Naturally we all know that the asking price is the amount a property is put on the market for and the selling price is the sum it is ultimately is sold for, but it is the interrelationship between the two that is interesting, for it tells us a lot about Marbella property market.
An indication of property market conditions
The difference between the asking and the selling price is therefore interesting, for this information collated across a street, specific residential area, town, region or country tells us a lot about the dynamics at work in its property market, and this again is one of the key indicators of economic health.
For instance, if the ultimate selling price of properties is quite far below the original asking price, this indicates that they have been on the market for a long time before selling, that there has been a lot of negotiation and haggling, and that the buyers have had the upper hand and been able to achieve a big discount. This is a classic example of a ‘buyers’ market’ and the sign of weak demand, falling prices and therefore a depressed property market and economy.
If, however, there is little or no difference between the asking and selling price, this is an indication of keener competition for the property among buyers, little or no haggling and a shorter selling time – all factors that indicate a healthier, more vital market and economy. In its stronger form, this is known as a ‘sellers’ market’, and in the latter it isn’t unheard of that some vendors even raise their original asking price. This is not regarded as good practice, but it does happen.
Accurate valuations making for saleable properties
If, however, an individual property suffers a large drop in asking price in an otherwise healthy market, it is usually an indication that the original value set was simply too high. Accurate valuations are therefore important if you are serious about selling your property, for they reflect the real market conditions and ensure that your home’s asking price does not frighten off potential buyers because it is out of sync with what they can find elsewhere.
Many an agent that simply wants to list your home will accept any asking price, even if the owners’ emotional attachment to the property will make them want to ask too much. An experienced realtor on the other hand, will advise you correctly and back it up with factual information so that your property has every chance of success and doesn’t have to go through the lengthy process of waiting and haggling before it sells at a large discount after all. Proper valuations are all about avoiding time wastage.
It is interesting to note that, according to the National Association of Realtors (NAR) in the USA, 35% of properties are sold there without any meaningful price negotiation. In other words, the buyers accept the asking price without even endeavouring to haggle. As Mark Stücklin of Spanish Property Insight points out in his article on this topic, in Spain this happens only 10% of the time, an indication not so much that the American property market is stronger than the Spanish one, but that asking prices are set too high here and the value of accurate valuations is still not yet fully appreciated.
Given that this leads to protracted sales times and unnecessary haggling, it would be good if we can begin to shed the culture of overvaluing our asking prices in expectation of counter offers, and rather move towards a more accurate, technically based reflection of prices. In time, this will benefit both vendor and buyer, and also feed more accurate data back into the market – an important factor in an age where information is king.