Agents play a vitally important role in selling property. How do they assist in determining the price of a property?
If your property is on the market, there is no better feeling than getting a great offer that you almost do not have to think about before accepting.
According to Samuel Seeff, chairman of the Seeff Property Group, a focus on ensuring you list your property at a market-related price remains the key to a successful sale. He says that sellers need to bear in mind that despite the steady demand for property, there is still a constant flow of new stock onto the market which means that buyers still have plenty of property listings to choose from.
The result is that buyers largely still hold the bargaining power in the market, especially at the higher price bands above R1,5 million. Working with a credible area agent is therefore vital to ensure your price is set at the correct level upfront, he says.
Sellers, however, often have a price in mind when they first meet agents, usually based on what they have seen on property portals. Seeff says that sellers need to bear in mind that prices on the portals are not an accurate gauge in terms of what properties are actually selling for. These listing prices are often inflated, and most properties do not sell or the sellers need to drop their prices to conclude a sale.
Buyers simply overlook overpriced properties, he adds. They stay on the market for longer and soon become stale and buyers disinterested. The longer it is on the market, the bigger the gap between the original listing and ultimate selling price.
There is only one way to ensure your property sells for the best possible price in the shortest time period, and that is to price it correctly upfront. To gain such a competitive advantage, you need to use a credible local area agent with a record of accomplishment in the area.
Each area and property is different. A local area agent will have their ear to the ground and a thorough understanding of what buyers are looking for and prepared to pay. They will do a thorough assessment based on various factors such as:
Assessment of recent sales over the last three to six months to gauge what buyers are paying. If there are no sales, the agent will assess the last sales and add on a suitable percentage to arrive at an appropriate asking price.
The next consideration is the location of the property. If in a popular location, the price would be in the upper percentile compared to a less favourable location which might put it in the lower percentile when looking at the range of prices achieved in the area.
Valuing the property in terms of its age, size and condition is also vital to the price. The better the condition, the higher the price. Features such as security, safe parking, a swimming pool and neat garden are value-adding factors. Excessive bedrooms and features, might, however, not add to the price.
Trends in the area also affect the price. While deterioration will be a drawback, development can add a premium to the price. Agents usually consider any unique factors which add to the demand and prices that buyers are prepared to pay.
Stock levels are also considered. If there is an oversupply, sellers face stiffer competition and prices come under pressure. If there is a shortage, sellers can usually expect higher prices. If the seller needs to sell when there is an oversupply, they will need to make an allowance for that in the price.
“Testing the market” with a higher price is never a good strategy. Listing at a higher price will not achieve a higher selling price as buyers are well informed and will simply ignore the property. Be wary too of choosing an agent based on a high price offer because this is in all likelihood so that they can secure your business.
Seeff concludes by noting that the risk of listing at a price which is too high, is that it only serves to drive buyers to other listings in the area. The seller may inevitably need to drop the price and may end up selling for less than what he/she might have if listed correctly at the outset.