The acquisition of a property is all about price analysis. Property is considered valuable, but only at the right price due to so many factors that can affect its profitability. That’s why it’s important that you don’t set any price just for an easy sell. But as you strive for balance, this is where things become more complicated.
This gives rise to what many like to call the pricing dilemma. It describes the disconnect between the business and its clientele, the property owner and the tenants, the seller and the buyer, etc. when it comes to pricing. But then again, it also becomes quite helpful in determining the best price for a commodity or property.
You have to make your price work for you, but at the same time, you have to make sure that you set the proper price for a property based on its true value. At some point, you may also have to raise or drop prices for certain situations. For instance, you raise the price to raise its perceived value but you drop the price when no offers have been made.
Basic Tips for Setting a Price
Before you ask help from an agent to sell your property, you first have to identify your price for yourself. Knowing for yourself these kinds of things will greatly help you avoid unjustified offers.
Here are a few things you should consider when determining the price using analysis of your assets:
Comparative Market Analysis
The internet is readily available with homes and other properties for sale. Hence, it would be easier now to compare with your competition. You can search for homes for sale in your area, and see how high or low the prices are. You can research the price range depending on the type of property and location you have.
If you plan to have an agent help you sell, then they should also be able to present you with a comparative market analysis. This is a basic part of their job and so it would readily be available to you.
But then again, you can always do this on your own. Just be sure to consider the following in doing your research:
- Compare with properties of the same type as yours (houses, commercial spaces, condo units, etc.)
- Compare your price within ¼ to ½ of a mile from your property
- Compare properties within 10% less and higher value to yours. A property with a 1000 square meter size should be compared to properties within the 900-1100 square meter range.
- Compare with properties built within your property’s age range
- Compare with properties being sold in the last 3 months only
Avoid Expired Listing Practices
Some properties just don’t end up getting sold. Check these listings and take note of the kind of prices they set for the properties. It would also be great if you can compare their final price with their starting prices. This way, you can determine what prices did not work for your potential market.
Exercise Unique Price Branding
Since the internet is readily available with plenty of properties for sale, you have to set your listing apart from the rest. This can be difficult to achieve in terms of naming your listing because you would want your property to appear amongst the competition as well. Hence, one way to do this is to put in a unique price brand.
This can be achieved by setting a price that has a lesser crowd. If you have plenty of properties in the area selling at $250,000 and $280,000, then you can set your price at $270,000 where lesser properties are found.
Trust in the Psychology of Century and Obscure Pricing
Even supermarkets apply the psychology of century pricing. Science proves that people appreciate seeing $99.99 compared to $100, and feel that there is a huge price difference between both. This also applies to property pricing. Your $399,000 could just be more saleable compared to when you price it at $400,000.
Of course, you cannot put up random pricing as well. Setting the price at random such as $432,948 could be too distracting for potential buyers to give notice.
Evaluating the Value of Property for Pricing
But of course, before you dive into actually putting a price on a property, you have to be able to assess your property’s worth.
You cannot price a property too high if it is too old or too small. There are a lot of considerations to make when gauging your final price verdict.
Some of these considerations are:
Property Conditions
Are all aspects of the property functional, without any major problems? Is it a newly constructed property? The overall condition of a property is perhaps the number one gauge for determining the price.
Property or Area Utilization
What is the area good for? Can you put up a commercial space? Rent out an area? Convert it to office space? If the property your selling can generate income or has high earning use, then you can put that into consideration when pricing it.
Property Restrictions
If there are any restrictions to the area or property, then you also have to put that into consideration.
Location
Your property’s location will play a huge part in setting a price. This does not only include the distance of the property from important city amenities, but also the general environment of the location. Are the houses in your location aesthetically appealing? Are the commercial spaces within foot traffic? All these and more will greatly affect the final price of your property.
Transportation Options
The ease or difficulty to get to your location is also a big deal when it comes to setting the price. You cannot demand a high price if your property is located too far from easy access transportation.
Knowing all these will surely equip someone with the basic knowledge in analysis, real estate entrepreneur and understanding the concept of pricing a property. But of course, asking help from an agent or an appraiser is also an option that you should also take into consideration. Regardless, even when you do ask for help, you are at least knowledgeable enough in analysis and the basic ins and outs of this trade.