SELLING? DON’T GET EMOTIONAL
Overinflating your house’s value in a buyer’s market could lead to few offers or none at all, writes
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.