'Determining fair market value'
In today's competitive real estate market, price still remains a driving factor for homeowners to sell their property in the shortest possible time.
However, the biggest question is determining what that correct price is, as it depends on a large number of aspects that influence the perceived value of a property, says Adrian Goslett, CEO of RE/MAX of Southern Africa.
According to Goslett, the importance of correctly pricing a home cannot be over emphasised. This is because in the current buyer's market, a property that is priced at the correct market value will appeal to a much broader number of potential buyers. He says that if two properties in the same area, offering the same features are compared by a buyer, price will become the only factor that will separate each property and influence their decision making process.
"When it comes to the property market, time is of the essence. The longer a property is on the market, the less likely the seller is of getting their asking price. The gap between the initial asking price of a home and the eventual selling price will gradually widen, the longer the property is on the market. If a property is priced correctly, there is a good chance that it will sell within the first four weeks of being on the market. However, property sold in the fifth week will generally sell for around 3% less, 13 to 24 weeks for 6% less and houses are on the market for 24 weeks or more sell for approximately 10% less than the original asking price," says Goslett.
He notes that one of the leading influences on the perceived value of property is the current market conditions. During the boom period a massive demand for property drove the property prices up, however in today's market, demand has lessened from that time, which has forced property prices to readjust. Although sellers are the ones that set their asking price, property pricing within a certain market is largely determined by what a buyer's is willing to pay for that property.
Goslett notes that often a seller's perceived value of their home will differ from a buyer's, based on the fact that homeowners generally have an emotional connection to their home.
"For this reason, using the services of a professional real estate agent with experience in the area where the property is situated can be invaluable. An estate agent will be able to appraise the home objectively, based on a compilation of comparative information from various internet research sites as well as their extensive market knowledge. Estate agents will also have their own reports of actual prices paid for homes in a particular area over the past three to six months, which they will use to help them accurately value the property in question," says Goslett.
An estate agent will complete a comparative market analysis (CMA) from all the data gathered, to give them a foundation from which to work, explains Goslett. "The property being valued will be compared with other similar properties that have recently sold in the region, allowing the agent to determine an average price per square metre. Once the estate agent has this as their base, they will be able to factor in other features that are unique to the seller's property and will have an impact on the home's precise value. These will include aspects such as a home's security features, finishes and fixtures, size, location within a community and any renovations that have been completed," says Goslett. "Needless to say, homes that are well maintained and have individual features that make them stand out from other homes in the same area will have a greater perceived market value," he concludes.
RE/MAX Press Release