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WHY SHOULD YOU GET A VALUATION?
For most people their home is their single biggest investment. When thinking of selling, the 1st thing you should ask is what is my home worth in the current market? How many home owners really know what their property is worth?
Although many would venture a guess based on asking prices in the surrounding area, this is generally an ineffective way of determining a price for your house, especially if you are seriously thinking about selling.
HOW DOES ONE DETERMINE MARKET VALUE?
THE ACCEPTED SOUTH AFRICAN LEGAL DEFINITION OF MARKET VALUE
Market value is the estimated price¹ a willing, able and informed buyer² will pay a willing and informed seller² for a property in an arm’s length transaction after proper marketing at the date of valuation where both parties act with knowledge, caution and without obligation.
¹ The price is that which could be obtained should the property been exposed to the market for a reasonable time;
² Seller: Should be selling out of free will and be ready to accept when a fair price is offered; and
² Buyer: Is assumed to be willing, but under no undue duress to buy.
When you want to go to market, it is vital to determine a fair, market-related asking price for your property. Our time-tested, proven approach of conducting a diligent market analysis and reviewing it in detail with an owner reduces time wasted on trial and error regarding price. The end result is a faster sale, at a better price and with less inconvenience to our seller.
WHAT IS THE MARKET VALUE OF YOUR PROPERTY?
What you paid for your home has nothing to do with its present value;
What you require to purchase your next property doesn’t determine the value of your current home;
The price you would ‘like to achieve’ isn’t necessarily what buyers will be willing to pay in the current market;
The time and money you spent on renovations doesn’t necessarily determine your property’s value;
The value other agents put on your property is not always accurate;
Our valuation of your home merely serves as a guideline; and
As a general rule, buyers will feel an extraordinary price is justified if your property offers extraordinary features.
To summarize: The real value of your home is determined by what a BUYER is willing to pay in TODAY’S MARKET based on how they perceive your home COMPARES with other properties in the same market.
To determine market value we put ourselves in the shoes of the buyers, by using the:
COMPARABLE SALES APPROACH:
The comparable sales approach is based on the theory that a knowledgeable buyer would pay no more for a property than the cost of acquiring an acceptable substitute property. In applying the comparable sales approach it is necessary to investigate the sales of similar type properties that have been sold, as well as comparable properties on the market.
The above information is compared to the subject property, which involves judgements as to the degree of similarity with regard to value factors such as:
Location
construction type
age
quality of finishes
condition
layout
size
accommodation
other features such as swimming pools, boreholes etc.
and overall features.
The recent sales of properties which are most comparable, tend to set the range in which the value of the subject property will fall. Further consideration of comparative data will indicate to the valuer a figure representing the value of the subject property in keeping with the definition of value sought as at the date of valuation.
We the use our judgement on the degree of similarity between the subject property and recent comparable sales regarding the above value factors.
The comparable sales are also adjusted to take into account size, accommodation, swimming pools and
All these factors are taken into account when determining the final estimated value of the subject property.
PLEASE BEWARE OF OVER-VALUATION
It could be harmful to the sale of your home as it:
Loses prospective buyers;
Eliminates offers;
Limits financing options for the buyer;
Causes your home to be used as a ‘bouncer’; and
Eventually results in a lower price.
Those buyers who may been interested in your home if it was priced correctly from the start, will not react to the marketing campaign as they consider your property to be above their budget.
Therefore, if your home is overpriced, the right buyers will probably never see your home.
And those buyers who do react to your overpriced marketing efforts and do indeed view your home, actually expect to find more value and are subsequently disappointed as they compare it with other properties that are on the market that offer better value as these are priced realistically.
As a result, the entire selling process will be protracted and will most probably result in your home eventually selling below market value.
Buyers usually know the market better than sellers do:
Sellers may look at a few homes before listing theirs, while buyers have frequently looked at dozens of homes over a few weeks or months by the time they decide to make an offer. By then they would have acquired a finely tuned idea of value as well as a sense of which way the market is tending.
So if your home is not attracting any interest after a few weeks, you should consult your agent and consider lowering the price as soon as possible. Sellers who do this when the listing is relatively new and the home still fresh in potential buyers’ minds stand a good chance of keeping the marketing momentum going. Those who don’t will, inevitably, end up with an unsold property that is “stale” or about as attractive to buyers as last week’s bread.
IN A NUTSHELL:
If you overprice your home,
The RIGHT buyers won’t see it
And the buyers who do see it, won’t want it.