Inspiration

Two Tips re Pricing

RAT 25 (Rawlings Agency Tips) How to combat media speculation

Frustrating isn’t it? The media is now starting to perpetrate the idea of green shoots of recovery by publishing various stats that suggest that prices are once again on the rise, so vendors decide that they will hike their asking price to take advantage of this apparent reversal of fortune.

Certainly, good prices may be being achieved due to scarcity of supply in many areas, but it is those people who inevitably want to go beyond this who shoot themselves in the foot, and possibly you with them!

So here are a couple of ways of deflating recent stats/myths as you continue to seek to secure correctly-priced, ie saleable stock.

Myth one: “Average house prices are rising” (Source: The Nationwide House Price Index for May 2009 suggested a rise of 1.2% over the previous month)

The Reality: Prices have not necessarily risen. The mean average price has apparently risen simply because the buy- to-let and first time buyer market, at the bottom of the price spectrum, has shrunk dramatically. Simple maths means that the calculated average becomes higher as the balance of prices shifts away from the bottom.

Myth two: “The market must be rising because the gap between asking prices and sale prices is narrowing” (Source: RICS 15th June 2009)

The Reality: Property is now selling closer to its asking price because most properties currently selling are those that are relatively new to the market, where the asking price already reflects a fall in value. Properties on the market a few months ago were the old chestnuts that where valued when prices were higher. In order for them to sell, substantial drops in sale prices were required – hence the low offers. If you are coming onto the market today we would recommend that you quote an attractive asking price based on today’s market - and stick to it.

Clearly the above two arguments are to be used when you need to persuade a seller to quote the right price. However, it may be that prices are indeed on the rise in your area due to undersupply, in which case you may prefer to take a more ambitious approach to pricing for a couple of weeks – just don’t let it go stale, only to be sold at a later date at a reduced price by one of your competitors! Then you need to use the above to help you “reposition” the property in the market.

One final piece of advice for today, based on bitter experience I learnt when I was 10 (and nothing to do with property) is this: “If you are going to spray your bike gold, don’t lean it against your dad’s car first!”

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© Richard Rawlings 2010
Richard Rawlings is the founding director of Estate Agency Insight, which specialises in helping estate agencies harness opportunity through innovative method, marketing, publicity, and training. He can be contacted at or on 0845 838 1354.

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