How agents decide on the selling price of your property
Category Property Tips
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.
It starts with ensuring the property is listed at a market-related price. Sellers, however, often have a price in mind when they first meet agents, usually based on what they have seen on property portals. Prices on the portals are not an accurate gauge. The asking prices are often much higher than the selling prices and many will need to reduce their price in order to sell.
Buyers simply overlook overpriced properties. 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 the 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 comparable property sales, the agent will assess the last sales and adjust by 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, extra parking, a separate flat or cottage, a view and an amazing garden are value-adding factors. Expensive, but unnecessary features might, however, not add to the price.
Trends in the area also affect the price. While deterioration will be a drawback, upgrades can be an advantage. 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 allowance for that in the price.
"Testing the market" with a higher price is a risky 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 valuation because this is in all likelihood so that they can secure your business.
The risk of listing at a price which is too high, is that you are driving buyers to other listings in the area. You will inevitably need to drop your price and may end up selling for less than what you might have if listed correctly at the outset.
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Author: Gina Meintjes
