No Price Methods (‘Deadline Sales’, ‘By Negotiation’ etc) Take longer to Sell For A Lower Price
Wait? What?… But don’t many real estate agents say the opposite?
Yes, they do. Check out typical real estate brand websites. According to most of them:
“No Price Marketing increases buyer demand and leads to a higher sale price”.
But does it?
Have you questioned that notion? Or do you take everything the real industry tells you as gospel?
At Restate, as professionals advising and helping you sell your biggest asset, we see it as our duty to question it.
From my experience and recent research, I’ve discovered that it’s not necessarily true.
Yes, I’ve seen the likes of ‘Deadline Sales’ achieve a few outstanding results. But I’ve also seen a lot of them backfire.
Rather than focus on the occasional wild success story (told by salespeople pitching for your listing), wouldn’t it be wiser to look at the bigger picture – the over-all trend?
I’ve always had doubts about ‘No Price Marketing’. Mainly because of how often buyers tell me something like:
“If the property does not have a price – we don’t bother looking at it.”
Further, if you are a student of marketing, you’ll know of a guy called David Ogilvy. Considered by many to have been one of the smartest marketing minds of all time. In his book: Ogilvy On Advertising – he puts it this way:
“When the price of your product is left out, people have a way of turning the page.”
I guesstimate that up to half of the buyers feel this way. But even if only 20% of buyers skip looking at your property… how can agents say that ‘no-price’ attracts more buyers?
Following, how can they say it gets the best price? One of those buyers who didn’t look may have paid more?
And what about some research? Shouldn’t any advice offered you be evidence-based?
So we recently completed two studies in our local market.
First, we looked at new listings in a specific price range – comparing the number of online ‘views’ they received.
Yes, many variables determine the popularity of a new listing to the market. But if the claims are correct, we should see increased buyer activity. Right?
Wrong. The results did not fall into line. Although interestingly, the properties with the lowest online interest had no asking price. Coincidence? Maybe.
We then analysed seven months of sales in our local market, comparing the final Sale Price achieved to the Rateable Value.*
It’s not ideal research. RV’s are not a very reliable benchmark, but they’re the only one we have. And with a large enough data set, we should at least see a trend. If as claimed, “no price marketing leads to a better sale price”, we should see it in the numbers.
Here is what we discovered:
Properties marketed without a price: Averaged 95 days on the market and sold for an average of 4% above their Rateable Value.
Properties marketed with an asking price: Averaged only 57 days on the market and sold for an average of 6.5% above their rateable value.
Which suggests, overall:
‘No-Price Marketing’ takes longer to sell for a lower sale price.
You may be wondering why then, do so many agents say the opposite? Why are we seeing them push no price marketing more and more often?
There are many reasons. But that’s a topic for a different discussion.
Please Note: I’m not saying you should never use one of the no price methods to sell. There are occasions where it may be a smart move. Check out our Home Sellers Seminar for more in-depth knowledge on the pros & cons of different selling methods.
* VERY IMPORTANT TO UNDERSTAND: This does not mean that your property is worth exactly 6% above Rateable Value. This figure is an average from close to 500 transactions. Individual property sales varied from 39% under RV to 62% over RV. So please seek professional advice before making any solid plans around the market value of your property.
