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Why you should avoid creating a property price ceiling

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Why you should avoid creating a property price ceiling

In today’s market, more and more agents are advocating no-price marketing. My Property Preview explains why.

How much is my property worth? It’s the first question every seller asks when they decide to part with their property.

While your real estate agent will be able to give you a ball-park figure, a number of industry professionals recommend you keep it under wraps so you do not create a ‘price ceiling’, an invisible barrier which will cloud the judgement of potential buyers.

Instead, they advocate for ‘no-price marketing’ and an auction campaign that will truly test your property in the market.

North Shore Realty agent Ben Thomson says ‘no-price marketing’ is ideal for the current Sunshine Coast market, and there is no shortage of buyers and high demand for Coast property.

“Sellers want the best price, and listing a price can limit the room for negotiation. It can also mean a price is perceived as
too high, so the buyer won’t view the property,” Mr Thomson says.

“In such a buoyant market like this, putting a price on a property can prevent you in achieving above current market value. We are in such a buyer-saturated market currently with ‘emotional’ buyers regularly out there looking. As we all know when we purchase with emotion we tend to go above and beyond out limits of purchase.”

Mr Thomson says a good agent will work hard to attract as many emotional buyers as possible, as those who are in the investor market will simply look at the bottom line and will move on if the numbers don’t work for them.

“I believe it’s important to understand every property is different. Each property might suit a different campaign or price strategy,” he says.

“But no-price marketing is ideal in a market like the one we are currently in when there is no certainty about the proposed sale price at the time of appraisal because of the high demand.”

Harcourts Caloundra agent Luke Carter says, “If you’ve sold your property in a week, you’ve probably undersold it.

“If an agent comes out now and tells you they know what your house is worth, I’d be concerned.

“You’ve got to have a strategy that’s not going to put a price into a buyer’s head, as you don’t know what someone is willing to pay.

“It can be dangerous in a rising market for an agent to have an idea of what they think the house is worth, because it can sometimes put a ceiling price on what they can achieve.”

Mr Carter says auction has become a cheaper option now than it was 10 years ago, thanks to a drop in advertising prices in My Property Preview.

“A good agent using the auction strategy should be able to make more than the cost of the auction back through creating competitive bidding,” he says.

McGrath Estate Agents’ Geoff Ohmsen says he uses auction as the best way to maximise the sale price of a property while also reducing the days properties spend on the market.

“If you list a private sale, often you will end up with an okay price and longer days on market,” he says. “Until you have tested the market, you can’t know confidently that you’ve gotten the most that you can for your property.”

Mr Ohmsen says agents need to “stop being the gatekeepers” when it came to a property’s value and focus more on attracting people to the open homes to boost the number of emotional buyers.

“If large numbers of groups of people are coming through an open home, people who love the property will automatically see them as competition,” he says.

“If they hear a buyer comment on how nice it is, they might decide they should have a crack at this property before someone else does. It’s about creating that competition and allowing buyers to fight it out in an open forum.

“If you don’t mention a dollar figure, it comes down to the buyers on the day, who may place much more value on the property.”

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Roxy has been a journalist for more than a decade and joined the MWP team at the end of 2016. She is a chocolate-powered writing machine who loves to engage with the Coast community, uncover untold inspirational stories and share information that can help people.

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