Over­in­flat­ing your house’s value in a buyer’s mar­ket could lead to few of­fers or none at all, writes

CityPress - - Business -

If you’ve made im­prove­ments to your home, which you’re con­vinced will up its re­sale value, you’d be for­given for be­ing up­set when you didn’t quite get the of­fers that you hoped you would.

There are many sell­ers cur­rently ex­pe­ri­enc­ing this prob­lem be­cause, within this cur­rent hous­ing mar­ket, the power has shifted into the hands of the buyer. It’s caus­ing stress for some sell­ers who par­tic­u­larly want to re­coup the money they pumped into their prop­erty, per­haps through mak­ing extensions or con­vert­ing the garage into a granny flat.

Ac­cord­ing to Cameron Jansen, bro­ker/man­ager of RE/MAX Cen­tral, the dif­fer­en­tial be­tween the list­ing price and sell­ing price of homes in the cur­rent mar­ket can be as much as 30%. “Buy­ers are aware that mar­ket con­di­tions are in their favour and as such are look­ing for a bar­gain where pos­si­ble, of­ten putting in of­fers that are be­tween 25% and 30% be­low the seller’s list­ing price,” ex­plains Jansen.

In­dus­try ex­perts are di­vided as to whom this buyer’s mar­ket cur­rently af­fects. Ac­cord­ing to Jansen, it ap­plies to most prop­er­ties, from the af­ford­able hous­ing sec­tor right up to the lux­ury mar­ket. How­ever, Bianca Arns­meyer, sales man­ager at Ber­man Broth­ers Prop­erty says ar­eas like Cape Town’s At­lantic Se­aboard still see high de­mand. “Very sel­dom do we have a prob­lem of un­der-priced prop­er­ties – es­pe­cially on the At­lantic se­aboard. But given the height­ened buyer de­mand in this area, an un­der-priced prop­erty will be snapped up al­most im­me­di­ately, while the seller will be left ru­ing missed in­come.” How should sell­ers cope with this? The key is not to get emo­tional about a prop­erty and in­form­ing your­self about your area and what you can ex­pect for your home. If you ig­nore the cur­rent en­vi­ron­ment and over­in­flate your home’s value it could re­sult in few of­fers or even none at all and re­sult in your home be­ing on the mar­ket for months.

And even if you get in­ter­est from prospec­tive buy­ers, the deal may still fall flat as banks may not al­low the full loan ap­pli­ca­tion or re­ject it entirely. “Banks are very fa­mil­iar with true mar­ket value as they do not want to be ex­posed when grant­ing a mort­gage loan. A po­ten­tial deal can eas­ily be lost as the banks may not grant the loan to an in­ter­ested buyer if they be­lieve the prop­erty is over­priced,” warns Arns­meyer.

By then some dam­age could al­ready have been done. “This can even­tu­ally lead to the sell­ers re­duc­ing the price to fi­nally ac­tion a sale. Both of these ac­tions have the ef­fect of dam­ag­ing the im­age of the prop­erty as buy­ers can won­der what is ‘wrong’ with it that it has not sold as yet – this can have a long term harm­ful ef­fect,” says Denise Do­gon from Do­gon Group Prop­er­ties.

“With tech­nol­ogy and in­for­ma­tion at your fin­ger­tips, you could do a bit of re­search your­self, look­ing at what prop­er­ties sell for in your area and also view­ing mar­ket statis­tics on nu­mer­ous on­line plat­forms. How­ever call­ing your lo­cal real es­tate agent for some ad­vice and a free prop­erty eval­u­a­tion could save you a tremen­dous amount of time, rather than try­ing to fix your mis­take later on,” adds Craig Hutchi­son, CEO of En­gel & Völk­ers South­ern Africa.

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