Pricing Your Home To Sell

The most important aspect of selling your home is getting the pricing right on your property. The right price will ensure that your home spends less time on the market and attracts the right buyer. Before talking about price though, it is important to understand a few key principles to keep in mind when considering and determining price, the most important of which is that THE CURRENT MARKET DETERMINES THE VALUE OF YOUR PROPERTY.

In other words, the value of your home is determined by what a willing and able buyer is prepared to pay, given a certain set of circumstances. If the price is too high and the prospective buyer does not find the value compared to the prices of similar competing houses in the area, the house will not sell.

Therefore, the market value of your property IS NOT

• what you paid for your home;
• the amount that you need to purchase a new home;
• the price you would like to achieve for your home;
• necessarily the value agents put on your property; or
• what a valuator says your home is worth.

Market value is determined by the current market.

Current market considerations

• Even though there is evidence of many willing buyers in the market, the number of able buyers has decreased significantly due to current global economic pressures, the National Credit Act and the stringent lending criteria of financial institutions.
• The continuously rising cost of living has resulted in many homeowners no longer being able to afford their properties, resulting in an increase in available properties on the market. The market is therefore increasingly competitive and qualified buyers are spoilt for choice.

The pitfalls of overpricing

Be aware of over valuation because it can damage the sale of your house.

• An unreasonable asking price discourages prospective buyers.
• Buyers purchase by comparison and if the property is priced above similar competing properties, it will eliminate offers.
• A property that is priced too high will stay on the market too long leading to over-exposure.
• An overpriced property limits financing.
• It eventually means a lower price.

According to the FNB Property Barometer Report published in November 2011, the average time for properties on the market is currently 19 weeks and 85% of sellers had to drop their asking price by an average of 12%.

Getting it right

The correct method to price a property is to use a Comparative Market Analysis (CMA). This determines the value of a property in comparison to other comparable properties which have recently been sold or are currently for sale. Your agent should assist you to set the correct asking price for the property in terms of the current market conditions. The ultimate pricing decision resides with the seller, but your agent has the duty to present you with the relevant market facts.