The underestimated power of guide prices
Everything you need to know about this useful pricing strategy to ensure you achieve the best possible price for your property.
There is an art to valuing a property. Market it at a low price and sellers are left wondering if they could have achieved more. Market it at a price that is unrealistically high and the property will generate little to no interest, leading to gradual price reductions and a painful wait for a purchaser. Known as a stale listing, this often occurs as potential buyers assume there must be a problem with the property for the price to keep dropping and it still be on the market. This is often an unavoidable situation for a seller as they are locked into a fixed term contract, often for a 3 month period.
All sorts of terminology exists when it comes to marketing a property, 'Offers in excess of', 'Fixed price' and 'Offers in the region of' are some of the most popular. In our experience a 'Guide price' has been by far the most successful pricing strategy. The low end of the bracket draws the interest of more buyers, with the high end allowing for flexibility in the negotiation to ensure the property is sold for the highest possible price.
We launched this four bedroom eco home in Canterbury with a guide price of £700,000 - £750,000. We had multiple viewings in the first week of marketing, leading to multiple offers and a sale agreed for £750,000.
Deciding on the right price range is crucial and we put in a lot of research before making our recommendation to a seller. After extensive research into properties sold locally, the local property market as well as national trends and predictions, we then look to the price brackets that are used by property portals such as Rightmove, Zoopla and On The Market. As the value of the property increases the price brands become wider. For example after £290,000, the next bracket is £300,000. But after £1 million, the next bracket isn't until £1.25 million. If a property’s value sits close to the lower end of a price bracket, we may recommend a wider guide price to allow your property to be exposed to people searching in this slightly lower price range.
There is a psychological element too, we are all familiar with items ending with 99p, rather than just rounding up to the nearest pound. The same applies in property, albeit on a bigger scale. Someone could say they have a maximum budget of £1 million, but could they stretch themselves that little bit further for their dream home? Probably.
Our office in Wells, Somerset listed this newly built five bedroom eco home with a guide price of £2,000,000 - £2,300,000. After a number of bids an offer was accepted of £2,330,000. Other agents insisted that the vendor wouldn't achieve over £2,000,000 for the property, the guide price (combined with our unrivalled marketing) meant there was greater scope to increase the final sale price.
As mentioned earlier, there is an art to valuing a property. Many estate agents will value a property based on the sellers maximum expectations in an effort to win the instruction, only to lock them into a fixed term contract and inevitably reduce the price in the coming months. At Sandersons, we don't lock clients into fixed term contracts, they are free to walk away and use a different estate agent at any time. Therefore, we always endeavour to provide sellers with honest advice and a realistic valuation.
This charming four bedroom property in Mersham had been on the market with multiple other agents, it failed to sell even when listed at a lower price. We marketed the property with a guide price of £750,000 - £800,000. Within a week we arranged 6 viewings for one day. 5 of the 6 viewers made offers, this led to a competitive bidding war. We negotiated an offer for £875,000, £75,000 over the top of the guide price.
Some sellers gasp at the thought of their property being shown to people searching for slightly lower than they are prepared to accept, but our expert negotiators have proved countless times that a wider price bracket brings increased exposure, interest, viewings, offers and ultimately the highest possible price for the seller. After all, it is the seller that accepts the offer and if it is too low they can decline it. From a negotiation standpoint, having an offer on the table is a more enviable position than no offer at all.
Are you thinking of moving? Perhaps your property is on the market and not selling?
If you would like a free no-obligation valuation, please feel free to get in touch.
