What Does POA Mean in Property?
It can sometimes feel like the property industry is packed with jargon and acronyms. POA is one of those terms that crops up every so often and leaves the layman wondering: ‘what does POA mean in property?’. POA is a way of hiding the asking price of a house when it’s being sold through traditional means on the open market. This doesn’t mean that the savvy buyer can’t get an inkling of what the asking price of a property marked as POA might be.
Most property platforms, such as Rightmove, Zoopla and Onthemarket, will require sellers or estate agents to input an asking price in order to list a property. This is so that they can show the property amongst comparable listings. They do this so that they can target the right kind of buyer for the property, achieve more interest and therefore sell more properties. You can work out the rough price of a POA property by looking at the price of properties that it’s listed amongst.
In this guide we explain what POA means for both sale and rental properties. We discuss why estate agents use POA instead of making the asking price visible. And we break down the pros and cons of using POA and whether it actually works when marketing a property. Finally we go through a few alternatives to selling your house through a POA listing. Read on for more information or use the menu below to navigate easily.
What does POA mean?
If you’ve seen this on listings then you’ve probably wondered: ‘what does POA stand for?’. POA in property stands for Price on Application or Price on Asking. These two terms mean the same thing in practice. It requires the prospective buyer of the property to contact the estate agent for more information about the property price. This can be effective in some specific situations, however its usage is declining as it generates some discontent amongst both buyers and agents.
The use of POA is common where a property is bespoke or niche in some way. This is because it allows the seller to gauge the market’s reaction to the property and therefore establish at what price they can generate demand. It prevents them from being tied to a specific price and keeps their options open. This same tactic is used to price some luxury or bespoke goods, such as supercars, yachts and private jets.
What does POA mean in rental properties?
The meaning of POA for rental properties is exactly the same as with a property that is marked for sale – Price on Application. There are two differences in the usage of POA for rental properties vs. sale properties.
First is the type of property that it’s used on. POA tends to be used for rental properties when they are part of new developments being let for the first time or where rental properties are popular with tenants. This is to give the landlord an idea of what they can charge for the property and gauge demand amongst renters. This can almost create a bidding war between would-be tenants.
The second difference is how commonly it’s used and on the range of property types that it’s used on. POA is used much more commonly on rental properties than sale properties. It’s also used on properties at all price ranges, whereas it tends to be used on more niche or expensive properties when they’re for sale.
Why do estate agents use POA?
Estate agents use POA for a number of reasons. Typically these are to give the property exclusivity, to hide the price from neighbours and/or family members, or to keep the price private if the person is in the public eye. Celebrities or public figures may not want tabloid news picking up on their property price and making speculations about their financial situation.
Another situation in which estate agents may opt to use POA when selling a property is if they’re unable to agree a fixed price with the vendor. Using POA enables them to list the property without a commitment to achieve a certain price. It can also help the agent gauge the market price for the property and make better recommendations to future vendors. Finally, if the agent is able to generate a lot of interest in the property it allows them to build their contact book of prospective buyers.
What are the pros and cons of using POA?
We’ve discussed why agents may decide to use POA, but is it a good thing? We’ve listed some of the main pros and cons of using POA to sell a property here.
Pros of using POA
- Privacy. We all know the type, nosey neighbours, family members who want to get involved in your business, friends who just want to see what’s going on. Listing a property as POA keeps your finances private and means people won’t know how much it’s worth. Using this method is also common amongst celebrities and people in the public eye who want to minimise the coverage of their finances and property dealings.
- Hide price reductions. If you’re forced to reduce the price of your property due to a lack of interest at the current level then listing it at POA prevents would-be buyers from seeing those reductions. Buyers often take price reductions as a signal that the seller is desperate. They use this information to put in low-ball offers, which could mean that you end up achieving a much lower price for your property.
- Good for niche properties. If you’re selling a house that is particularly unique or quirky then it can be quite hard for estate agents to price it due to a lack of comparables. These are similar properties in the area that the agent uses to guide their price based on how much they sold for. Setting a POA lets agents put the question back to the buyer and find out how much they’re willing to pay for the house.
Cons of using POA
- Creates a barrier to purchase. Unless the property is the buyer’s dream house, it could be argued that having a property marked as POA creates an additional barrier between the buyer and seller of a property. Since humans naturally want to find out information about things. Hiding the price of the property turns it into more of a focal point and means that buyers will naturally focus on that as opposed to looking past it.
- It’s frowned upon. If you’re reading this article it’s likely that you’re not quite sure what POA means. It can make buyers wonder why sellers or estate agents bother to list the property as POA. As a result buyers sometimes interpret POA as agents just trying to sell the property for over market value and extract as much money as possible from the buyer. This can be seen as an exploitative practise.
- Deters bargain hunters. Bargain hunters will be conducting their property search with a heavy focus on price. Having a price listed as POA may mean that they simply exclude this property from their search, instead of making the extra effort to call up and find out the price. These bargain hunters use the rough monthly repayment calculators that are available on property portals as part of their house search. This obviously isn’t possible with houses listed as POA, and so again, they’re excluded from the search. This limits the potential market for houses listed as POA.
- Creates extra work for agents. To estate agents time is money. Having a property listed as POA means that agents need to deal with more enquiries from potentially uninterested buyers about the price of a property. If a property is listed with the price clearly displayed then the agent can be sure that they’ll only be receiving enquiries from buyers that are able to proceed and purchase at that price. Whereas if the property is listed as POA, they may need to wade through enquiries from sellers who just want to find out the price, only for it to transpire that it’s out of their price range. It’s for this reason that many estate agents choose not to use POA at all.
Does using POA work?
We’ve discussed the pros and cons of using POA to sell a property. It’s clear that it can work in certain situations, but it’s certainly not perfect.
If you’re a private person, or you’re a high profile person in the public eye, then using POA can be a great way to hide the value of your property from prying eyes who aren’t actually interested in buying the property. Using POA to sell your property can also mean that price reductions are hidden from the market. This means that these price reductions won’t be seen as a sign of desperation to sell, and so you’re less likely to be exploited by opportunistic offers from prospective buyers. Finally, if you’re selling a niche property with very few comparables, using POA to sell your property can help achieve a more honest price for your home. This is because it helps estate agents to gain the true market price for the property and therefore sell at the best level.
If you’re not that bothered about the privacy of your house price, and your property has many comparables in the local area, POA could actually do more harm than good. It creates a barrier to purchase. Many prospective buyers can be left thinking ‘what does POA mean’ and therefore focus more on the price rather than looking past it. POA can be seen as exploitative and an option for agents to try and extract as much money as possible from the buyer. Using POA can also be seen as a deterrent for bargain hunters since they will focus heavily on price in their search. Buyers like this may choose to just completely remove POA properties from their search. Finally, and importantly, listing a property as POA creates extra work for estate agents since they have to deal with buyers who may not even be able to afford the property that they are inquiring about.
Unless you’re selling a quirky, high value property, we’d suggest that the costs outweigh the benefits when using POA to sell your property. POA creates a great deal of frustration when selling a property, for buyers, sellers and agents. So, we’ve recommended some helpful alternatives below.
What are the alternatives to using POA?
POA isn’t the only way to sell your house. There are a number of other ways to sell your property fast. We’ve recommended three of the most common below.
- Property Auction. Choosing to sell your property through an auction is good in the sense that it can prove a degree of certainty around the date that your home will sell. It also typically progresses more quickly than an estate agent, and buyers tend to be more committed since they will pay a deposit to bid on the property. There are two important considerations to bear in mind when selling through a traditional auction. First is that auctioneers may try to encourage you to set a low reserve and starting bid price in order to create a bidding war and drive up the price. If it works, this can be a really effective way to achieve a high sale price. The second consideration is time. You will likely have to wait a number of weeks after listing your property for the auction to take place, and then another few weeks for paperwork etc. to be completed. If you need to sell your house fast then this could throw a spanner in the works.
- Estate Agent (without using POA). Selling your house through an estate agent is usually the best option to achieve the highest price for your property. Estate agents will also usually take on most of the workload, which removes some of the stress of selling your house. Bear in mind however that when selling through an estate agent you will be liable for both their commission and the typical costs of selling a house. This means that you’ll need to pay conveyancers, potentially cover the costs of some renovation work, and you’ll need to be available for viewings on your house too. It’s also worth noting that selling your house through an estate agent can be very slow. Estate agents don’t work to a deadline, which means that sales can drag on for some time.
- Cash House Buyer. A third option to sell your house or flat is to use a cash house buyer like SmoothSale. SmoothSale can provide you with a free, no obligation cash offer for your property. If you’re happy with the offer then we can buy your house for cash in a timeframe that suits you. The main advantages of using a cash house buyer are speed, flexibility and simplicity. Because we buy your house for cash using our own funds we can complete the sale process very quickly. In as little as seven days if that suits your onward plans. There are also no fees to pay. We cover all costs associated with the sale of your home and we’ll even cover your legal fees. The offer amount is the amount that you will walk away with!
Whichever option you’re considering to sell your house, SmoothSale can help. We offer a number of private house sale solutions including cash house buying, property auctions, and investor marketing. We’re confident that we can help you to sell your home quickly to pay off your arrears, so why not give us a try free of charge? Contact us today on 0800 368 8952 or get a cash offer!