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Setting House Prices to Attract Buyers

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RESOURCES - House Prices:
This article on house prices is mainly for those attempting a private house sale. It shows them how to set their house price so that it attracts the attention of as many buyers as possible.
If you're interested to learn about how to accurately value your property please read:
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House Prices / Asking Prices / Sales Prices

When dealing with the subject of house prices, be sure you're clear on the difference between "asking prices" and "sales prices".

Sales Prices:

This is what a house is worth - what it sells for - the money banked!

Asking Prices:

These are advertising prices and traditionally they are set between 2-10% higher than the expected sales price.

Selling for just under the asking price allows buyers to feel that they've negotiated a good deal while you achieve the sale price you were hoping for.

There is an art to setting an asking prices but all it really boils down to is keeping it competitive.

Buyers are attracted to properties that look like good value - no one likes to overpay.

Buyers' only real points of reference on value are the other houses they're currently viewing. It's important that you advertise your sale in line with these properties or run the risk of not finding a buyer at all.

As I mentioned, there is usually a gap of 2-10% between asking prices and achieved sale prices (you can get an idea of what the gap is in your are by looking at the market data that Hometrack collates).

To attract more buyers, make the gap between your sale price and your asking price smaller than your competition (i.e. Keep your asking price as low as possible).

This may sound counterintuitive but it's one of the best strategies for achieving the highest sale price possible.

More buyers = Competition = Higher eventual sale price

Basically you're trying to increase your chances of buyers getting into a bidding war over your property.

Rounded House Prices Don't Attract Buyers

This is an old salesman's tactic that you'll have seen in the supermarket a thousand times - it works for house prices too.

Here's an example:

  • Your house is worth £388,000
  • In your area houses are selling for 97% of the asking price
  • That means your asking price should be £400,000

Knocking off a few quid and advertising your house at £399,995 will attract more buyers than £400,000.

It's silly but it works.

House Prices & Stamp Duty Thresholds

Here are the latest rates for Stamp Duty Tax:

Be careful if your house is worth close to:

  • £125,000
  • £250,000
  • £500,000

It is hare to sell property priced just over one of these tax thresholds.

This is especially true around the £25,000 mark because the tax rate jumps from 1%-3%.

If this applies to you, here are a few things you can try:

Option #1 - Advertise with an asking price that's 3-4% above the tax threshold.

At this level buyers will be attracted because it's not too far over the threshold. They'll sense that there's a chance you could be negotiated down to just under the tax threshold.

Option #2 - Agree a sale price just under the tax threshold but negotiate a separate sum for your fixtures and fittings.

This will net you a few extra grand while maintaining the saleability of your property.

Avoiding Stamp Duty

Understanding some simple Stamp Duty avoidance strategies like the one I just mentioned help you to:

  1. Sell for more
  2. Buy for less

However, you need to know what you're doing otherwise The Inland Revenue will have something to say about it.

The people at the excellent Tax Café website have commissioned a first-rate book detailing everything you need to know about how to avoid stamp duty.

It's pretty easy to read and gives you step-by-step guide to all the legal tax avoidance strategies you can use to:

  1. To make your house more saleable.
  2. Save large sums of money when buying.

The book is written by Russell Eaton (who is the UK's leading authority on legally dodging Stamp Duty) but I must warn you - this is an instructional book so don't expect a "rollicking good read.

The writing is a little dry in places, the suggested dialogue a bit stiff. However, it is concise, accurate and clearly shows you how to use strategies that can save you a lot of money.

Learn more: How to Avoid Stamp Duty (by Russell Eaton)

RESOURCES - House Prices:

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