After the first, here you have the second part of our CEO’s article about the price importance in a real estate sale: what to do and what to avoid.
You decide to sell your property: which is the right price to ask for it? I am going to propose you two examples that may support you while making your choice.
- CAUTIONARY TALE
The following graphics report the historical series of the estimates and prices of a farmhouse sold by GE during 2019.
As you can deduct from them:
Great Estate estimate through THE BEST PRICE SYSTEM: € 950.000; advertised at € 1.350.000 (+ 4% compared to its real value); the property remained in the market for about 2 years and a half (30 months); sold at € 800.000 (-15% + 2 years of maintenance costs).
- Advantages:
Just one: let the seller think that a person who falls in love with his/her property and who is willing to offer him/her more still exists. Every client who purchases is in love: to date, no one is going to invest more than € 100.000 if not so. But, in addition to this, a client needs to have also the perception of making a good investment. Placing a property at a certain market value means also give to the clients the perception of a fair investment: 90% of the properties are owned by “dreamers”. With time passing, they will be back to reality but, once done, it will be too late. I would like to let you understand this concept by explaining to you all the disadvantages.
- Disadvantages:
- Year after year, you will assist in decreasing the value of your property.
- You will have to keep investing to maintain the image of your property or to limit the maintenance investment but, in this way, the value will be even lower.
- Thinking – or deluding yourself – to have € 1.350.000 at your disposal without understanding that, in reality, you “just” have € 950.000.
- Selling your property out because, once it has been in the market for years, clients will start thinking there is some problem with it.
- Selling your property out because, month by month, the few clients interested in your property keep monitoring its price decreasing… Do you know what they think about it?
“I am waiting… soon the price will decrease again”
(basically, the same concept of the real estate auctions)
Or, another version, when an interested client will do an offer, he/she already knows that you are inclined to decrease the price: you already did it once… why not twice?
- Selling your property out because those few interested clients will consider you as the person who tried to fool them by asking for a too-high value: they will start the negotiation with a closing attitude and, be willing to treat you as they think you are doing with them, they will use the same approach as you:
“He/she tried to fool me… now it is my turn.”
- ROLE MODEL
Great Estate estimate through THE BEST PRICE SYSTEM: € 900.000; advertised at € 1.000.000 (+ 10% compared to its real value); the property remained in the market for about 4 months; sold at € 900.000 (the same value as the estimate).
- Disadvantages:
NONE.
- Advantages:
- Selling your property at the best price possible without assisting to a continuous value decrease.
- Keep investing in property maintenance and taxes for a few months.
- Having € 900.000 at your disposal.
- Having great power towards the buyers who face themselves with a fair-priced property. Given the fact that many other properties are clearly overpriced, the purchasing of that property seems them a real investment to do.
- Selling at a higher price is possible because the few clients interested in your property keep monitoring the houses in the market and when seeing a property with a fair price for sale, what do you think their opinions are?
“beautiful home and a very interesting price… I have to hurry.”
(the same concept of the real estate auctions, but on the rise)
When a client will do you an offer, he/she will already know that you are not inclined to decrease the price because IT IS THE RIGHT ONE!
- Selling your property at a higher price is possible because those few interested clients will perceive you as a serious person asking for a fair price and respecting both him/herself and the future buyer. In this way, the buyer will respect you and the negotiation as well.
If you still have any doubt, I suggest you read the interview with who made the right choice already: the ex-owner of “La Quercia Illuminata”.
Are you still convinced that asking for a higher value for your property is something correct to do?
If you missed the first part of this interesting article by Stefano Petri, our CEO, just click here.
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