You as a seller have to concentrate on five considerations when selling NL. Price, Agent, conditions on selling, Location, and lastly Financing. The first three you can control, the last two you cannot. With this article I will try and give you the information on how to arrive at the correct price for a property. The other four points fall outside the scope of this article.
A house is only worth what a willing seller will accept, a willing buyer will offer and what a bank will lend on it. The fair market value of a house is the highest price an informed buyer is prepared to pay, assuming there is no unusual pressure to complete the purchase.
Thus the asking price has to be realistic in relation to local market conditions. It is critical to start your marketing campaign with the right price.
Review a list of houses that sold within the past six months, along with the houses currently in the market (your direct competition) as well as properties that is in the market now and did not sell.
The properties sold tells us what informed buyers are willing to pay, for this kind of house, in this area, at this time.
The properties not sold tells us what informed buyers are not willing to pay, for this kind of house, in this area, at this time.
Now compare your house with the properties sold, not sold and currently in the market and be honest with yourself! The only way to make an intelligent decision is to examine what all the comparable houses in your area is selling for.
There are three pricing strategies; to price your house above, at or below its market value.
Priced above market value.
Most sellers like to price their house high, thinking that someone just might pay it. That’s highly unlikely – buyers shopping for a home know exactly what the market is like, and won’t be fooled into paying more than they are worth. The only way to sell an overpriced property is to sell it to a cash buyer. To try and find such a buyer is like looking for a needle in a haystack. You need someone that was smart enough to accumulate a few hundred thousand Rand in cash and dumb enough to not shop around.
Priced at market value.
The best strategy, that is what your house is worth and you will sell it in the shortest time with the least hassles.
Priced below market value.
This can be an excellent strategy on the condition that you will not review offers until after your house has been on the market for at least a week. Anybody likes a bargain. Pricing your home low can help you set up an auction situation where several buyers bid against each other on your home and frequently bid the price up.
Worried about setting the wrong price for your house.
Evaluate the estimates of value from the agents visiting your house during the listing agents open hour. These agents work with buyers and sellers everyday and they have a very good idea of what buyers will pay.
The average price from a number of experienced agents will give you a very good indication of what market value is. If your house is not within 5% of the average it will be overpriced.
Never let your house become an old tired listing. You will eventually sell it for less than you would have received if it were priced correctly from the beginning.
Something that you as seller will never know with an overpriced property is that the agent will use your house to sell a better priced property. The agents do not do this to out of free will, but are forced into it. When an agent works with a prospective buyer he will show the buyer all the properties in a certain price range. The buyer select on best value for money and all the overpriced properties will be eliminated. So your house will be used to sell the best priced property. In winning the race all you have to do is beat number two, even if it is by a split second. Therefore price your house to win the race.
When one analyse the buying process from the buyer’s point of view it is pretty obvious what you have to do as a seller to arrive at market value.
Any potential buyer decides on the area where he would like to live and what his requirements are as far as the house goes. He normally is also limited to what he can afford. He then inspects all the properties on the market in a specific area at that time and then compare the properties, what each property offer and at what price. This process will then enable him to select the one that offers him the best value for money. Therefore when you want to sell you need expert advice on what your house will compete against in the open market.
When a bank has to value a house, they confirm with the deeds office what properties, recently sold in the same area. They then compare the properties sold against the property for sale.
The above process is referred to as a CMA, a comparative market analyses.
An estate agent worth his salt will be able to provide you with a CMA. This should include recent sales in your area, what houses sold for and how long it took. What properties is direct competition against your house, as well as properties that did not sell. From this information you can then set your marketing price. The asking price and the selling price is normally not the same. You will be well advised to ask an experienced estate agent to advise you on how much bargaining room to built into your price.