14 Feb 2018
Author: Stephen Breen
In today’s current climate where down-valuations are becoming commonplace, how do you price your home for a quick sale? More surveyors than ever before are offering lower valuations than expected, with some properties assessed at six or even seven figures below what a seller was hoping for. For those who achieve the valuation they wanted, the challenges of moving to the next rung of the housing ladder can still make selling your property difficult. In such a market, you need to know how to set the right price point to ensure a fast sale of your home.
The price is right
As your property goes on the market, you will see one of two possible scenarios play out: you’ll receive an offer or offers within a couple of weeks, or you’ll hear nothing. Those sellers without offers are the ones pricing their home above what it is worth, in the hope that a buyer will offer the inflated price – or knock them down to the price that the seller really wants. This pattern of pricing is outdated and no longer works. If you want to achieve £450,000, you should price your home at £450,000 rather than £479,000 – you’ll have a far better chance of achieving the desired price. If you list your home for a higher price, it will stick; and you won’t see offers for several months. At this point any offers are likely to be well below what you wanted in the first place as opportunist buyers take advantage of your apparent desperation.
The longer your house is up for sale, the less likely it is that you will achieve the price you’re looking for. Buyers are already having to contend with soaring house prices and consequently, higher stamp duty payments; together with legal costs, search fees, survey fees and moving costs. It is therefore not surprising that buyers take their time and look for reasonably priced properties, rather than paying an inflated price on a whim.
However, if your property is priced fairly and realistically, the first genuine buyers who view it are highly likely to make an offer at the asking price. Those first buyers are always the most motivated: they’re the ones who watch the listings carefully and pick up the phone the moment a suitable property comes on the market. An offer on the table makes the property even more attractive: it offers other prospective buyers the reassurance that the property is desirable. If more than one buyer is interested, it is common to see more offers that exceed the asking price.
Another trick that sellers should be wary of is the age old tactic that agents use of overvaluing a house to win a client’s business. If you receive a number of valuations from agents, don’t pick your agent based on the one that says your property will sell for an exaggerated price – it won’t. Your property will go on the market, receive no interest and you’ll have to drop the price a month later: an instant warning bell to any buyers who have seen the listing already. Further, you’ll miss that initial wave of interest from eager buyers who watch for newly listed properties that fall within their budget.
The problem of down-valuations
There is an increasing trend amongst surveyors conducting a valuation on behalf of a mortgage lender of down-valuing properties, particularly in some parts of the country. Reports suggest down-valuations of five or six figures below the expected asking price are not uncommon. If a buyer receives a low valuation after putting in an offer, it is likely they will struggle to raise the finance they need and will therefore try to negotiate on the price. In turn, a lower price may make it difficult for a seller to purchase their next home.
Many lenders treat such valuations as final, regardless of evidence to the contrary. One solution is for sellers to pay for a valuation survey early in the selling process, giving the seller a value range to work with. From this, the seller can set a realistic price that is likely to be achieved which will reduce the likelihood of sales falling through down the line and therefore reducing wasted time and costs.