Now here is a subject that may be a well-known term to a number of you, but unknown to many others in terms relating to real estate sales.
Vendor (or seller) discount means the average difference between the initial price sought for a property and the eventual or final selling price. Discount really refers to the fall in start and final sale price of a home. For example, first listed for $425,000, buyer purchased for 5.3% vendor discount meaning final selling price $402,475.
Now I have just plucked the 5.3% figure out of the air however, in every town and suburb in Queensland a vendor discount applies except in a handful of locations where only a dozen or so houses have sold over a twelve month period.
Why vendor discount and not a premium above market price you ask? Well generally in a buyers’ market, buyers have the upper hand and most are very aware of this situation. When a sellers’ market exists such as recently in Sydney a premium above asking price might prevail, however in searching data, vendor discounts rule except where I found Botany (Sydney) which recorded 0.00%.
Getting back to our favourite State, Queensland, vendor discounts can vary greatly and this very much relates to the strength of the real estate market and the local economy. Vendor discounts particularly apply in areas affected by the downturn in mining. For example in Moranbah, vendor discount is around 20%, way outside of normality. In Mackay it is currently hovering just above Moranbah’s figure. In contrast, take a Brisbane suburb of Capalaba where house sales are in the hundreds over a twelve month period, the vendor discount hovers around 4% or slightly above.
The downturn is the mining boom is a blow to many property owners affected in many Queensland locations however, having not to pay high commissions lessens the pain considerably.
The truth about vendor discount is that it occurs pretty much across the board and this is because real estate property at the start of listing is priced higher in an attempt to capture a keen buyer in the first two to three weeks.
So when you sell privately through Total Clarity Realty, pricing your home similarly is very important. The main thing is don’t be afraid or annoyed at vendor discount, just be sure to be prepared for offers and continually present your property for maximum appeal.
To find out more about Total Clarity Realty’s private home sale package, click here.