Does reducing prices really lead to faster sales?
Recent research from an independent estate agency firm questions the notion that sellers need to drop the price of their homes to get them off the market.
Figures from Andrews, collated across their network of 54 branches, show that 70% of their completions during the first six months of the year either exceeded or closely met the asking price.
Group Chief Executive, David Westgate, explains: “Media reports which focus on vendors reducing the asking price of their property are, more often than not, tales of an inaccurate valuation in the first place. Simply, a well-priced property will sell fastest. We’ve seen in the first six months of this year that properties which sold either at, or above, the asking price spent just 49 days on the market which compares favourably with the industry average of 96 days.”
The data demonstrates a linear pattern whereby the degree of the price difference is directly linked to the time taken to secure a sale. A small difference between asking and selling price of five per cent or less will see a sale secured within 69 days, whereas a difference of up to 10% results in a property remaining on the market for an additional 49 days (118 days in total.)
Westgate continues: “A smart combination of an accurate initial valuation and hands-on marketing by agents with genuine local knowledge is vital to securing a swift sale in what remains a challenging market.
“This is all about successfully managing expectations and unfortunately there remains a significant percentage of agents prepared to provide a high valuation simply to secure the listing. When this is coupled with a vendor flattered by the news that their home is worth a seemingly favourable amount, the property is placed on the market with unrealistic expectations and consequently hangs around for longer and sells for less.
“Of course, these figures don’t provide a fool proof recipe for sales success and recent shifts in the market mean that a certain level of haggling is almost the norm in many cases. This data does, however, suggest that accurate pricing isn’t yet standard across the industry and it’s this that’s to blame for such high levels of price reductions.”