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It's a buyer's market, even though asking prices are up. But sellers can still attract premium offers with the right strategy, as Graham Norwood and Rupert Jones report
It's the traditional house-hunting season, and hopes harboured by owners and sellers of a recovery in the market are high, fuelled by figures this week showing that asking prices have increased for a third month. Rightmove said the typical asking price rose by 1.8%, or almost £4,000, this month, adding this may mean "we have finally reached a price floor, and confidence is starting to return". Mortgage lending is also showing signs of recovery.
But estate agents say it remains a buyer's market and those who can get a mortgage are not prepared to pay premium prices. Therefore it is vital to get the marketing right.
So which tactics work best if you want to sell at the best price?
1. Deliberately under-price to trigger a bidding war
It's the new marketing tactic being used by some estate agents: put homes on sale at asking prices below the levels they have fallen to over the past year.
The theory goes like this. In today's market, sellers cannot get a premium price without competition between potential buyers. Many homes at normal market prices struggle to find even one interested *buyer, but those with surprisingly low asking prices may attract several bidders. All that interest will hopefully mean the seller ends up securing a deal above the asking price.
This worked for Paul Irvine who has just sold his bungalow in Great Easton, Essex. It was listed at £225,000, though his estate agent thought it was worth about 10% more, even in a depressed market. Within three weeks there were 19 viewings and eight offers, three above asking price.
"If you can't get people through the door, you'll never sell a property. It had been on sale before at a higher price and didn't attract any real interest," says Irvine. "By putting a more attractive price on it, we pulled in the buyers and in a very short period. I'd never have thought of it but it worked well."
However, estate agents admit this approach cannot be used for all transactions. "It's hard getting sellers to agree. It's difficult enough for them to accept some prices have fallen 20% in the past year. Then asking to advertise their home for even less often brings a sharp response," says Antony Bromley-Martin of the Strutt & Parker agency in Chelmsford, which sold the Great Easton bungalow.
And it's a risky business. Going in low can be "a dangerous game", reckons Richard Hatch at national estate* agency chain Carter Jonas. There is a risk you could end up under-selling your property.
The practice of under-valuing is now being used at all levels of the market and across the country. "I wanted £320,000 but was persuaded by the agent to market at a more attractive price to drive significant amounts of interest," says Paul Patton, whose three-bedroom home in Chorlton, Manchester, has just gone on the market* for £295,000. He adds: "It's definitely worked. I reckon it will end up going to sealed bids."
A farmhouse in Shalford, near Guildford, Surrey, has been valued at £1.8m but is being put on sale from 1 May at £1.5m, again to entice competition.
And how do buyers react to ending up offering over the asking price? "It can be a shock. Most anticipate that in today's market there are very few others interested in buying, but actually* there are more people looking, and very occasionally there's actually a shortage of homes on sale," says Joel Baseley of Rampton Baseley, a south London agency.
2. Price extravagantly high, then cut so people think they are getting a bargain
When it comes to designer dresses, sofas and the like, most of us are suckers for a bargain. The price tag on that sale item says "30% off" and we snap it up, feeling very pleased with ourselves ... even though it was probably overpriced in the first place. The buyer is happy and the retailer is pretty pleased, too. So why shouldn't the same apply to selling houses? Say your house is probably worth £180,000. You put it on the market at £200,000 and then, a few weeks later, cut by £20,000.
Would-be buyers who liked the look of your property, but thought it was perhaps just out of their price league, suddenly sit up and take notice, and the offers start rolling in.
Some say this can work, but you've got to be sure you are going to get the interest from potential purchasers.
Many experts reckon going in with a high price can be fraught with danger. "There are buyers out there but they are not stupid. They are sniffing out sensibly priced property," says Peter* Bolton King, chief executive of the National Association of Estate Agents. The big risk of "going in high" is that "your property goes stale, and you end up reducing and reducing and reducing", he adds. "If you're not careful, your property gets a name for itself. Those that are selling are the ones that are properly priced in the first place."
Slashing your price can make you look desperate, argue some agents. Worse, some house-hunters who have had their eye on your property may end up thinking – erroneously – that you have had to cut because* another potential buyer's survey has uncovered something horrific.
According to Nicholas Leeming at the propertyfinder.com website, a seller generally gets the best price for a property in the first month of it going on the market. He says he would advise sellers to approach two or three agents specialising in their area and the type of property they have. If you want to see which properties have been cut in price, go to propertysnake.co.uk.
3. Throw open your doors
Another method some agents are using to generate interest is "open house days," where buyers are invited to view at the same time. This tactic, common in the US, means would-be buyers rub shoulders with each other, often resulting in high offers submitted quickly in order to beat the opposition.
Agents typically write personal letters* to buyers registered on their books and known to want a home like the one on sale, inviting them to view. Neighbours are leafleted and ads placed in local newspapers. Often, quite a few people will turn up.
"It also means that other buyers, knowing an open house is coming up, will put in an offer above the asking price before the day to pre-empt the whole process. It may be accepted by the seller, so the sale is agreed even more swiftly and everybody wins," says Bromley-Martin.
4. Make sure your property is all over the internet
Online is where it's at. For many buyers, the days of walking into an estate agent's office and speaking to someone are long gone: they are doing all their browsing online. So it is vital to use an agent with a strong internet presence. "Make sure they are on every possible property portal, and have a very good, up-to-date website," says James Hyman, partner at Cluttons. Rightmove.co.uk claims to be the UK's number one property website, with details of more than 1m homes. Biggies include FindaProperty.com, Primelocation.com and the recently launched PropertyLive.co.uk.
Hyman adds homebuyers "aren't interested in long descriptions [of properties]. They want floor plans, and as much visual information about the property as possible".
5. Presentation, presentation, presentation ... but don't spend a fortune!
Agents say first impressions matter more than ever in the current market. Maximising your kerb appeal to ensure your home stands out is particularly important if there are other similar properties on the market in your area.
"You've got to walk through that front door and go 'Wow, I like this house'," says David Smith at agency Dreweatt Neate, which operates in southern England.
Bolton King says that at the risk of "sounding like Kirstie Allsopp", it is all about decluttering, and making sure the exterior is well maintained and the garden presentable. If you have kids and/or dogs, it might be a good idea to banish them at viewing time.
But he says there is very little point forking out large sums on redecorating, because what you do may not be to the taste of prospective buyers, or spending a fortune on a new kitchen. A much cheaper option is to replace battered cupboard doors and panels.
... And here are some tips for buyers
• Make sure you've done your research. There's no excuse for not being fully up to speed on how much properties are going for and changes to prices. Websites such as Rightmove.co.uk allow you to search for properties. Sites such as Propertysnake.co.uk are useful for information on price reductions in your area. Its database contains details of almost 88,000 properties whose prices have been cut by up to 56%. Look at historic trends in the area, such as prices at the peak versus now. How does the current price compare with what the property would have gone for in 2007? This can give you clues about whether a property is on for too much.
• It's a buyer's market, so you're in the driving seat. Many experts say you should negotiate hard, particularly if there is any evidence that the vendor is in a hurry to sell. They may need to move quickly because of a new job, for example.
• That said, some agents say buyers should be careful not to go in with ridiculously low offers that may alienate sellers and perhaps send a signal that you are not a serious buyer.
• "Think of the property as a home rather than just a cash cow. I think we've got out of the habit of doing that," says Peter Bolton King at the National Association of Estate Agents. He adds: "If you are fairly certain you are going to be in the property for three [or more] years, does it actually matter if the price comes down a little bit?"
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