It’s the price that sells the house!
This statement will attract the interest of many, especially because not everyone trusts real estate agencies (perhaps rightfully so… I would add) and therefore prefer to sell their property independently. But how do you set the right price?
Alain Pinel, the legendary Californian real estate guru, responded as follows: “There is a general rule in real estate that the wisest professionals keep reminding themselves of when they need to set the price for a new property on the market: if a property exceeds even just 5% of the perceived market value, the seller loses half of the potential buyers. If the set price exceeds the commercial value by 10%, the chances of selling are reduced by 70%. This is especially visible in the luxury sector.”
By Ueli Schnorf – Co-owner of Wetag Consulting
The first question a private seller should ask is: Do I really want to sell, or am I just testing the market’s interest in my property? In the latter case, you can set any price. However, if you genuinely want to sell, you should set a price that attracts the highest number of buyers in a reasonable amount of time, achieving a sale at the best price.
If you seek advice from a real estate agent, you should understand whether they truly want to sell your house or are mainly interested in “buying” your listing. It’s easy to secure a listing by telling sellers their house is worth much more than what other agents recommend, but obviously, aside from the ethical issue, this approach yields no results and doesn’t answer the question: How do you set the right price?
Unreliable and useless valuations
“Today, we know there are many companies promising free property valuations in ten seconds. These are companies that collect your data to sell to large firms, and the offered estimate holds no real value. If we truly want to calculate the value of a property, we must understand that there are three pricing strategies: the one perceived as ‘market value’ based on relevant comparisons, a slightly or significantly lower one used to create maximum interest (common in tough times), or a higher one used by those who have time to wait.”
A hardly objective vision
“Our experience shows that more than half of homeowners greatly overestimate the value of their property, for various reasons. The statement ‘I paid so much for it myself’ doesn’t mean the property is worth that amount on the market. When we hear ‘the neighbor recently sold for x francs,’ it may be true, but often it isn’t. ‘My location is the best, and you can’t find anything like it today’ or ‘my view is unmatched’ may be true in the owner’s eyes, but it may not reflect reality.”
The real value almost never matches the commercial value
“Apartments, especially newly built ones, are easy to compare in terms of price, while it is often difficult to compare the prices of single-family homes or luxury properties. Banks or architects will give you the loan-to-value or real values, but these often have little to do with real estate market values. In this general uncertainty, owners, to have room for negotiation, add 10% to the sale price. This reasoning almost never works. A price that is too high discourages potential buyers, at least until the price is inevitably reduced massively.”
The market sets the rules
“The timing of a possible price reduction must take into account the current state of the market segment in which the property is offered. In a very hot market, this can happen after just a few weeks; in a very slow market, it may happen only after six months or a year. The reduction must also be significant enough to restart marketing efforts.”
Conclusion
“Setting the right price, which is crucial for sales success, is a matter of experience and must be done as consciously and unemotionally as possible. Experience shows that the more conservative and reasonable the initial listing price is, the better the final result will be. Remember that in most cases, it’s the buyer who determines the market price, not the seller. The more potential buyers there are, the better you will be able to assess their behavior. The advice is always to rely on professionals in the field.”
Luxury Real Estate for sale in Ticino, Switzerland
Riva Antonio Caccia 3
CH-6900 Lugano
Via Antonio Ciseri 13A
CH-6600 Locarno
Via Monte Verità 1
CH-6612 Ascona
www.wetag.ch
www.journal.wetag.ch
[email protected]
+41(0)91 601 04 40