Demystifying sellers’ price expectations

The struggle to understand property price guides can often lead to headaches and further questions. Some might wonder what the difference is between a price guide and an asking price, or when buyers should offer over or under the price guide.

According to Mark Hay Realty Group Principal Mark Hay, a price guide is a way of informing the intended purchasers of the price parameters of a particular home for sale.

“In a hot market, price guides should be reasonably accurate, however, properties that are priced at a ‘from’ price give the indication to the purchasers of a minimum price the seller will accept,” he said.

Mr Hay said one of the best ways to navigate a price guide was to employ an independent buyer’s agent to do research and negotiate the best possible outcome.

“The buyer’s agent will look after your best interests and work on a percentage commission on the purchase price of your new property, paid at settlement,” he said.

According to Marron Real Estate Principal Rhett Marron, a price guide should only be treated as a seller’s price expectations, which in turn may assist a buyer to determine how genuine a seller is about selling their property.

“There are other more important factors for a buyer to consider, such as the price similar properties in the area have recently sold for and similar properties currently on the market for sale, which is a better indication,” he said.

According to both Mr Hay and Mr Marron, there is nothing to stop an interested buyer from making an offer below the price guide or on any terms they think appropriate.

“Real estate agents have a legal obligation to present all offers to their seller, even if a buyer were to offer under an advertised price guide,” Mr Marron said. “Where an offer from the buyer is unreasonable, there is often some argument as to whether or not an agent is compelled to formally write up an offer. In this case, some agents will take a verbal offer from the buyer and present it to the seller.”

Mr Hay said while it was important for buyers to put their best foot forward if they were keen on a property, it paid to do your research.

“Occasionally you will have an overzealous seller punching way above their weight, and if your market research tells you it’s not worth the money, you can start under the price guide,” he said. “Although, the agent or the owner may have no intention of dealing on your offer if it comes under the stated ‘from’ price.”

According to Mr Marron, there isn’t a stark difference between a price guide and an asking price.

“A price guide may be marketed in various formats, as opposed to an asking price which is traditionally a single dollar amount,” he said.

“All are simply an indication of the seller’s expectations on the price they would like to achieve for the sale of their home.

“Whether a seller uses a price guide or an asking price, a buyer should always undertake their own research and obtain their own advice as to what the current market price of a particular home is.”

Mr Hay said a price guide was a guide to approximately where the price point should be starting or ending, while an asking price was always expected to be the highest point a seller expected and would usually indicate they would be open to offers less than the asking price.

“When negotiating an offer, price is not always the key ingredient,” he said.

“There are so many other areas which can see your offer shine above others. The offer may be cash and unconditional, or the settlement may be expedited or extended in order to allow a longer settlement, creating more time for the seller to find alternate accommodation.”