Emo­tional is­sues can af­fect sales

Sell­ing a home can be an emo­tional roller coaster for an owner, but the key is­sue re­mains de­cid­ing on the cor­rect price. Lea Ja­cobs ex­plains

Business Day - Home Front - - HOMEFRONT -

COM­MONLY re­ferred to as the three Ds, the most fre­quent rea­sons for putting a home on the mar­ket are divorce, death and debt. The de­ci­sion to sell, re­gard­less of the rea­son, is an emo­tional one. Af­ter all, hav­ing lived in a house can stir up a wealth of emo­tional is­sues.

Chil­dren have been brought up and played in the gar­den and mem­o­ries of birth­days, an­niver­saries and fam­ily get-to­geth­ers re­main en­trenched. In the seller’s eyes these mem­o­ries are price­less, so sell­ers tend to wear rose-tinted glasses from the moment they list the prop­erty.

How­ever, there is gen­er­ally a rude wake-up call when the first of­fer comes in. While the owner may be­lieve his home is worth more than what is be­ing of­fered, buy­ers have a dif­fer­ent view. Find­ing a happy medium is dif­fi­cult.

The orig­i­nal price the home­owner paid for the home ap­pears to be ir­rel­e­vant. The state of the mar­ket, where the prop­erty is sit­u­ated and what the home of­fers, play ma­jor roles in de­cid­ing what the prop­erty is worth.

In a seller’s mar­ket home own­ers may get away with a lot, but dur­ing a down­turn, when buy­ers are spoilt for choice, it be­comes al­most im­pos­si­ble to get more than the house is worth.

The mort­gage cri­sis over­seas has played a role and South African banks, ner­vous of the im­pli­ca­tions of over-cap­i­tal­is­ing on prop­er­ties, have re­fused to grant bonds on what they deem to be an over­priced prop­erty.

Carol Reynolds, area prin­ci­pal for Pam Gold­ing Prop­er­ties in Dur­ban North and La Lu­cia, says un­for­tu­nately there has been a lot of press about an in­crease in buyer ac­tiv­ity this year.

“Sell­ers have been op­ti­mistic that this has trans­lated into an in­crease in price in­fla­tion. The re­al­ity is that the FNB house price in­dex was at 10,1% in July, and has in fact de­clined to 7,1% in Au­gust, with ex­perts pre­dict­ing the av­er­age price growth for the year to be a slow 6,4%.”

She says there are many fac­tors driv­ing af­ford­abil­ity in the cur­rent mar­ket and de­spite the will­ing­ness of buy­ers to trans­act, sell­ers will not achieve in­flated prices for their homes be­cause the banks will not find value.

“The banks are buffer­ing-in a cush­ion to ac­count for in­ter­e­strate fluc­tu­a­tions and ris­ing costs and they take all these fac­tors into ac­count when as­sess­ing bond ap­pli­ca­tions.”

And un­less a prop­erty is cor­rectly priced it will not sell.

“Buy­ers may be cu­ri­ous, but they are non­com­mit­tal, and un­til this changes and the lend­ing cli­mate re­laxes, prices will re­main stag­nant.”

It is ev­i­dent that the prop­erty in­dus­try has borne the brunt of the re­ces­sion. The num­ber of es­tate agents has dwin­dled dra­mat­i­cally and those who are left are fight­ing bat­tles on a num­ber of fronts. Houses are tak­ing longer to sell, buy­ers are strug­gling to raise fi­nance, and most frus­trat­ing, per­haps, is the un­will­ing­ness of sell­ers to heed their agent’s ad­vice and price their homes to sell.

The Pri­vate Prop­erty web­site has ini­ti­ated a pro­gramme aimed at help­ing sell­ers base the sell­ing price on re­al­is­tic, un­emo­tional facts. Their sys­tem al­lows home­own­ers to ob­tain a val­u­a­tion us­ing fac­tual data from the Light­house Group.

Chair­man Justin Clarke says the pub­lic’s re­sponse to the project has ex­ceeded ex­pec­ta­tions.

“The site is free and avail­able to any home owner in SA. It’s no se­cret that the biggest chal­lenge fac­ing the seller is cor­rect pric­ing. There is al­ways a buyer at the right price, but it is dif­fi­cult to pro­vide an ex­act ap­praisal. Who knows what a will­ing buyer is pre­pared to pay? Af­ter all, it is a per­sonal judg­ment that the buyer will make. How­ever, get it wrong and the home will ei­ther sell for far less than it was orig­i­nally on the mar­ket for, or worse, not sell at all.”

Knowl­edge Fac­tory’s SAPTG arm of­fers a sim­i­lar ser­vice. Eval­u­ate pro­vides in­stant prop­erty value es­ti­mates to any cell­phone via SMS. CEO Geral­dine Mitchely says the data pro­vided is un­bi­ased, as it draws on data from Deed’s Of­fice reg­is­tra­tions and the prop­erty mar­ket ex­per­tise of SAPTG.

Reynolds says that con­vinc­ing a seller that a prop­erty is over­priced is not easy and the price coun­selling process can take as long as a year.

She says that sell­ers need to re­alise that the buyer’s pool shrinks sub­stan­tially af­ter the ini­tial 4 to 8 weeks of a man­date. Es­sen­tially, this means that if a prop­erty does not en­ter the mar­ket at the cor­rect price, by the time the price has been ad­justed in ac­cor­dance with mar­ket con­di­tions, the buyer pool has moved on and the seller loses the ac­tiv­ity that drives pric­ing up­wards.

If valu­ing a prop­erty cor­rectly is so vi­tal, why do so many sell­ers ig­nore their agent’s ad­vice?

“Sell­ers of­ten think that agents un­der­value prop­erty to achieve a quick, easy sale,” says Lau­rie Werne, MD for the group’s Western Cape re­gion.

“Un­for­tu­nately, as with any pro­fes­sion there are those whose in­tegrity and in­ten­tions are flawed. This is, how­ever, be­gin­ning to change and sell­ers can guard against this by se­lect­ing a rep­utable agency, rather than choos­ing the one that charges the least com­mis­sion,” he says.

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