Priced to go

En­sure your house is val­ued cor­rectly

Finweek English Edition - - MONEY CLINIC - LEANI WES­SELS leaniw@fin­media24.com

“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.

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