Sales Price Influences

 There are actually five things that influence price. They are:

1. The property seller’s motivation

2. The property buyer’s motivation

3. The market on the day of an offer being submitted

4. The quality of the marketing of the property

5. The agent’s ability to negotiate on your behalf.

These 5 things all have a BIG role to play in the final outcome. So they’re all equally important. And because each of them can vary, in some cases quite dramatically, so can the sales price.

That’s why the old adage applies...

“Similar properties often don’t sell for similar prices”

What that means is, you can have two very similar properties located in similar streets, or even the same street and because just one of the five “Price-Influences” was different for one of the properties, so was the sales price.

Here’s an example of what can happen...Say you list your property for sale. Your agent provides a pretty thorough appraisal, identifying all relevant recent sales.

On paper the properties identified in the “Comparative-Market-Appraisal” make good sense. They all seem to be similar properties like yours. “A good indicator of price”, your agent will say.

But hang on a second. Have you considered the “Five things” that may have influenced their sales price? Probably not. Because unless your agent sold those properties, he or she probably doesn’t know.

For example...

--- One of the comparison properties may have been sold under some kind of “Seller Duress” (i.e. they had lost their job and has to sell quickly).

--- Another of the comparisons may have had “poor marketing” and as a result didn’t get enough exposure to the market or attract enough “A-Buyers” (I’ll explain who they are later in this chapter) causing the property to be “Under-Sold”.

— While another had its sale price botched because the agent wasn’t a competent, skilled negotiator.

This is why getting an “Appraisal” is fraught with danger. You can’t just simply say... “Oh, there’s a property that just sold like mine, so I can expect what they got.”


That assumption doesn’t take into consideration the “Five things that influence price” and how those five things affected the sale of the property you’re using as a comparison and as a “Price-guide” for your property.

Now you might be thinking this makes pricing your property hard. Well the truth is, it does make it hard. So what’s the solution?

Well the first thing to do is find an agent that’s more concerned about getting you the highest price than trying to “estimate” what your property is worth.

Look, I’m not against appraisals. But.... when is comes to achieving a “Premium Price” for your property an appraisal has its limitations.

What’s more beneficial than “estimating” a sales price, is the answer to this question...

— What do you think is happening to the market over time? In other words, how is the market trending. And, markets are always trending...

The “Three Market Trends”:

— The market is either ‘Trending UP’ over time – that means there’s proof that the market is rising; and therefore it could be described as a ‘SELLER’S MARKET’.

— The market is ‘Trending FLAT’ over time – that means all the evidence is saying the market isn’t going up or down, it’s just bouncing along without much change.

— The market is ‘Trending DOWN’ over time – that means all the evidence is pointing to prices easing or even dropping; in which case its commonly referred to as a ‘BUYER’S MARKET’.

When you’re certain what the trend is, it doesn’t matter so much what the ‘appraised price’ of your property is, what matters is you know what to do to beat the trend or even benefit from the trend.

For example:

– If it’s ‘Trending DOWN’ – the quicker you sell the better, that is, the longer your property stays on the market the less it will be worth.

– If it’s ‘Trending FLAT’ – what’s important is to get it sold before it becomes stale - the statistics show in a flat trending market, the longer the property is on the market it gets a stigma about it and buyers start to ignore it. That will cause the price to be driven down over time.

– If it’s ‘Trending UP’ – an appraisal makes even less sense. That is, over time the price will go up. Now that will also depend on the time frame. In this case you will want to take advantage of an upward trending market by NOT capping the sales price at a pre-conceived idea of what it is worth. Fact is, it could be worth more.

WARNING: Most sellers get caught up in the hype of selling their home and nearly always believe the market is going up or about to go up. Most sellers also believe their property is worth more than it is. That’s human nature. Desire replaces reality.

It may be the case that at the time of you reading this book the market is indeed trending up. If that is so, you need to ask this question... “By what percentage per month is it going up and how long will that upward trend last?

Don’t fool yourself into believing markets go up and up forever. You and I both know they don’t. You have to consider the impact the economy will have on the property market in the near future. You also have to look at the bigger picture. Look at world economic trends as they too can have an impact on the market over time.

Plus you need to understand what’s driving the current trend in order to determine what the market will be like in the near future. The question to ask is how sustainable is this trend? How long will it last? There are all good questions to ask your agent. Your agent should be an expert on ‘Market Trends’.