What is the best asking price for your home? It may seem logical to determine the market value first and then put that amount on Funda as the asking price. Yet when selling a home, it often works differently. The market value, the asking price and the final sale price are three different things. For us, the asking price is above all part of the sales strategy and has one important goal: reaching the right buyers, creating enough competition and ultimately achieving the highest possible sale price on the best terms.
Contents
- How do we determine the market value of a home?
- The best asking price is also determined by the current market
- Why a lower asking price sometimes leads to a higher sale price
- How important are the price thresholds on Funda?
- How far below the market value should you go?
- Overbidding says little about the value of a home
- Why starting too high usually isn't wise
- Is the WOZ value important when setting the asking price?
- A unique home sometimes calls for experience rather than a formula
- Do you always need lots of viewings and a bidding deadline?
- So how do you choose the best asking price for your home?
That's especially important in Utrecht. Buyers have become used to overbidding and already factor it in during their search. Someone who can pay a maximum of €700,000 might only search on Funda up to €625,000 or €600,000, because they expect to have to overbid quite a bit. So if you put a home on the market too high, it can fall outside the search of someone who could ultimately have afforded it perfectly well. But starting too low isn't automatically smart either. Two hundred viewing requests sounds fantastic, but if a large share of those people can't or won't pay what the home is really worth, it does you little good as a seller in the end.
The best asking price is therefore not by definition the highest or the lowest asking price. It's the price that lets you achieve the best sale for that specific home, at that specific moment.
How do we determine the market value of a home?
Before we set an asking price, we first want to know what the home is actually worth. To do that, we produce a valuation report in Brainbay and search the NVM exchange via Realworks for relevant transactions. We don't simply look at the average price per square metre in Utrecht, but look for homes that are as comparable as possible in terms of location, type, floor area and features.
Then we look at the differences. What's the standard of finish? How good is the layout? Is there outdoor space and how appealing is it? What's the energy label? How is the home positioned in the street? How much light comes in and what potential does the home still have? As a result, two 90 m² homes in the same neighbourhood can have quite different market values.
We also look at a home's potential and at how a few small changes could improve the energy label or give the home more official square metres.
Our own sales transactions are at least as interesting. We know not only what a comparable home ultimately sold for, but also what happened during the sale. How much interest was there, which bids came in, what objections did buyers have and how much competition developed? It's precisely that information that helps us judge how the market might respond to a new home.
The best asking price is also determined by the current market
A sale price from the past never tells the whole story. That's why we also look at today's market. Which comparable homes are for sale now, what's coming up soon and how many buyers are currently looking for a home like yours?
For that we use tools such as the Vraagscan (demand scan) from Funda. Funda looks at the behaviour of serious searchers and gives insight into how many potential buyers are active in different price brackets. The scan then sets that against the number of comparable homes that are for sale or have recently sold.
That tells you much more than just looking at what the neighbours' house fetched last year. For example, if there are lots of serious searchers in your price bracket and hardly any comparable homes on offer, that opens up different possibilities than if five similar homes appear on Funda that same week. That's why we sometimes even advise bringing the sale forward a little, or waiting a while. Timing, price and presentation have to fit together.
Why a lower asking price sometimes leads to a higher sale price
Deliberately listing a home slightly below the expected market value can be a good sales strategy. An attractive asking price reaches more searchers, generates interest more quickly and can get several buyers interested at the same time. That competition can ultimately lead to a higher sale price.
There is a limit to that, though. Making the asking price as low as possible to get as many viewers as possible isn't a good strategy in our view. You want enough competition, but above all competition between people who can genuinely appreciate the home's value and are financially able to pay that price.
An example from our own sales shows clearly why:
We sold a home of around 76 m² on the Cornetstraat for €616,000. There were around 40 viewers and in the end well over €120,000 above the asking price was paid. Not long after, across the road on the Hoveniersstraat, a corner house of around 90 m² that also had a much bigger garden was listed for €525,000. It attracted around 200 requests and the house sold for €650,000, €125,000 above the asking price. That sounds like a fantastic deal. Everyone was talking about how there were as many as 200 requests, as if that were an achievement. As if that was what counted…
After that, just around the corner, we sold another home of around 90 m², but with a much smaller garden. We chose an asking price of €625,000, no less than €100,000 higher than the asking price of the house with the bigger garden. We didn't get 200 requests, just 13 viewers. That felt nerve-racking for the sellers. But fortunately they trusted us. In the end we sold the home for €720,000.
The difference in final sale price was €70,000. And that for a home with a much smaller garden. That €70,000 was earned by applying the right strategy and negotiating the right way.
That example shows exactly why the number of viewings or the amount overbid is never the most important result for us. Two hundred requests and €125,000 overbid sounds spectacular, but the home with far fewer viewers and the smaller garden ultimately fetched considerably more. So the trick isn't to get as many people through the door as possible, but to choose the asking price in a way that activates the right market. After all, you want the right viewers in your home, not to let in exactly the 30 out of those 200 people who can't pay what you're after.
How important are the price thresholds on Funda?
The price at which you list a home also affects how findable it is on Funda. Buyers search within a certain budget and set their filters accordingly. A home with an asking price of €625,000, for example, won't be shown to someone who has set their maximum search price at €600,000.
That sounds obvious, but in a market where overbidding is common, something unusual happens. Buyers often deliberately search below their maximum budget. Someone who can ultimately pay €650,000 might set their search limit at €575,000 or €600,000, for example, because they want to leave room to overbid.
That's why we analyse not only the expected proceeds, but also what happens if we list a home at, say, €595,000, €600,000 or €625,000. Which group do you reach then, and how much competition is there within that price bracket? As a result, the best asking price may deliberately be lower than the market value, without us thinking the home is worth any less.
How far below the market value should you go?
There's no fixed percentage for that. Setting it ten to fifteen percent below the market value because on average roughly a certain percentage is overbid in Utrecht is far too simplistic in our view. The percentage that gets overbid is a consequence of the asking price you choose, not the other way round.
For one home, a sharp asking price can create a lot of competition and work extremely well. For another home, a higher asking price may actually be smarter, for example a unique property with little comparable data, or a home for a target group that's less used to a bidding war. Think of a home that suits a smaller target group and somewhat older people. In that case the result may come from hard negotiation, with the home ultimately selling below the asking price. In the end, it's all about a good price per square metre.
That makes no difference whatsoever to us. We don't want to choose a pricing strategy that lets us boast afterwards about how much was overbid. We want to choose the strategy that gets the seller the best result.
Overbidding says little about the value of a home
That's straight away one of the biggest misconceptions in the housing market. A home that's overbid by 15% hasn't necessarily been sold at too high a price at all. And a home bought below the asking price isn't necessarily a bargain at all.
Take two comparable homes, both with a market value of around €500,000. Home A is deliberately listed low at €450,000 and ultimately sells for €520,000. The buyer has then overbid by €70,000, or 15.6%. Home B is listed at €525,000 and sells for €510,000. There the buyer paid €15,000 below the asking price.
Yet the buyer of home A paid €10,000 more for a comparable home.
So looking only at the overbid percentage says little about the quality of a purchase or sale. The asking price is a strategically chosen amount. In the end, you have to compare the transaction price with the real market value of the home. At the same time, aiming high doesn't always mean you'll ultimately get more for your home.
Why starting too high usually isn't wise
“We're in no hurry, so we'll just start a bit higher. We can always drop the price later.” It sounds logical and we hear it regularly, but not being in a hurry doesn't make a home worth more, nor does it change where the best asking price lies.
What's more, a home only gets one real first introduction to the market. The moment it appears on Funda, searchers receive an alert, it gets forwarded and the first viewing requests come in. You want to make use of that attention. If the asking price is too high, a large part of the potential target group may drop out before they've even seen the home. (Psst… We sometimes change the main photo or tweak small things, so that the home pops up again for viewers on Funda or reaches a different target group, all to get the most attention.)
So lowering the price after a few weeks isn't the same as starting with the right asking price straight away. A home that's been online for a long time can start to feel to buyers a bit like that old sweet at the bottom of the sweet jar. There's probably nothing wrong with it, but then why hasn't anyone else taken it?
So if a home has been put on the market wrongly, we'd rather opt for a seriously adjusted strategy than knock a little off the asking price every few weeks.
That said, a higher asking price can definitely be the right choice. With a unique property, little comparable supply or a different target group, it can actually be wise to start closer to the expected sale price and then negotiate hard. Here too, it's not the overbid percentage that counts, but the final transaction price and terms.
Is the WOZ value important when setting the asking price?
We often hear: ‘No, that asking price really doesn't feel right. It's below the WOZ value’. We don't use the WOZ value (the municipal property valuation) as the starting point for the asking price. The WOZ is determined by a model and doesn't look at the current condition of a home, the finish, the light, the exact location, outdoor space, layout and potential in the same way a buyer or estate agent does.
So the WOZ value, the market value and the asking price are different concepts. The WOZ value is used for things like taxes, the market value is an estimate of what the home could fetch if sold at that moment, and the asking price is the amount at which you strategically put the home on the market.
So for setting the best asking price, we find recent transactions, current competition and buyer behaviour much more interesting than the WOZ assessment.
A unique home sometimes calls for experience rather than a formula
Not every home is easy to compare. For a standard terraced house there are often enough recent transactions available, but what do you do with a unique loft, a listed building, a completely renovated townhouse or a home in a unique location?
Then we work through past transactions and look for references where certain aspects are comparable. At the same time, experience plays a big role. You need to be able to judge how much value buyers attach to certain features and how large the potential target group is. That's the bit of fingerspitzengefühl you don't get from a single price per square metre.
Then there's emotion on top of that. Some homes simply have a high fall-in-love factor. The location is right, the light is beautiful, the layout works and the presentation means people walk in and immediately think: I want this. In fact, they feel it in their gut: I have to have this. This is home. That's not a number you can tick off in Brainbay, but it can certainly affect what someone is willing to pay. With homes like that in particular, the pricing strategy has to leave room for that emotion and competition.
Do you always need lots of viewings and a bidding deadline?
No. We'd rather have thirteen good viewers than two hundred people who can't possibly pay the expected sale price. So if we notice during the sale that interest is enormous, we try to make clear up front what price level we expect. If that isn't feasible for a buyer, there's little point in scheduling a viewing anyway. That saves the buyer disappointment and everyone time. Is it really busy? Then I calmly call all the viewers to manage expectations. I tell them how busy it is, what I expect and up to what price it can be valued. The viewer can then judge for themselves whether they still want to come and view.
Nor do we work with a bidding deadline as standard. A tender can be a very good way to make use of competition between buyers, but sometimes negotiating individually produces a better result. We don't want to sell because the deadline happens to expire on Thursday at 12:00. We want to sell when we're happy with the result. Taking the temperature a little beforehand is always good. What do the viewers think, where else are they going to view, what's their budget? With all this information you naturally sense what the best strategy is. A closing time or negotiation.
Sometimes that also means we don't accept. No deal can be better than a bad deal if we're convinced the right buyer isn't at the table yet. Perhaps the right buyer will be there in a few weeks. If we really have that feeling, we'll sell later.
So how do you choose the best asking price for your home?
So setting the best asking price takes much more than multiplying a price per square metre by the floor area. We look at recent sales transactions, our own sales results, Brainbay data, NVM references, Funda search behaviour, current competition, standard of finish, energy label, outdoor space, location, potential, target group and the moment the home comes onto the market. Then we decide which asking price will reach the group of buyers needed to achieve the best result.
Sometimes that means deliberately starting below the expected market value and creating competition. Sometimes it means a higher asking price and hard negotiation. And sometimes two good viewings are worth more than two hundred requests.
Because in the end, that's why you hire a selling agent: for the best result. Not to quote the highest asking price during an introductory meeting, not to promise the highest proceeds without being able to deliver, and not to proudly announce afterwards what percentage was overbid, but to achieve the highest transaction price on the best terms.
Ultimately, we want the best transaction price and a stress-free process.
