How to set your property's asking price

If you want to sell your own house and save money by not paying huge estate agent's fees, then the most important thing you need to do is set the right asking price.

Before selling your own home, you need to have researched the market thoroughly and know what your property is worth. Buyers don't generally offer the full asking price, so if you want to get the price you think your property is worth, you must add something extra to allow for this. Generally speaking, properties sell for between 95 and 98 per cent of the asking price, depending, of course, on the state of the market.

So if you think your property is worth £300,000, you must be selling your own house for a higher amount to allow for this. Also, fix the price just below a round figure. Psychologically, selling your own home for £299,950 will feel like more of a bargain to a buyer than selling your own house for £300,000.

If you're aiming to achieve, say, £300,000, an asking price of between £319,950 (6.7 per cent above what you hope to achieve) and £329,950 (10 per cent above what you hope to achieve) is what you should be aiming for. This rule applies at every price level, even though asking between £525,000 and £550,000 for a property which you hope to sell for £500,000 looks greedy.

It's worth remembering that at this level buyers are sophisticated enough to know that they can make an offer £50,000 below the asking price without being laughed out of court.

In Scotland the way prices are arrived at is a little different. Here a sellers' market philosophy generally prevails. If you're selling your own home, you set an asking price below what you consider the market value to be, inviting 'offers over' it.

Of course, buyers will usually offer below the full asking price first and then negotiate, but others will be prepared to offer between 10, and sometimes 30, per cent above the asking price.

In Scotland properties generally sell for between 10 and 15 per cent above the asking price. So if you're looking to achieve, say, £300,000, an asking price of 'offers over £270,000' is what you should be aiming for. (It should be added that this way of inviting offers is not uncommon in England when the market is strong, and likewise that in Scotland not all property is marketed at 'offers over' - if you're wanting to sell your own home quickly, you may decide to market your property at a 'fixed price', telling buyers that the first offer you receive at that price will be accepted.)

Whether you're selling your own house in England or Scotland, the level at which you fix your asking price will also depend on the following factors:

The state of the market

If the market is busy and there are more buyers than sellers around, then you can afford to take an optimistic view in the hope of achieving more than your target price. Think about adding around 10 per cent to the price you want to achieve. If there are more sellers than buyers, you should be more cautious. If this is the case, think about selling your own house for just four or five per cent more on the price you want to achieve.

How many buyers you want to attract

If you want to attract as many buyers as possible, put it on the market with a low asking price, in the hope of attracting several offers. People will think that they're getting a bargain, but will probably be persuaded to pay more if they find that they're in competition with other buyers.

If your property is particularly desirable and you feel you may be able to sell it for more than it's worth, then add a generous amount to the asking price. This is a high risk strategy because if few buyers are interested and you don't get any offers, you will be forced to drop the price and quickly.

Stamp Duty Land Tax

Stamp Duty Land Tax thresholds can affect the asking price when you're selling your own home. Stamp Duty Land Tax is the tax which most people pay when they buy a property.

Current rates of Stamp Duty Land Tax

Purchase price £125,000 or less - nil
Purchase price £125,001 to £250,000 - 1%
Purchase price £250,001 to £500,000 - 3%
Purchase price £500,001 or more - 4%

In certain areas with high levels of deprivation, Stamp Duty Land Tax is only levied on properties over £150,000; this is known as Disadvantaged Areas Relief. If your property is worth less than £150,000, you need to find out if it falls into this category, by doing a postcode check on the HM Revenue & Customs' website. Log on at www.hmrc.gov.uk, click on 'Individuals and employees', then on 'Stamp Duty Land Tax postcode search'.

If you're selling your own home at an asking price of around, or just over, one of the thresholds for Stamp Duty Land Tax, it may be difficult to sell at a price just above the threshold. This is particularly true of properties worth just over £250,000 when the rate of tax jumps from one per cent to three per cent. For example, the tax on a property selling for £250,000 comes to £2,500; whereas if you sell your own house for only £500 more, i.e. £250,500, the amount of tax jumps to £7,515.

In these circumstances, you could add a generous percentage to your asking price in the hope of achieving well above the threshold. But remember that most buyers get to know what a property is worth and are unlikely to be fooled; then your property could remain unsold.

When you're selling your own home, another alternative is to agree a price just below the threshold and negotiate an additional sum for fixtures and fittings which are not liable to tax. This is unlikely to result in a large uplift in the total proceeds of the sale because HM Revenue & Customs have recently tightened the rules on fixtures and fittings with the result that buyers are now reluctant to pay over the odds.

If HM Revenue & Customs consider that the sum paid for fixtures and fittings is inflated, they will conduct an investigation, as it amounts to tax evasion. If you're planning to sell your own house in the longer term, then your best bet is to find a way of improving your property so it will be lifted into a higher price bracket.

More tips on selling your own house can be found in Anthea’s bestselling Sell Your Own Home Kit. Find out how you can advertise your home, value the price of your property, close the deal and, most importantly, save money on estate agent's fees by selling your own home yourself.

Published on: June 3, 2008

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