Common misconceptions around setting the asking price
Category Advice
The process of buying and selling real estate can be complex, especially for those who have never been through it before. To shed some light on the topic, here are some of the popular home-selling myths that have become commonplace in the property market.
The first common misconception is that the seller sets his/her own selling price. While it is the seller who decides whether they agree to the selling price, other factors come into play, such as the property's location, size, condition and the market. Buyers will have a large influence on the selling price of a property. If buyers do not perceive the home to be priced at fair market value, they will not be interested in purchasing it. If the home is in demand, it will fetch a higher price than if it is not.
Sellers should also note that the initial asking price of the home can vary greatly from the actual selling price - so it's not always reliable to base one's selling price on the asking price on neighbouring homes listed on property portals. Real estate agents will know what neighbouring homes actually sold for, and not just what they were listed at. It is far more reliable to base one's asking price on a professional valuation.
The next misconception is that overpricing the home leaves room to negotiate. Instead of leaving room for negotiation, overpricing drives buyers away. Inflating the home's price will alienate buyer pools, in that buyers who could afford the home at its true market value will overlook it. Equally, those who can afford the inflated price will soon realise that the home does not compare to others in the same price bracket. The home could stagnate and sell for far less than what it may have sold for if listed at the correct price from the start.
A final misconception is that all renovations and home improvements will increase the value of the home and will therefore eventually pay for themselves. While certain renovations and home improvements will increase the home's resale value, it is possible that the seller will not receive all the money back that they have invested in the project. Before deciding on any project, it is best to get expert opinions from real estate professionals on what should be fixed or changed and what kind of return can be expected as a result.
Author: Private Property - Extracts
