How to get the most profit from the sale of your property? From the analysis of examples based on real trades, the do’s and don’ts to develop a winning positioning strategy.
This guide completes the in-depth study “The right asking price when you decide to sell you property“, with practical examples and advice on what to do and what not to do to offer a property on the market and obtain maximum results.
You have decided to sell your property: what is the right asking price?
First let’s clarify: we define “value” as the amount that can be requested on the market for your property, while “price” means the amount actually paid at the time of the sale. In the previous article, we talked about how the value attributed to a property can be influenced by various factors, we recommend that you read it before moving on. Below, we will show you through practical examples the different results obtained in two trades, with or without the application of a correct positioning strategy.
Recurring example: the subjective value attributed by the owner exceeds the objective estimate by more than 20%
The graphs below show the historical series of evaluations and the historical prices relating to a farmhouse sold by our group in 2019.
- The valuation conducted by Great Estate’s The Best Price system in 2017 attributed a value to the farmhouse of € 950,000;
- The owner has chosen to place the property on the market at a value of € 1,350,000 (+47% compared to the estimated value);
- The farmhouse remained on the market for 30 months, in the meantime the estimated value suffered a physiological decline also in relation to market fluctuations;
- The sale took place in 2019 for € 800,000 (-15% compared to the estimated value).
For the owner, none.
The numbers demonstrate how subjective value can negatively influence the outcome of the sale. Believing that there is a buyer who “falls in love” with the property, and for this reason is willing to invest whatever amount the owner requests, is the worst approach with which to face the delicate positioning process: more than a strategy, it is an illusion that leads to financial suicide.
Of course, people who decide to purchase valuable goods such as a prestigious property, also do so driven by the fascination exerted by the beauty of the place, the landscape, the atmosphere and therefore any customer who buys a property falls in love with it. But, in addition to love, the buyer’s choice is also driven by the perception of making a good investment. After the emotion of the first visit, a more rational approach takes over, supported by sources of information that with digital are within everyone’s reach: comparison with other properties on other portals, the calculation of additional costs, the level of maintenance and renovation of the property, the completeness of the documentation found.
This is what happens to those who decide to approach sales without adopting a rational strategy.
- Seeing the value of your property decrease, year after year.
- Continue investing to take care of the image and decoration of the property, or stop doing so and cause a further loss of value.
- Believing, or rather deluding yourself, that you have a certain budget available (in the example, over 1 million euros), when in reality the final revenue will be significantly lower.
- Keeping the property on the market for too long, resulting in image damage that generates distrust in potential buyers.
- Selling off the property, progressively reducing its value until it creates the expectation of a further decline in the interested parties.
- A downward negotiation: the few intending to purchase, having access to information on price changes that have occurred over time, will be suspicious and disheartened in matching the requested value and could present an even lower offer.
95% of the properties that are on the market are not sold mainly for this reason: the subjective value identified by the owner, often without specific skills, exceeds the objective estimate drawn up by professionals in the sector by more than 20%.
Example to follow: a correct positioning strategy
This example shows the graphs relating to the valuations and asking value for a property in Città della Pieve sold in 2018 by the Great Estate group to British buyers.
- The valuation conducted by Great Estate’s The Best Price system in 2018 attributed a value to the farmhouse of € 900,000 (not very different from that in the previous example);
- The owner has chosen to place the property on the market at a value of € 1,00,000 (+10% compared to the estimated value);
- The farmhouse remained on the market for only 4 months;
- During negotiations, the purchase price was negotiated at € 900,000, exactly the same value attributed by the valuation.
It may seem that the owner has “lost” the difference between their subjective value and the requested value, but the latter corresponds exactly to the objective value of the farmhouse. Compare this example with the previous one and it will immediately become clear to you which of the two was the best strategy: based on the valuation, both owners had the potential to collect from 900,000 to 950,000 euros, the first property suffered a devaluation which is added to the maintenance costs of 30 months, the second one was sold at the right price in just 4 months.
1) Sell for the best price before the property value starts to decline year after year.
2) Continue to invest in the maintenance and tax costs of the property for a few months.
3) Have a budget very close to what you expect, in the example € 900,000 paid in the same year.
4) Have surprising market power, offering buyers the prospect of a real bargain, given that many other similar properties are objectively overpriced.
5) An upward negotiation: the few interested buyers, having access to comparison data between the different properties for sale, noticing a value in line with the market will be encouraged to act as quickly as possible, so as not to miss the opportunity.
6) An excellent reputation given by the request for an honest and fair value, demonstrating that you have respect for yourself and the future buyer.
Here are the advantages you can obtain by relying on a professional, objective and transparent to position your property strategically. This is demonstrated by our customers themselves, who share their point of view on this sale in the interview with the former owner of the farmhouse “La Quercia Illuminata.”
Still planning to put your property up for sale at the highest price?
Learn more about the services dedicated to sellers and The Best Price evaluation system: visit our website or contact your trusted Great Estate consultant.