SALES methods that are too sophisticated could be turning buyers off your property.
A number of new sales methods have gained popularity in recent years, but they could be being over used, according to a WA real estate agents representative.
REIWA Sales Consultants Network chairman Paul Dilanzo said while most new methods were designed to get the best price for the seller, some could be scaring buyers away.
“The feedback I get from a lot of buyers is that the sales methods without prices confuse them and they end up walking away from a property,” Mr Dilanzo said.
“Buyers want to know how much a property is.
“There should be a guide at the very least.”
Mr Dilanzo said he was afraid agents were getting too sophisticated in their sales techniques.
“They believe in a method so much that they recommend it for everything, but unfortunately the public dont know how to use it,” he said.
Traditionally, most properties would have a fixed price, but a quick scan through any suburbs listings today will show set date sales, price guides, price brackets, expressions of interest, price on application and auctions, to name a few.
Mr Dilanzo said some methods were developed to tap into the buyers psyche or get the best sale price in a buoyant market where fixed prices may not.
Momentum Wealth managing director Damian Collins said there wasn’t one single best method.
“Take in your market, consider your property and your circumstances,” he said.
“If you have a specific time frame, a set date sale might work for you.
“In more buoyant markets, trying nonspecific mechanisms, like expressions of interest, or offers might work for homes.”
Mr Collins agreed that sales mechanisms without prices were frustrating for buyers.
His recommendation for a fixed price was to add a small amount of breathing room.
“If its worth $500,000 you could try for $519,000 and have room to move, but if you try for $550,000, but expect it is worth $500,000, the trouble is the buyer doesn’t know that,” he said.
Agents say auctions are gaining popularity in WA, though at about 2 per cent of the market, they are still less popular than in Sydney or Melbourne.
The experts said auctions could achieve above expected prices, but were most suited to properties which would hook buyers emotionally.
Metropole Property Strategists founder Michael Yardney said sellers needed to consider the market carefully when choosing the best way to sell their home.
He said that in a moving market sellers should compare their home with sales no farther out than three months.
“With the WA market moving so fast, you can shoot yourself in the foot unless you put the price high,” he said.
“I would recommend a price range for a hot market; it opens it up more.
“Don’t put the price range more than 10 per cent; don’t put $400,000 to $500,000, put $450,000 to $500,000.”
Mr Yardney said it was best to set the price range with the target price in the middle.
He also cautioned against using methods that were too smart, as they could work against the seller.
Hegney Property Group chief executive Gavin Hegney said in any market, the best method was one which didn’t scare buyers off.
“A good agent will educate their client about the best sales method for their property, for their location and for the market,” Mr Hegney said.
“Today, there are a range of choices not available in years gone by.
“A good agent will be well-educated across all methods and can advise on the best to choose.”
PROS AND CONS OF SALE METHODS
To Be Sold
PROS
– For people who need to sell urgently, “to be sold” can attract serious buyers.
– It implies the seller has realistic expectations for the price.
CONS
– When buyers see “to be sold”, they think “bargain”.
– It can make the seller sound desperate.
Expressions of Interest or Offers
PROS
– Expressions of interest are designed to bring a buyer up to their maximum price. They are run as a silent auction and encourage buyers to put in high offers because they don’t know what the asking price is or what others have bid.
– They work well for unique, hard-to-price properties.
– They can help agents get feedback from the market on what people are willing to pay.
– They can work for a more standard property in a sellers’ market where buyers may pay more if they are afraid of missing out.
CONS
– As well as bringing buyers’ offers up, EOI can equally bring sellers down to realistic prices. Perhaps not recommended in a buyers’ market.
– Buyers can be frustrated by the lack of price or a set date for offers. Putting in an offer can take a lot of time and effort for a property they’re not sure they can get, especially if they need to sell their own home by a certain time.
– Just as buyers can put in higher than expected bids, they can also go much lower.
– The strategy can be pointless if there are easily comparable properties on the market.
– EOI may not work for a standard home in a steady market.
“Priced from”
PROS
– Pricing a home “from” works best in buoyant markets.
– Like a range, it can attract buyers in a lower range and tempt them into the higher bracket.
– It may well achieve the desired price point and help reduce the number of buyers coming in under the price.
CONS
– The problem with “from” is that the buyer only hears the lowest price.
– Unless buyers have incentive to go higher, such as competition, they probably won’t.
– Similar to a price range, the lowest price cannot be a bait. If you receive an unconditional offer for the lowest price, you must be willing to take it.
Set Date Sale
In a set-date sale all off ers are collected by the agent during the marketing campaign and presented to the owner by a set date. The owner will then choose the best offer.
PROS
– A set date sale encourages buyers to put their best foot forward because it’s essentially a silent auction.
– The fixed sale date creates a sense of urgency.
– They work best in buoyant markets, where people are driven to put their best foot forward by a fear of missing out.
– SDSs will also drive buyers to put in their best offer if it’s a property they love.
– They can work better for properties that are unique, hard-to-price or something buyers will fall in love with.
CONS
– A set-date sale could deter some buyers who prefer the transparency of a fixed price or price guide.
– The set date may not work for those with time constraints.
– SDSs don’t work as well for investment properties.
– They work better for properties that are unique, hard-to-price or something buyers will get emotional about, rather than standard properties because they frustrate buyers.
Auction
PROS
– Auctions don’t put a limit on price.
– They work on competition. If more than one buyer loves your property there could be a bidding war that could drive the price up by tens of thousands of dollars.
– The sense of urgency can work on buyers’ emotions.
– Auctions are cash sales and can be a quick way to sell.
– While an acceptable bid may not be made on the auction day, sales can be negotiated afterwards.
CONS
– Auctions principally work well for houses that buyers will fight over, typically those that are unique or where stock is low. Exceptions are the past six months where auctions worked well for cheaper houses as buyers snapped at lower priced homes.
– As a rule, vendors pay for auctions whether the property sells or not.
– They tend to work less well for easily comparable properties, ie villas/units.
– First homebuyers or other buyers lacking confidence can be scared off by the process.
– They may also put off buyers who can’t make unconditional offers. Buyers need to have their finances in order to enter an auction, as they are cash purchases.
Fixed price
PROS
– As fixed price is the traditional sales method for Perth, buyers are comfortable with it and how it works.
– It is clear, upfront and transparent.
– Most buyers are aware they can negotiate the price.
– There’s no deferral in time; buyers don’t need to wait for a predetermined date.
CONS
– If a buyer falls in love with your home they might be willing to pay more to capture it, but a fixed price may not give them the incentive.
– Other methods may be able to capture a higher price through creating competition or drawing on the buyers’ fear of missing out.
– They are best suited to steady or flat markets and may not get the most for the seller in fast-moving markets.
Price Range
ie. $450,000 – $500,000
PROS
– A price range will get more buyers through the door than a fixed price, increasing the chance of your home selling for the best price.
– By putting a lower price, you can attract the interest of buyers who wouldn’t otherwise come forward.
– If the buyer then falls in love with the property, a good agent will be able to bring them up, as most buyers shop below what they can aff ord.
– Price ranges can also be used to test what buyers are willing to pay for a property, without the fear of overpricing.
CONS
– You have revealed your minimum price to the buyer.
– Unless they fall in love with the home, buyers will see the lowest price as what they’re willing to pay and could make offers below that.
– You must be willing to accept the lowest price if you receive an unconditional offer because agents are not allowed to price bait.
– It won’t be easy to drag the price up; you need a skilled agent.
Price on Application (POA) or Contact Agent
PROS
– Creates a level of interest in a property.
– It can allow a good agent to start a conversation with potential buyers.
– The agent can see where the interest is, find out what buyers are willing to pay and encourage people to view the property.
– It avoids overpricing the property.
CONS
– The agent must be willing to say the price on application, or at least a guide, otherwise frustrated buyers could walk away.
– Sellers may have to adjust their expectations of price based on feedback from the market.
Source: Pros and cons compiled from the combined tips of Metropole Property Specialist director Michael Yardney, Hegney Property Group chief executive Gavin Hegney, Momentum
Wealth managing director Damian Collins and REIWA Sales Consultants Network chairman Paul Dilanzo.
MARKETING COSTS
MARKETING for a standard home in Perth should cost $1800 to $2000, REIWA Sales Consultants Network chairman Paul Dilanzo said.
For a top-end home, however, sellers could expect to pay between $5000 and $10,000.
Mr Dilanzo said estimates from sellers’ advisory company Australian Real Estate Consulting that WA agents fees were generally between 3 per cent and 3.5 per cent were too high.
“Good agents should get 2.5 to 3.3 per cent,” Mr Dilanzo said.
“Less-skilled agents should get between 1.5 and 2 per cent.”
Mr Dilanzo said the cost of marketing campaigns was justified when getting the best price.
“If you don’t go out and find all the buyers, how do you know you’ve got the best price?
“If you sold a home in 48 hours and only got two buyers through, what about the other 25 that are out there?”
Mr Dilanzo said some of the most important tools were street signs and photography.
“Your neighbours are your best allies for telling people what’s for sale in the suburb,” he said.
“20 per cent of the sales I’ve seen in my career have been local sales.”
Mr Dilanzo also said while good photography could cost a bit more, it was central to any marketing campaign.
“If you can get someone to fall in love with your property, you’ll get the best price,” he said.
MARKETING BREAKDOWN:
Online advertising: $600 – $800;
print advertising: $200 – $1000.
Standard signage: $170 – $180.
Photography: $150 – $250