Ninja in a Blazer – 1st March 2023
Another Day, Another Bought Listing
I was speaking to a buyer the other day, they’d recently sold their property.
The first agent told them $900,000 in late-2022, ended up priced at Offers over $799,000 after two weeks, and offers over $750,000 after four weeks. They then changed agents, picking a new agent who told them $750,000-$800,000 vs the agent that told them $650,000 – $700,000. They sold 6 weeks later for a little over $600,000. That’s the best part of 20% lower than what they told the seller, and 30% lower than what the first agent told them.
The first agent bought the listing, the second agent bought the listing, but they controlled the listing and wore down the seller to take an offer. Had they marketed the property in the $650,000-$700,000 they probably would have sold for more.
I try to be more like the third agent, honest on price, the issue with being honest is you will often end up the bridesmaid position as the owner often chooses the agent who gives the highest price. This is commonly known as buying the listing (Bought with a higher offer) where the biggest liar gets the listing. Most people who sell with me will achieve around the price I’ve indicted or above. Sometimes I’m wrong as you don’t notice the little things with the property until you’ve spent a bit more of a subjective look. I try to put myself in the shoes of a buyer when appraising a property, what has sold recently that is similar, what are the pros and what are the cons of the property. Why would a buyer purchase this property over another or spend more on it.
You have the problem of agents telling buyers a price, then it selling for significantly less. Recently a property was advertised without a price, the agents were giving a price guide in the mid to high 800s before the first open home. An offer was accepted in the high 7s after the first open home. What about all the buyers that didn’t turn up that didn’t think they’d stand a chance with a budget of $820,000. To be fair to the agent, we get the price wrong sometimes, sometimes it’s the owner, sometimes the agent. However, to give a price guide over 10% above what it sells for without giving it a chance 5-7% lower than initially indicated will look extremely frustrating for most buyers.
We find that if a property is positioned in the correct price point correctly it’ll attract a good number of buyers and offers.
If the property is priced too high you’ll get no interest and no offers. If it’s priced too low you’ll get a tonne of interest and a tonne of offers, but they might be from the people that can’t afford to offer more. Looking at what has sold helps, but also looking at what is for sale can be even more accurate.
The chart below best depicts the pricing strategy best.
When I appraise a property, if I can find a very comparable property that’s been bought and sold during a similar period, I can give an idea as to what it might sell for. For instance, a home that was just sold was purchased in 2016 for $486,000 vs the one I’m appraising purchased in 2018 for $486,000 (median was similar enough – maybe $50,000 higher in 2018). The home sold for $775,000; an increase of 59%. However, this home also had a new deck and a new shed/garage – approximate cost of $50,000. The home I’m appraising would have been worth around $436,000 in 2016 and therefore by adding 59% should be worth around $695,000. The home I’m appraising didn’t have any major modifications. So when we sold it for $750,000 we knew we’d achieved a great price for the owner.
The negatives of this way of appraising is if there was something wrong with the house that sold that needed major rectification and price reduction – this could have been when it was purchased the first time in 2016 or the second time more recently. The other negative way of appraising this way is the small things aren’t taken into account – ok, maybe nothing major was done, but there might be a lot of small things that aren’t easily noticed – gardening is a huge one – if you make the garden into another living room, then it’s definitely worth more.
Use the sliders below to see the difference a little time and money can achieve.
The reason I give honest advice you ask?
Wouldn’t you want someone giving you the best advice so you know where you can move to and if it’s really worth you selling or not?
I’d like to be considered a trusted advisor, similar to a doctor – where you contact them for accurate information – you don’t go to a doctor to be lied to “you’re as fit as a 25 year old – yes they’ll say it, and it’ll make you feel good, but you know they’re joking a little”.
If you’d like to have a chat about any value adding improvements, or you’d like to have a chat about the buying or selling process. Get in touch with the honest agent and get an accurate appraisal on your property.