Is the asking price a guideline to the real value of a for sale property?
The value of a residential property on the market is always relative to the recent sales of other comparable homes in the neighbourhood.
That is the basis on which deft home buyers shop. And it is the way in which all markets work - always more or less in line with the equivalent other brand.
Some sellers set the value of their home sale price according to their needs. Those needs could include what they are going to spend the money on i.e. paying the balance of the bond on their current home; buying another property; settling some debt; or even embarking on a world tour.
They will say: "I need X amount for my house because my bond is so and so - and I still need another R2-million for something else.
That is often how they pitch the value of their house - by virtually picking a number out of the sky.
Know the real value
The question is: What is the down to earth, real value of a residential property for sale?Is it the advertised price? Or 10 per cent lower than advertised? Or even 20 per cent lower?
It could, in fact, be any of these prices - depending on various circumstances.
If the property has a number of buyers interested in purchasing it, then, just as people are attracted to a busy restaurant, the increased interest will result in a higher price.
Conversely, no interest over a long period could result in a substantially reduced sale price.
(It is intriguing to see certain real estate services offering 'attractive savings' to home sellers by discounting agent commission. Savings? Of whatvalue?
In this languid market, sellers need to price their properties as the next best buy in the suburb if they hope to blend with the mindsets of current home buyers.
Achieving better price
A good purchase is what every buyer aspires to, and it dictates how buyers shop. Why? Because it is the way all markets work .The residential property sector is no different.
Pricing a property is not an exact science - and the ideal scenario of having more than one buyer interested in a property would result in a better price achieved. It is happening very rarely in this market because of the big choice of homes on offer.
The ratio of available stock relative to buyers who can transact is very poor at the moment. Put another way, fewer buyers are chasing more houses.
Maybe some aspect of a property will have greater value to certain buyers than other aspects - for example, the convenience of being one block from a school.
While it may not be an attraction for some people, for others it will be an excellent plus factor that is well worth paying for.
That is where value can fluctuate a bit - depending on how people see certain aspects.
But it only allows for between five to 10 per cent variance. That is firm in the mindset of home buyers.
Author: Ronald Ennik