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Hi there! Jarrad Mahon from Investors Edge Real Estate. Joining you to the next in our series of videos on How to make thousands extra when next selling your Perth property. I’m joined with Logan Duncan Smith today, one of my savvy sales agents. Thanks for joining us Logan.
So today’s topic that we’re going deeper into showing you the behind the scene of how we do things is on pricing to drive competition for you home. So we’ve got three different approaches to how you can price your property when we’re selling through private treaty. There is of course auction which we’re not going to cover off today. Auction is still a very underutilized type of sale here in Perth, well when I say underutilized, the majority of people sell by private treaty and the majority of buyers who are comfortable with buying that way so auction is really just suited to more unique properties.
So I first that we’d go through is Fixed Pricing and then we’d touch on From Pricing and then we’d go into Range Pricing.
Fixed Pricing
Jarrad: First of all Logan, with Fixed Pricing, what are the kind of pros and cons to setting a fixed asking price for your property?
Logan: Look, to be honest, it’s a better approach when there’s not a lot of comparable sales for a particular property. Typically higher end properties are best done with a set price sort, where you are not too sure, where there is not a lot of recent sales and there’s just less buyers in that sort of space. But to me it shows that you’re willing to take less…
Jarrad: The buyers are gonna see it on there for $1.2 Million and immediately think right I can come in below that and I guess other buyers that are looking if they don’t search up to $1.2 Million, it doesn’t appear in their search results, they not even come across the property.
Logan: That’s it, it’s for more unique properties, in that higher price range.
“From” Pricing
Jarrad: So next topic is From Pricing that where we have From $500,000. What are the benefits of using this strategy when pricing?
Logan: I find, it tends to get more buyers through the door so if you are asking from $450k, you going to get people from $450k to $500k and possible some at $430k mark as well. The only thing is it doesn’t really prepare the buyer for what the actual sellers looking for a lot would come and ask “What are they willing to take?” “What’s going to get it done for us?”
Jarrad: So its more kind of giving a minimum, putting it out there that that this is the minimum a seller is looking for.
Logan: That’s it as well. With advertising prices, we have to be willing to take what we’re advertising from, so you don’t want us to be in the situation where you have no inclination to take 450k, we’re advertising From 450k.
Jarrad: Basically saying, if that’s the very best we get from the market and we’ve exhausted all possibilities that’s the very best then we are will to accept that.
Logan: That’s it yeah.
Range Pricing
Jarrad: Now we do use “From Pricing” a fair a bit but we also use Range Pricing a fair a bit as well. What are the benefits to that?
Logan: Yes, Range’s are what I tend to do a lot of. It sort of shows to our buyers what the owner is willing to take and what the owner wants and that’s were we’re trying to set the range.
Again lowering the range let say $450k to $480k, it’s one of those things where we capture the market from $400k to $450k and then that $400k to $500k mark and you’re going get multiple ends of buyers. And yeah again, it just captures more the market similar to the “From Pricing” but you know the upper end of the Range can sometimes scare buyers off.
Jarrad: You can put them off because they can see that hope price for the seller must be up at 480k and I think it’s more at 450k, so you have just got to be careful about setting too broader range.
Logan: That’s it as well. We try to stay with a 30k maybe a 40k range. But that also sets the buyers up for negotiations, if they’re going to be offering at the lower end of the range. They tend to expect and know that they’re going to be getting counter offers [from the seller] at the upper end of the range.
Benefits
Jarrad: So other than our 3 types of ways to price what we have got to ultimately do is come up with a price that’s going drive competition and what are the benefits that you see when you get that price right?
Logan: Typically you get a lot of people at home opens is probably the biggest indication, you get a lot of views online and a lot of people at home opens, but with property and with sales, typically speaking the first 4 to 6 weeks is when you’re going to get your best result. You know your fresh, you’re not the used car at the back of the car yard, you are the fresh new one at the front. And it’s just when you get your best and your most genuine sort of interest.
Jarrad: With that competition I guess, we are creating a bit of a fight for our property in some cases aren’t we when we got multiple people interested?
Difference between Listing & Selling Price
Logan: That’s it. You sort of create that competition amongst the buyers. A key thing is understanding the difference between a listing price and selling price. If you list it too high, typically the selling price is going to hit just like if you list it competitively you can push that selling price back up while by attracting multiple bids.
And it’s one of those things as well, that when buyers putting in offers, it’s quite an emotional experience, it’s quite an investment. Especially when they know, there’s multiple bids on the property and we let them know, we don’t tell them where the other bids are at. But we do have a disclosure form, they sign off understanding there is multiple offer.
It definitely helps and it has certainly helped in the past when you have had multiple bids and as one of those things where as well where they know that they might not get a second chance so this is their best and final price.
Jarrad: At least we know then that we have gotten their best price then for the seller.
Impacts of Getting Pricing Wrong
Jarrad: So I guess, what happens when we get it wrong? We’ve spoken about the benefits of getting pricing right but we don’t always get it right sometimes the market is less than we think. But I guess unlike other real estate agents we face that very quickly, give a lot of feedback to our owners so they can make decisions quickly.
What’s happening out there with the other sales agents in Perth, I mean their average selling time is 60 days around at the moment, 2 months to sell, why is that? Why are they taking longer when your best sale price comes in that first 4 weeks?
Logan: In the end, like, there are a lot of agents out there where they’ll give you what you want to hear and not necessarily what the market is willing to pay. When it’s pretty evident that everything has been selling for $450k, $450k, $450k, $440k, $430k there’s no point listing from $460k or $500k for example.
Jarrad: So what would you suggest listing at in that thing in that case?
Logan: It just depends on the client’s situation. But when sales have been in a range of 430k to 450k, what better than a asking range of $430k to $450k? Or asking “From 430k” or “From 440k”, it just depends and also obviously…
Jarrad: You’re not obviously going and saying let’s put it on at the fixed price of 460k. Then we get less people through for all the reasons we spoke about.
Logan: It’s just one of the things where having a sign board out the front of someone’s house, is great advertising for local agent. We try to get results within the first 4 to 6 weeks and if we’re not getting results in the first 4 to 6 weeks then typically we’d look at coming off the market coz we’re just wasting marketing money.
Jarrad: Sales agents can tend to put their head in sand on things and just hope that it’s going to change. And it’s the case of getting feedback and getting it to the owners so that we can make decisions together.
Logan: That’s it as well, you know if the market, is a declining market, you want to try meet the market quickly and if you’re coming down to meet the market slowly and the market continues to go further down. It’s just one of the things where you’re going to take a greater hit it on your sales price.
Jarrad: So basically, we really care more about getting that result quickly and capturing that initial demand rather than just leaving our sign board up for the whole of the suburb to see for 3-4 months.
So that was all we really had to chat about today. Really super important to get your price competitively set and we’d always suggest if you’re in a typical price range to use a range and from price and the difference in the sale price can be massive.
Logan: Definitely and it doesn’t devalue your property, it’s just one of the things, it’s another tactic that we use.
Jarrad: Great! Thanks for joining us guys. See you!
