Differences between desired price, valuation and sales price18 Jan 2021 | Buying and Selling FAQ
Definitely, when a property owner puts his property up for sale, he wants to get the best possible sale price, so far everyone agrees, the problem is that when selling a property many factors come into play which will undoubtedly influence the sale price. But before delving into these factors we are going to review the following three concepts that will be fundamental in arriving at the correct reasoning for establishing the correct sales price: desired sales price, appraisal price and final or actual sales price.
The desired price, as the name suggests, is the price at which the owner wishes to sell his property, which as we have just mentioned, will always be the maximum possible. However, this price should be based on the market price index, and not on the needs of the owner. These needs may be to want to sell the house at a higher price than it cost us, above the price of the mortgage still pending repayment or for an amount we need to reinvest in another project, among other reasons.
The desired price could be said to be the dream price, but unfortunately this will remain a dream.
Valuation price “asking price
The valuation price, also known as “asking price”, will be a recommended sales price by a professional, either an appraiser or a real estate agent who knows the market and who will carry out a study of the competition taking into account the prices at which other products with similar characteristics are marketed and who, due to his experience, has also carried out sales and knows the real sales prices of many other properties.
Final sales price
The final sale price is, as its name indicates, the price at which the sale is finally closed. Generally this will be a price lower than the valuation or “Asking Price”.
Once these three concepts have been clarified and returning to the initial idea of analysing the aspects that influence our sales price, we see that we often confuse them.
It is common that when we sell our property we take into account the desired price rather than the valuation price, resulting in a lengthening of the selling times. In certain cases this lengthening results in our property losing interest due to the so-called wear and tear effect that occurs when you see a property on the market for months.
It is also true that the valuation price is not a true science and can sometimes be slightly higher or slightly lower than the market price. It will also depend on the product, whether it is a “prime” property with a lot of demand, or a very liquid one, or a not so prime property with less demand, or what is the same, less liquid.
when we launch a property on the market for the first time, it is very important to get the price right
In any case, and apart from the theory, in practice, when we launch a property on the market for the first time, it is very important to get the price right and this means that we, as real estate agents, will have to deal with the desired price and the valuation price, marking as a starting point a point more or less close to the valuation price depending on the seller’s desire and needs to sell.
With respect to the final price and according to the market at this moment, we must have discounts that oscillate between 5 and 15% with respect to the valuation price.
Having said that, I hope I have clarified these terms and that it will be useful for you to understand the importance of launching a property on the market with the correct price in order to generate visits, receive a serious offer and make the sale.
In Benarroch Real Estate we are at your disposal to help you sell your house when you need it.
Article by Brice Benarroch Mennessons18 Jan 2021
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