PRICE YOUR HOUSE RIGHT FOR TODAY’S MARKET
Category Residential Property News
You’ve put your house on the market, and you’ve just received an offer you don’t like. Deep down you know the old adage that the first offer is usually the best one – for good reason - but still, it’s nowhere near what you believe your house is worth. Or rather, what you’ve invested in it. After all, you’ve only been in the house a few years, you’ve put in a pool and deck, and you’ve updated the bathrooms. You need to recoup those expenses.
The reality is that those lifestyle alterations you made were for you to enjoy. So, at this relatively early stage of ownership, they can’t simply be seen as figures to be added to your original purchase price. Property is rarely a short-term investment.
There are so many factors to take into account when pricing your house, but primarily, you have to know that your home – your asset – is linked to everything which is happening locally and globally. You can’t divorce those worlds.
You’ll probably call in an estate agent to give you a valuation, but realistically, before they arrive, you will have a figure in mind based largely on what you’ve spent. The agent’s valuation will be based on experience of what the market is looking for – in other words, the value that buyers place on various aspects of a home in that position/suburb – and also, of course, what other similar properties have sold for in the area recently. It’s not what they sold for two years ago, because we’re in a very particular property cycle, and that has to be taken into account.
If you’ve owned your home for a long time and have equity in the property, a lower profit is an easier pill to swallow – you’re envisaging R2m equity, and you get R1,9m, far easier than a seller who has bought recently.
Myles Wakefield, CEO of Wakefields Real Estate, says, “It’s not a comfortable scenario for an estate agent either, to present an offer which you have told us doesn’t even match your costs, but if you need to sell for whatever reason, you have to be fully cognisant of the state of the market. It’s understandable that you’d be hoping for that 5 or 6 percent return (at least) on your investment, but the current market is not delivering on that. There is pressure on pricing in certain sectors of the market – demand is considerably higher in the lower price ranges – so don’t make the mistake either, of overpricing. What that effectively does, is remove a stratum of buyers who won’t look at your property because ‘it’s out of their reach’.
“If you need to sell your house, think hard before turning down offers. Work with them. If you’re selling to buy elsewhere, if properties in your area are fetching lower prices, it’s very likely you’ll be paying less where you’re moving to. You’re buying and selling in the same market.
“If however, your property has been on the market and the offer/s you’re receiving just don’t work for you, consider taking it off the market for a few months or more. When you return to the market, there’ll be a fresh set of buyers out there.”
Wakefield added: “And in this market, don’t give buyers any reason to lower their offers. Get your home into the best condition you can, rid it of clutter, and pay attention to the small detail.”
Author: Anne Schauffer
