Unlocking Real Estate Success: The Power of the Right Purchase Price
In the world of real estate, every sale begins with a fundamental question: What should be the asking price for the property? It’s a question that weighs heavily on the minds of sellers, who naturally want to maximize their return. Often, sellers insist on setting an initial asking price that leans towards the sky, even if it goes against the counsel of their seasoned real estate agents. However, recent findings from our extensive international study, conducted by our European network EREN, offer a compelling lesson in the significance of getting the purchase price right from the start.
The study, which spans over a decade, from 2010 to 2021, delved into transaction data gathered from all member companies within the network. Its primary objective was to examine how the accurate valuation of a property impacts the time it spends on the market and, more importantly, its ultimate success in being sold.
Navigating the Price Predicament
For property owners embarking on the journey of selling their beloved homes, the dilemma surrounding the asking price is almost inevitable. Naturally, they aspire to command the highest possible price, a sentiment that often leads them to propose a listing price that tends to lean towards the higher end. In contrast, their real estate agents, armed with market insights and expertise, may advise a more realistic valuation. However, the allure of a higher price tag can be tempting.
The Price-Performance Paradox
What our comprehensive study unearthed was rather illuminating. Contrary to what some sellers might believe, setting a purchase price that’s excessively high can have far-reaching implications. Not only does it lead to a protracted period on the market, but it also results in substantially higher average discounts being offered to potential buyers. In essence, the initial lofty asking price rarely materializes into an actual sale price.
The Luxurious Lesson
This trend is particularly pronounced in the luxury real estate segment, where prospective buyers tend to be meticulous and watch the market closely over extended periods. When a property lingers on the market for an extended duration, a negative perception begins to form among potential buyers, dampening their interest. In response, sellers may find themselves reluctantly doling out successive price reductions in an attempt to reignite interest. The unfortunate outcome? The final sale price often falls even lower than the initial expert-recommended valuation.
The Imperative Takeaway
In sum, our study underscores a clear and pivotal message: An asking price that veers excessively high sets in motion a cascade of consequences. It triggers prolonged marketing times, during which the seller bears the financial burden of property maintenance. Additionally, it forces sellers to eventually concede to significant price reductions. The final sale price, more often than not, falls below what the expert initially suggested.
The key takeaway here is the importance of initiating the selling process with a professionally determined valuation, even if it suggests a figure somewhat lower than the seller’s ideal asking price. It’s a strategic move that can lead to shorter marketing times, reduced financial outlays, and, ultimately, a more successful and financially rewarding real estate transaction. So, when it comes to selling your property, remember: The right purchase price can make all the difference in your real estate journey.