In my personal experience, and talking to agents and vendors, many people blow their best chance of selling well by going to market with an inflated asking price. This is especially true in falling markets, like the current one.
‘Selling well’ means getting the best price possible reasonably quickly, given your property and the state of the market. It’s much more challenging to do this in a market downturn. Almost anyone can sell well in a boom.
Agents often get blamed for advising clients to ask too much, but vendors are also partly to blame. They tend to go with agents who dangle a high price before their eyes, so agents who are more realistic about prices get nothing to sell. Consequently, all agents have an incentive to start high, on the assumption that vendors will be ground down by reality. The real problem is the lack of transparency that obscures market prices from buyers and sellers. The Spanish State is responsible for that.
I have bitter experience of going to market with too high a price. I did it with the only two things of value I have ever tried to sell; a motor boat, and an island.
That sinking feeling
Back at the start of the last crisis, around 2010, I decided to sell a motorboat I had been given as a wedding present. I hardly ever used it, because my wife didn’t enjoy going in it, and it was costing me more than 1,000€ a year to maintain out of the water. Best thing to do was sell.
But it’s not easy selling boats in a crisis, especially not in a small market like Formentera, where my boat was kept. I had no idea how hard it was going to be.
My boat coast €25,000 new, and was in perfect condition. I asked the owner of the local boat shop how much to ask, and he advised 13,000€. I was shocked how low that was compared to what it had cost, but went with his advice as I knew nothing about the price of boats, or the second-hand boat market.
Three years later, having spent more than 3,000€ to maintain the boat out of the water, I sold it for €4,999. Dealing with the boat, managing ads at different portals, and trying to find a buyer had taken up a lot of my time. I would have been much better off selling in 2010 for 4,999€ when I first put it on the market, but of course, hindsight is a wonderful thing.
In fact, I think I could have sold it for more than 4,999€ had I hit the market with the right asking price in 2010. At the time 13,000€ was not the highest asking price, but it definitely wasn’t at the low end. I should have started at 9,999€ to attract bargain hunters at that moment (prices only went down). It would have been a bargain at the time, but it would have been painful for me to feel like I was giving it away. As it was, I had to go through years of frustration to get my expectations beaten down. In the end I was ready to sell for 1€.
In 2013 I decided enough was enough. Having dropped to 10,000€ in 2010, I decided to reduce the price every month in 2013 until I found a buyer. In February I dropped to 7,900€ (no enquiries), in March to 6,999€ (no enquiries), in April to 5,999€ (no enquiries), and in May to 4,999€, at which point I was bombarded with serious enquiries, including people from far afield. I had finally hit the price at which buyers were interested. Had I gone to market at the price of buyer interest in the first place, I probably would have ended up at least 5,000€ better off, if not more.
It was a similar story with a private island I was charged with selling just after getting the boat of my hands. The owners were offered €30m in the boom years by a billionaire who desperately wanted the island, but one of the owners refused to sell, so they went to court for about 10 years, spending a fortune in legal fees, before finally agreeing to sell in 2013, when the economic situation was dire. Boats and islands are not easy to sell when times are bad.
I had just learnt a painful lesson in asking prices with my boat, but the owners of the island had not yet learnt the lesson. It’s not easy to value private islands, as the market is small, and each island is unique. Advised by a big-name international agency, they kicked off with a price of €46m, much higher than the €30m they had been offered in the boom, and sold five years later for €18m. They would have been much better off going to market at €25m, and closing quickly for anything above €20m, which I believe they could have done. In both the case of my boat and the island, much time and money was lost with an unrealistic asking price at the start of the sales process.
Valencia City Flat Today
It is easier to value a city flat than an island, because there are many more comparables. But like I said earlier, that lack of transparency in Spain means you only have asking price comparables, and what if asking prices are all too high? A reader called Chris with a flat to sell in Valencia has fallen into the same old trap.
“My flat in central Valencia went on the market at the beginning of February 2020,” he explains. “Two weeks later came the first ‘lockdown’, and the world ground to a halt. Since then I have had not a single offer. One reason being that not one, but two agencies, got the valuation badly wrong.”
He put his 2/3-bedder on the market for €205,000 on their advice. “I got valuations from three agents, two said €205,000, and one said €155,000, so guess which figure I believed?” Chris told me. “Now I’ve reduced the asking price to €160,000, but much time and sales visits were wasted.”
Anyone interested in a flat in the charming Old Quarter of Valencia city should get in touch with Chris, who will have more room to negotiate the price in a private sale. Registered users can reach him by direct message here. Pictures of his flat below.
So what’s my point? That it’s natural to want to get the best price possible when you come to sell your home, but don’t make the mistake of asking too much in a market like this, as you will blow your best chance of finding a buyer quickly, and have to reduce your price anyway. Best go with the agent offering you the lowest valuation.