How to price your property for the market
How to price your house for the market
BizCommunity 29 Jan 2015
sellers look to achieve the best price for their home, home buyers and
investors are savvy and street-wise, researching the market to gain a
good perspective on properties on the market in their preferred suburbs
and are only prepared to pay realistic, market-related prices.
buyers have easy access to a wealth of information and so they are well
educated regarding the residential property market and do their
homework before committing to a purchase.
Pricing a home to sell
requires a subjective view of the property, says Stuart Millar, Pam
Golding Properties area principal in uMhlanga and uMdloti. "Sometimes
people start at the 'wrong' end and work backwards, by looking at how
much they've spent on the property and what they'd like to achieve for
it. It's advisable to consult a qualified and experienced agent in the
area who knows what prices have actually been achieved for comparable
homes in the recent past."
Ling Dobson, PGP area principal in
Knysna and Plettenberg Bay concurs: "We often hear, 'I'm upgrading to a
larger home and I need my house to sell for Rx million otherwise I won't
be able to acquire the property I want.'"
suburbs have a ceiling price which obviously fluctuates with market
conditions, says Laurie Wener, MD for Pam Golding Properties in the
Western Cape's Cape Town metro region. If the costs of building and
renovating exceed that which can realistically be obtained in the market
place, then this is over-capitalisation. However, over-capitalisation
can be reduced by capital growth achieved over the time that the
property is held."
Greta Daniel, sales and operations manager
for Pam Golding Franchise Services agrees, and says a suburb's ceiling
price can best be ascertained by an area specialist, based on historical
knowledge of the area and backed up by data such as the Pam Golding
Residential Property Index, which combines information based on the
'repeat sales' methodology incorporating residential property
transactions registered at the Deeds Office - as well as other data
sources across the country's residential property market, including
Lightstone and PGP's own extensive sales data.
professional knowledge, together with commitment by the seller and agent
on a sole mandated marketing drive, will deliver the best results for
the seller and buyer. Multi-listing services where agents deposit the
stock in a common pool and have no accountability, invariably result in
time lost and the seller having to accept the lowest price from
competing agents," says Daniel.
A misconception is that simply
considering asking prices of properties advertised for sale provides a
good idea of what these properties are actually worth. "As these
properties have not yet sold, the asking prices may be too high, and
some of them may have been sitting on the market for some time," says
Annien Borg, MD for Pam Golding Properties in the Boland and Overberg
regions. "One should rather look at properties which have sold and this
is where a professional estate agent comes in. A reputable agent with a
sole mandate on a property will not - as some may incorrectly assume -
put a low value on a property in order to sell quickly."
Comparative market analysis
correct market-related price will ensure that your home is priced to
sell. As a starting point, consult an experienced and qualified agent in
the area to conduct a comparative market analysis of similar homes
which sold recently in your neighbourhood. However, as Wener points out,
a comparative market analysis (CMA) only permits pricing on a historic
basis, which can result in undervaluation in a bullish market.
using the CMA as a basis, the general market activity, sentiment and
many other economic factors must be taken into account in assessing the
current value, which is where an experienced agent's skills come to the
fore. Also, many properties have an emotional draw and it is not unusual
for beautiful furnishings or a lovely garden to attract a premium price
over the similar but less appealing house in the same street. The more
buoyant the market, the greater a role the emotional factor can play."
order to get the best selling price, a seller will also need to pay
attention to the preparation of the house to ensure it is appealing and
well-presented within its price bracket before embarking on the sale. In
this way, potential buyers are presented with the 'best buy' in terms
of value in your price band and area.
"This is especially
relevant in the current market, as stock in popular or high demand areas
are in short supply, which means that buyers are literally waiting to
see what new stock comes onto the market," says Carol Reynolds, Pam
Golding Properties area principal in Durban, Durban North and La Lucia.
"This makes correct pricing crucial as the buyer pool is in action in
the first two weeks of the mandate being listed and launched to the
marketplace, so if you don't capture that market, then you've lost those
buyers. And the last thing you want is for your property to sit on the
market for a lengthy period and then become 'stale', as buyers know when
a home is over-priced or remaining unsold, in which case they dismiss
this property and move on.
"It's true that every property has
more than one price. Firstly, what the seller thinks its worth, what the
agent values it at and what the buyer is prepared to offer. Then, of
course, there is the final settlement price."
Wener says in high
demand areas, such as the Cape's sought-after Atlantic Seaboard and
popular Southern Suburbs, the fact that the demand exceeds the supply
tends to narrow the margin between ceiling and asking price and may even
eliminate the margin completely when comparative offers result in the
asking price being exceeded.
She says the luxury or high end
category of the housing market is more difficult to evaluate due to the
uniqueness and lack of comparative properties. "Sellers in this sector
of the market also have their own views on what they want for the
property and often one has to test the market at a very optimistic price
and gauge the market response. Even the most experienced agent may be
incorrect in their assessment and there is also a high degree of
subjectivity, especially with unique or iconic properties and in an
environment of market fluctuation," she says.
As a guideline,
the following factors need to be taken into consideration:•What you paid
for your home has nothing to do with its present value
•The price you would like to achieve for your home doesn't control the asking price
•The value other agents put on your property is not always accurate
•What a valuator says your home is worth doesn't determine the price in the market
•The current market determines the value of your property.
in mind that if your property is over-priced, it loses prospective
buyers and eliminates offers, and also limits financing which can
eventually lead to a lower price.
Adds Reynolds: "There is a
misconception that multiple agents marketing a property will result in a
quicker sale. This is not the case, as agents prioritise stock which is
marketed on a sole mandate - a method which is most likely to achieve a
better price for the seller. For example, we've had several recent
situations where we sold properties for full asking price as the homes
were correctly priced. As a result we had two and even three buyers
competing for them, which served to drive up the price. Where multiple
agencies have listed a property the seller is at a disadvantage as the
agents compete with one another rather than focusing on achieving the
best market-related price for the seller."