Pricing property: How to choose the Right Price for your home
Category Seller Advice
When you price your property correctly when selling your home, you stand a larger chance of achieving your financial and personal goals.
Determining the Right Price for your house is not an art or a guessing game, but a science - and several factors influence it. Not only do you need to take many factors into account when you agree on a price for the home you're selling, but, above all else, you need to be realistic.
When you decide to sell your property, you're essentially stepping into the world of business, which requires smart choices. It's less about wishful thinking and more about logical decision-making.
But don't let the process of choosing the Right Price for your home scare you off. Selling your house can be a very rewarding experience, even if it requires that you put emotions aside for a while. There's nothing like seeing your property investment bear fruit, whether it's in financial profit or just the knowledge that you've sold your home and you're ready for a new adventure.
Where to start when you're pricing your property
There are many free tools available to help you determine the value of your home, and you can - and should - try them out. But information found online simply cannot substitute real-world knowledge. You'll almost always need the input of an expert to discover the best price at which to sell your house.
Luckily this advice is free. All you need to do is approach an estate agency or estate agent that is trained, experienced and reputable. And that's it! Estate agencies offer free valuations of properties, and the right estate agent will even be able to give you information about trends in your area to help you price your property correctly.
Unlike banks and municipalities, estate agents combine information from several sources to make a pricing recommendation.
Estate agents take these factors into account when they do a valuation of your property:
1. The Municipal Valuation and the Indexed Value of your house
2. A Comparative Market Analysis to indicate the sale price of other homes in your area
3. Annual sales and listing trends in your neighbourhood
The agents at NS Property Solutions also take these points into account:
1. Building and plot size, design and location within the area
2. Condition of the home's interior, exterior, fixtures, finishes and fittings
3. How much accommodation the property offers
4. Market conditions and price of other properties being sold in the area
5. What buyers will realistically pay for houses in your neighbourhood
6. The amount that banks are comfortable loaning potential buyers
These data sources aren't always available to homeowners, and sellers typically don't have enough knowledge of an area to come to the same informed conclusions as knowledgeable estate agents.
You can start by consulting the below sources, but make sure to back up your findings with insights from a qualified property practitioner.
Tools to try:
Property24 Property Trends and Statistics for annual sales and asking prices in your area
City of Cape Town General Valuations tool for municipal values of most properties in the city
Standard Bank's LookSee online property guide for comprehensive information
How to use a valuation report to price your house
When your property has been valuated, either through an estate agent or just your own preliminary research, you'll likely end up with a price range instead of a single price.
Your valuation report will show that you should price your home somewhere between X and Y rands. Now it is up to you and your estate agent to agree on your asking price.
The asking price you decide on depends on your goals as a seller. Some sellers want to sell their property quickly, while others have time to wait. Some homeowners want to make a specific profit from their house to buy another property they have in mind, while others aren't too worried about profit and loss because they have their hearts set on moving to another destination as soon as possible.
Your estate agent will help you make a strategic decision about selling your property, and it all starts with your goals. Do you need to sell fast, or do you have time to wait to find a buyer willing to pay what you're asking?
How to price your property to sell it quickly
You might want to sell your property quickly because you need the money or you're moving away soon and you're not willing to rent out your home. In this case, your estate agent might recommend that you price your house in the middle or lower end of the price range your valuation indicated.
If you price your property more realistically, you'll be able to compete more effectively with other sellers. There are almost always other homes on the market that offer the same features and amenities as your house. Buyers often have a good choice of properties in areas they're interested in and they're likely to choose the more affordable home among the properties they're considering.
If your house is more expensive than similar homes in the neighbourhood, then you might notice your listing getting several viewings but no offers. It means you'll have to wait for quite some time for the right buyer to come along.
There are always exceptions to this rule. Your home might be the only one on the market in your area, or your property might be in a very sought-after suburb. If that's the case, it might sell fast, even if it's priced at the higher end of the scale. In these cases, an experienced estate agent comes in handy. They'll know whether there's an uptick in interest in your neighbourhood and how fast properties are flying off the shelves.
How to sell your house at the highest price - and the risks involved
Yes, it's possible to sell your home at the higher end of the price range indicated in your valuation report. But it's not without its challenges.
One of the key things you need when you want to sell your home for the highest price possible is TIME. It will take time to either attract the right buyer or find that lull in the market where no other similar properties are for sale.
High-end homes have a greater chance of selling for the highest price possible because they often have unique features. It might be a special garden, unusual architecture or a combination of convenient amenities that is precisely what the buyer has been looking for. These buyers are few and far between, and it will take time for the right one to cross your path.
If you have time on your hands and you're not in a rush to take the next step in your journey, you could wait until comparable houses on the market have been sold off, leaving only yours available. Or, if you live in an up-and-coming area, you might wait until the demand for properties in the neighbourhood is so high that buyers will pay almost anything to call your suburb home.
But there's a very real risk in pricing your property at the highest end of the scale. Your home might not be as unique as you think. It's also very possible that while you wait for the properties competing with yours to be sold, other houses come on the market (which is extremely likely). And while you're holding out for demand for homes to increase in your area, you might miss the boom altogether because the popularity of suburbs change and evolve constantly.
While you've been holding out for a high price, you could have sold and started your new adventure. And if the right buyer never comes, you may have to settle for a price that is in the mid-range of your valuation after all.
With risks this high, it's vital that you consult an expert real estate agent before automatically assuming you'll be able to sell your home for the highest price possible.
Picking the Right Price pays off
Choosing the right price for your house is likely somewhere in between these two approaches. It's the amount that will make the property sell fast enough yet allow you to turn a profit. With all the risks involved in pricing your home incorrectly, it's definitely not something you want to do alone. Reach out to our team for advice and assistance.
It's also important to remember that property prices are often negotiated.
Choosing the Right Price for your home is vital because it will position your house for success among other competing properties, but it's not the last time you'll have to consider the price. Buyers might make an offer to purchase your home at an amount that doesn't match your asking price.
Buyers typically base their offer on:
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the amount they can afford
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what they think your house is worth
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what they believe they'll have to spend on the property to make it feel like home
The great thing about pricing your house properly from the start is that you'll have more confidence to stand your ground when you're offered a lower price. And if you completed the pricing process as outlined above, you would also have considered your personal and financial goals, which puts you in a great position to judge whether a potential buyer's offer will help you reach these goals or not.
As a homeowner interested in selling your property, you can make decisions blindly or choose your house price strategically. Your approach determines whether the process will be rewarding financially and emotionally - or an uphill battle. It starts with teaming up with the right people, which will allow you to take the next step in your property journey with confidence.
Ready to get started? Read up on the process of selling your home in these articles:
How a sole mandate can make your house sell faster
Myths about selling your home during a recession
Three signs you need to sell your rental property now
Want professional help? Get your free valuation from NS Property Solutions for properties in the Western Cape and Eastern Cape.
Author: NS Property Solutions