In this blog, Steve Gott from Gott Realty North Brisbane shares his insights into Real Estate Pricing Methods – covering the good, bad and ugly.
Firstly, we’re not your traditional real estate agency. We offer transparent, honest advice to every seller we speak to.
We know the industry often cops a bad rap – and it’s not hard to see why. Some agents lead home owners astray when it comes to choosing a real estate pricing method that will yield the best result for their property.
So, if you live in North Brisbane, are thinking of selling your home and want a data-driven, straight talking real estate agent, please call us on 0419 777 577 or request a free property appraisal here.
Real Estate Pricing Methods
Throughout the past 40 years that we’ve been marketing properties – we’ve been obsessed with tracking home sales data.
It’s part of our commitment to being the best real estate agent on Brisbane’s northside.
It also means we’ve got a unique perspective on what works when it comes to real estate pricing methods.
So here’s your guide to different real estate pricing terms and methods available:
Property Pricing Methods We Recommend – The Good
What is it? Fixed pricing is the most traditional real estate pricing method in Australia. How it works is that the seller decides on a price eg: $525,000 as the maximum asking price. The property is placed on the market at this price.
Pros: This pricing method has been very successful since real estate transactions have taken place in Australia.
Cons: The biggest risk with this pricing method is over-pricing.
Considerations: You want to obtain quality competitive market analysis (CMA’s) from the agents you speak to, and be realistic about the selling range.
With fixed pricing it is up to the buyers to offer the seller a price and then the negotiation process takes place.
What is it? Offers over is a relatively new real estate pricing method. It was introduced about 20 years ago and is commonly used by agents. One way to describe it as an “each way” bet to pricing.
Pros: When done right by a skilled agent and backed by comprehensive research, it has the potential to generate a higher sale return.
Cons: We’ve researched many properties listed and sold using ‘Offers Over’ by a wide number of different agents and found it’s very rare to secure a sale price well above the listed ‘Offers Over’ price. In fact, our data showed:
- Only 1% secure a sale price $20,000-$30,000 above the listed ‘Offers Over’;
- 5% reach $5,000-$10,000 above;
- 46% only achieve $1,000 above the offer over price; while
- the remaining 50% sell BELOW the ‘Offers Over’ price displayed.
Considerations: Choose your agent wisely. This method requires a lot of research and an agent who has their finger on the pulse of the local property market. Getting the right pricing point for “Offers Over” is crucial.
Here at Gott Realty, our in-depth ongoing research and data collection sets us apart and gives us a distinct advantage when it comes to choosing the right pricing point using this method.
What is it? Selling by auction is a century old tried and tested method of selling almost anything – and it can work brilliantly for property.
Pros: Under the bestselling conditions in Queensland, around 50-60% of properties sell using the auction method. Auctions tend to work well in Brisbane’s inner suburbs where the seller and buyer demographics are different to the northern suburbs. Closer to the CBD, access to finance is different and the culture of buying at auction is more readily accepted.
Cons: Selling successfully by auction in Albany Creek and surrounding areas is possibly not the best strategy. When comparing at property sales in Brisbane’s northern suburbs over the last 20 years, my observation has been that market conditions have to be just right including:
- Market approaching boom conditions;
- The home must be unique;
- Or the reserve set to a realistic level
Considerations: A critical component of any auction is an extensive advertising and marketing campaign, not unlike our Top Tier Advertising program that we recommend for every property.
Fake Property Pricing Methods To Avoid – The Bad and Ugly
I hate to say it, but there are many versions of fake pricing that take place, including:
- Off market sale
- Price on Application (POA)
- By negotiation
- For sale now
- Express sale
- Inviting all offers
- Mid $400,000s
Let’s start with Off Market Sale, a real estate pricing method to avoid in my books.
At the heart of getting a good sale result is actively marketing your property to the biggest pool of potential buyers. So, to sell a home without any advertising seems senseless.
Talking about other fake pricing methods listed above, when we speak to buyers and ask them for their perspective on these pricing methods, up to 90% respond saying they don’t bother to look at the property, let alone arrange an inspection or viewing. Some other researchers collaborate these figures.
Why would a seller entertain the idea of only attracting 10% of buyers to their property?
Once again I tend to find that these pricing methods are employed by novice or inexperienced agents. They may not have the necessary skills required to thoroughly research the market for similar properties, or they are just in it for themselves seeking to make a quick buck.
Why should you avoid fake pricing?
Remember – the buyer’s objective is to purchase at the lowest price possible. Fake pricing plays into their hands.
An interesting observation with most property sellers who undertake this strategy, is that if the home doesn’t sell within the first few weeks they revert back to a “fixed price” or “offers over” method.
But – by this time it’s too late. It looks as though something is wrong with the property, or it has moved to the third or fourth pages on the real estate portals out of sight of potential buyers.
Our tip, if you don’t want to indicate price when listing your property, opt for a full auction campaign.
Real Estate Agent North Brisbane
If you’re looking for a real estate team that is honest, respectful and always acting in your interests, request a free no-obligation property appraisal today.
Our team has unprecedented access to local property data and insights, and we are here to help you sell your property for the best price possible with the least amount of stress.
Gott Realty service Albany Creek, Eatons Hill, Cashmere, Warner, Lawnton and Bray Park and many more areas across North Brisbane. Learn more here on our blog.