Priced to go
Ensure your house is valued correctly
“FOR SALE” SIGNS are rusting on the perimeter walls of properties that have been on the market for months yet homeowners are stubbornly sticking to their often-inflated asking prices. The average time for houses to be on the market before they’re sold is around 160 days, against 30 days only a few years ago.
“With houses turning in sub-inflation growth, sellers should look at pricing their houses more realistically, while buyers are becoming increasingly more professional in their buying decisions,” says Jan Kleynhans, CEO of FNB Home Loans. He says buying decisions a few years ago were made with the heart rather than a website and a calculator. Unfortunately, many homeowners overpaid slightly for their dream home, hoping the market would catch up with the price.
FNB made waves last week when it announced that since 2008 house prices had actually dropped by 15% – a shocking figure for the psyche of a nation where home ownership is believed to be about as safe an investment as you can get.
“Personal sentiment – combined with historically higher property prices – has left many sellers with unrealistic expectations regarding the true value of their home,” says Jan Myburgh, GM at Harcourts Real Estate SA. He says the house valued accurately is ultimately the house that gets sold – simple as that. “Although agents can’t tell you what the market value of your home is, they have the experience to interpret what the market is accepting in comparison to what’s available. Although the seller has to ultimately decide how much he wants to market his home for, a knowledgeable and reliable estate agent should be able to provide facts that will assist in the decision-making process,” Myburgh says.
Comparative market analysis (CMA) is one method used to inform sellers. An estate agent will use CMA to reach a market value that
incorporates the strength of the local market, demand and supply forces and the sale of other similar properties in the area.
However, a valuation using an agent is only a guide to determine your home’s worth, says Myburgh. “To maximise your chances of getting the very best price for your property you need to ensure you use an agent who knows the area well, has a good track record in terms of the average number of days it takes to sell properties and is actively working in the area.”
Standard Bank’s mortgage website says the only way to arrive at a correct selling price is to study the prices of properties sold in your area. The value of a home is determined by what a willing buyer will pay a willing seller. To do that you need to ask yourself the following questions: Am I selecting an agent on services or product? Is the local market rising, falling or staying even? Is my opinion of value based on actual neighbourhood sales prices? How many homes in this area are competing with mine right now? How does mine compare? Have neighbouring homes been on the market too long? Is my home consistent with homes in the surrounding area? What improvements have I made that will increase its value? Are my financial needs influencing my asking price? Am I willing to price right and stand firm? Another factor to consider is whether there have been any recent distressed sales or auctions in your street. According to estate agency, Seeff, banks are including the price data from those sort of sales with other, healthy sales. That’s affecting the size of mortgages banks are willing to offer. And if your price is too high the buyer won’t be able to get a mortgage to afford
it – willing or not.