This is the first question that goes through the mind of an owner when considering selling their home. The right answer is worth a lot of money and can save you a lot of headaches from homeowners or real estate consultants who are responsible for selling your home. This article aims to help you choose the best price to sell your home.
Idea to retain: there is no single price to sell your house, it all boils down to the famous relationship between time and price: "The higher the price, the longer it can be to sell your house ."
To answer this question you will first have to consider another question:
How do you intend to sell your home?
The way you intend to sell your home may influence the choice of the sale price. Consider some questions in order to adjust the price to the best value in relation to the real estate market:
- Will you go to a real estate company to help you with the sale, or do you want to sell your home yourself?
- The mediation companies charge, on average, 4 to 5% commission (+ VAT) to the owner, calculated on the price registered at the time of writing. This cost can be mitigated or even canceled if the company does a good job and is able to sell the property at a higher price than if it were sold by a private individual.
- If you decide to sell yourself you will have to bear all marketing and promotion expenses. If you choose a mediation company these will be included in the cost of your services;
- Do you want to sell your home quickly or do you prefer to wait to sell at a higher price?
- Everything is sold, it is a question of time and or price.Putting the high price on the sale will take more time to take effect. If you want to sell your home quickly then you will have to choose a price below the market average;
- Do you want to maximize the sale price , through improvements or works, or choose to sell direct without additional headaches?
- This is a tricky issue as not always the costs of a complete remodel are easy to recover from the sale of the house, especially if the costs are high. Even though there are no substantial gains, at least it will make the sales process faster.
- Already small interventions, such as painting walls, or even placement of floating floor, may be the key element to realize a quick sale and at a good price;
- Do you want to sell the house with the stuffing included in the price (furniture, decoration and equipment), or do you want to deliver it empty?
- Well here is an option that may be good if the decoration still remains current (especially if it was made by a decorator), but generally can reduce the number of visitors and interested. Above all, do not fall into the temptation to add to the price of the property the "emotional" price that the filling has for you, let alone the cost of acquiring the goods, since furniture and other objects of decoration devalue immensely.
- Do you face the possibility of selling your house with barter ?
- It is a tougher sale but has substantial gains in terms of tax savings, so it increases the room for maneuver to lower the price or negotiate with the other buyer owner.
How much is your house worth?
As we have already begun to see, the formula to define the right price of a house is complex because it depends on multiple factors that influence the price and whose weight is highly subjective. Some of these variables can be:
- Location - This is one of the most important variables, since it is associated with the factor that most contributes to the success of the sale: demand. This can vary greatly, even within the same parish. It is not worth comparing real estate prices, located in different areas. It is an exercise that only serves to create false expectations with the owner. The proximity to points of interest, transportation, schools or medical services can be an important factor to improve the sale price;
- Year of Construction - The greater the age of a property, the lower its value. Except when: the conservation status is very good or has undergone conservation / renovation works, or has a relevant past associated with a famous former owner, or relevant historical episodes.The 5 year rule can help you in comparing the house with other properties for sale in the same area, with similar characteristics. The psychological effect, from the buyer's point of view, tends to fade when the age difference between them is less than 5 years. So if a property is 11 years old and the other 16, from the buyer's point of view the age factor will have less impact.
- The Typology - Although the typology of the property is usually linear in terms of the calculation of the respective price, the areas may influence, causing a T2 with larger areas to be offered for sale more expensive than a T3 with similar characteristics.Sometimes there is the temptation on the part of some owners to transform a T4 into a T3, or a T2, in order to expand the areas, but this remodeling does not always benefit the price of the property, and may even devalue;
- The Areas - This is an important variable in the price formation and is used in the calculation of the price per m2 (Price / Area). In the end, if the price / m2 is outside the average values of the surrounding area, it is not worth looking for other reasons for not being able to sell, the reason is the price! But make no mistake, the price / m2 is a weak indicator to determine the selling price . Normally, the indicators available online use for your calculation the prices of the ads and not the price recorded in the deed of sale. Also, what area do they refer to? Useful area? Gross Area? The value of the working area or dependent area differs.A balcony does not have the same value as a storage room or garage, and these dependent areas have less value than the living area.
- the Architecture of the Property - This factor is highly subjective and difficult to ponder by the owner, even because their connection to the property is usually emotional. But it is one of the most important factors when analyzed on the demand side. Each client has a different profile and tastes, but a property that has modern lines, especially if in its design was an architecture office with evidence given, is half way to sell fast and at a good price. In addition, if the house has been recently renovated the price may be higher;
- Guidance and Solar Exposure - This detail does not go unnoticed by demanding customers.To have or not have a good sun exposure, preferably spring / sunset, is a sufficient condition to value or devalue the price of the house. In addition the brightness of the apartment varies with the architectural design of the house, so each case is a case. Idea to retain: if your house has good light, then the price may rise ;
- o Housing Characteristics - It is not possible to attribute the appropriate value to a house considering only the average value of the market price / m2.Details such as: finishes and equipment available , if there is a garden or pool , home automation , gas central heating , garage or parking , storage , balconies or terraces , elevator , which floor , river / sea view , etc. can value your home and differentiate it positively from the other properties.
How to set the price of a house?
Price is a determining factor in the success of the sale. If you choose a low price you will lose money, if you choose a high price and outdated demand / offer will have negative consequences :
- At the end of 3 weeks / 1 month, to "go to the air" without being sold, the property loses value and the "aura" of novelty . After some time without selling the house, the owner has no choice but to initiate a process of successive discounts and discounts, which further amplifies this effect.
- In addition, many buyers turn to bank credit and it is common for negative surprises to appear after the bank assessment, because if the property is valued at a lower value than the owner's request the buyer may have to cancel the deal if he does not have equity to bridge the gap. Not to mention the deceit of the buyer who loses the amount paid by the bank evaluation.
There are several ways to determine the price you want to put your house up for sale. To choose the most adjusted price, you can choose one of these options:
1 - The help to a professional. It is the most usual way and can save you time and money.
- You can go to an appraiser , but that obviously has costs. However, the accuracy of a Real Estate Appraiser is well worth the price, especially if the property has unique characteristics, or if there are several owners and stakeholders (example of a property owned by several heirs). The PAI uses confidential information such as the prices of newly-registered properties in the area that sometimes differ from advertised prices when the property is on sale.
- You can ask the help of a real estate consultant . If you are an experienced professional, you can not only use your databases to compare and define a price closer to the market (when the mediator is large, we are talking about BDWith tens or even hundreds of thousands of real estate), as your own sensitivity and market knowledge (buyers and sellers) can bring you even closer to the right price.
2 - Do this task alone , using various indicators and tools, such as:
- Consult the INE or Finance data . If you live in the cities of Amadora, Braga, Funchal, Lisbon, Porto or Vila Nova de Gaia on this site you can consult the average prices per m2 for houses and apartments, and the detail can go to the parish, neighborhood or block. In the Finance Portal you have a similar service.
- Use the tools of some sites that collect the previous information and others, allowing the consultation of the average values per municipality / parish. There is, for example, the Deco website .
- Use the average values of bank evaluation of housing (€ / m²) that INE publishes monthly , distributed by municipalities with a population greater than 100,000 inhabitants (census data 2011). Below you can see my table based on these values:
- Consult the websites of real estate agents comparing your property with the rest that are for sale in the same area, with similar characteristics. It has, for example, the website of Keller Williams Portugal, where it also has the possibility to request a free consultation, usually assisted by a consultant, which is carried out using its own databases. In Keller Williams the page is this , being that, after completing the form is sent to a consultant of the zone of your property. This query has no costs or other links.
- Using Online Assessment Simulators , such as Casa Sapo .
- Go to the advertisers sites Casa Sapo , Idealista , Imovirtual , BPI Expresso Imobiliário , etc. and check the prices of the various properties advertised. The possibility of filtering the search through the zone, typology and other characteristics facilitates the comparison and allows a finer adjustment. In addition, you can find the average values / m2 calculated based on real estate ads in the areas where you search.
- Find out from the neighborhood if any property was sold recently and at what price. Please note, the values that matter most are those related to transactions performed, not announced prices. Between the priceannounced by an owner and the actual carrying amount there can be a big difference;
Psychological Price, the details also count
Can Psychology Help You Choose the Right Price? Since price is a crucial factor in the sale of a home, it is natural to think that all the advantages that you can use for your benefit will be useful for the purpose in view, which is to sell! the use of
1. The 99.99 syndrome
We all know the classic trick of pricing with a 999 or 990 at the end. It is believed that this theory came about in the 1880s, in order to convince the naive that they were buying a "bargain." But is it worth it? Using the 99 or 95 in the price of your home will not fool smart people and usually these are the ones that buy houses (although not always;)! On the other hand it can make searching difficult online, because if a buyer has a fixed investment ceiling it will filter the search of homes eg between 200,000 € and 225,000 €, now if you have tagged the price at 199.900 € this buyer you may not see your property. So a round price € 200,000, will be more effective as it will appear on both sides of the search; who seeks between 175,000 € and 200,000 € or who seeks between 200,000 € and 225,000 €.On the other hand if you want to position your home in the segment of luxury clients, you can not convey the idea that it is a discount price. Ferrari and many other luxury brands also use this method to brand their products.
2. The power of the four and seven
One of the methods of pricing, used by large supermarket chains like Wal-Mart and Home Depot, takes advantage of price psychology by making use of the " power of the four and seven ." For example, a price of € 247,000 or € 244,000 induces the customer to believe that the price was accurately determined by taking costs into account and conveying to the buyer the idea that there is less room for negotiation . This assumption benefits the seller. On the other hand, this method bets on the marking of unique prices that stand out in relation to the others . When your house appears in the middle of many others, eg a list of an advertiser website where the remaining prices have many zeros, the price of your home will stand out by being different and more unique, thus attracting the buyer's attention .Some believe that using the four and seven in price tagging creates bonds of empathy for potential buyers, first because they are friendly numbers and the other because the seven is a lucky number.
3. How to write the price
If it is someone who uses printed marketing material (flyers, signs, newspaper ads, etc.) can modify the way the price is written (in the online portals this is not possible) and this is important can can affect the way people perceive the price. The Journal of Consumer Psychology has found that when people have to spell the price on their head, it may seem higher. P.ex. see these three prices:
- € 1,400.00
- € 1,400
- € 1400
In this study, the last price, without commas, appeared to be lower in the eyes of consumers. So the next time you have to write a price on your leaflets, or the newspaper: opt for € 177,000, instead of € 177,000.
On the other hand, Cornell University made another study on the same subject and reached the following conclusions:
- 5,00 (best seller)
- 5,00 € (less sold)
- five euros (best seller)
There are restaurants that, on the menu, show prices this way. How can the same apply in real estate marketing? Instead of 100,000 euros, write a hundred thousand euros or 100 thousand.
4. Palms for the zeros
Whenever the property undergoes a price drop and it can be advertised in a personalized way, try adding more zeros to the discount amount to create the idea of a higher downgrade. For example, type "price drop of 50,000.00 €" instead of "50,000 €".
With the booming domestic market and the media spotlight focusing on real estate activity, choosing the right price is a difficult task to perform wisely and competently.
If on the side of the owners the expectations have risen, influenced by the buzz of the media, already on the side of the professionals of the real estate mediation the lack of suitability of some exacerbates even more these expectations.
Commercial techniques such as "suggesting an unreasonable price to obtain the garnering and satisfying the ego of the owner who thinks himself the owner of a palace" are perverse and contribute to induce a climate of false expectations and a speculative environment that harms all mediators, buyers and owners.
The price at which a property is put up for sale is crucial to the success of the operation . Do not get into price madness that does not get you anywhere, see a professional with a proven track record and you will not regret it.