Using fixed asking prices in the marketing of properties is negatively affecting the net sale return, collectively costing sellers millions each month and should be avoided in what is a new market environment according to RE/MAX WA Regional Owner, Geoff Baldwin.
“The past 5 years and particularly the past 18 months have seen our market evolve and become much more sophisticated with more agents and sellers recognising that a completely different approach is required to gain optimum results”, Mr Baldwin said.
“The days of estimating a likely selling price then adding 5 to 10 percent buffer on for negotiation are over, if we are serious about doing the right thing for the seller and ensuring every opportunity to maximise viewings, competition, offers and the best sale price.
“It’s a fact that the majority of sellers add a buffer onto what they think they can achieve to factor in room for negotiation and this results in a listing that is overpriced in a market where qualified buyers are still well and truly outnumbered by stock on the market.
“On the other hand, buyers invariably start looking well below what they eventually pay, because the last few years have conditioned them to think that they will get a bargain and it’s not until they’ve seen many properties that they eventually lift the budget.
“Unfortunately we still have sellers asking over the odds, buyers looking well below what they need to pay for their dream home and a situation where, on a property with a likely end selling price of $500,000, buyers and sellers are up to $80,000 apart.
“Another downside of overpricing in the early stages of a listing is it is that period when the property gains most interest however, if it doesn’t attract offers it stales and the end result is a lower offer or no offer at all.
“The best way to avoid overpricing is to avoid using a fixed asking price altogether but this requires some lateral thinking on behalf of the sellers and some very advanced skills from the agent.
“There are several alternatives to fixed price that are proving to be extremely successful in the current market, conditions including auction and buyer feedback ranging which both avoid fixed prices, maximise enquiry, viewings and competition.
“Although properties may not sell under the hammer at auction, when assessed as a multi week campaign where offers are considered before and after auction day, the results are almost 100 percent better than fixed asking price.
“Buyer feedback ranging is another method that is proving to be very effective, however it is critical that this system of selling is applied correctly by an agent who has had the required training, as applying the wrong range on a property can do more harm that good.
“When choosing an agent sellers should ask questions about alternative marketing methods rather than just accepting that a fixed asking price is the way to go”, Mr Baldwin said.