in advance will save you emotional stress throughout the process and offers the reassurance of having a plan to fall back on when and if things get tough.
Uncovering the reasons your home hasn’t yet sold can help you make the challenging decisions at the right time for you and your personal circumstances, and we can help you discover these reasons with an initial chat.
Looking to start your property journey?
Contact our Heswall branch today to get started!
Looking to start your property journey?
Contact our Little Sutton branch today to get started!