One of the most critical elements of selling any property is getting the listing price right. Price too low and sellers lose out on profits. Price too high and the property may not sell at all.
The resounding advice from property experts is to use a professional real estate agent to value your home before settling on a listing price. But what are those agents actually analysing to arrive at the numbers they recommend?
David Jacobs, Gauteng regional manager for the Rawson Property Group, explains.
The location and its buyers
“Every neighbourhood has its own set of micro trends and influences,” said Jacobs. “These affect how a property will be received by buyers and contribute to its market value.”
While sales statistics form part of this picture, Jacobs said getting inside the mind of local buyers is equally important.
“An agent who works in an area on a daily basis will have hands-on knowledge of what its buyers are looking for, and how these features may affect a property’s value,” he said. “This isn’t the type of knowledge you can find in databases, and it changes from season to season and year to year, which is why it’s vital to work with an agent who is active in your area.”
While virtual valuations are available, Jacobs said the most accurate property price estimates can only be achieved when seeing a home first-hand – preferably with the seller as a tour guide.
“Only someone who has lived in a home really knows all of its pros and cons,” said Jacobs. “That information can make a big difference to a sales price and is very important to share with your valuing agent.”
Jacobs urges sellers to highlight as many positive elements of their property as they can, but also resist the urge to hide their property’s flaws which will need to be disclosed to buyers during the sales process anyway.
“It’s far better to be upfront and take any major issues into account in your pricing strategy than to give buyers a chance to use them against you during negotiations,” he said.
Agents have access to extensive amounts of in-depth market and sales information, particularly when they’re part of a major brand.
According to Jacobs, this information is used to assess not only active listings in an area – a property’s direct competition – but also previously sold and unsold listings.
“Sold properties are used as a benchmark for successful pricing, while unsold listings are usually a sign of overpricing,” he explains. “Agents will measure the seller’s property against these, as well as active listings, to find a reasonable price range that reflects current market conditions.”
The seller’s requirements
A property’s listing price doesn’t only need to reflect its market value, however. It also needs to meet a seller’s personal requirements.
“Some sellers need to meet a particular financial target,” said Jacobs, “while others need a quick sale. A good agent will create a pricing strategy to support these goals where possible, and advise sellers if market conditions are unlikely to support the results they need.”
The proposed plan of action
Marketing strategies can also influence (and be influenced by) a property’s price. Jacobs said a good agent will make marketing recommendations as part of their valuation services, even including a proposed marketing strategy to show the exposure and service they plan to provide.
“This is a good indication of the value a seller will get for the commission they will be paying,” said Jacobs, “and, together with high-quality valuation documentation, makes for a far more reliable way to select a capable agent than simply going with whoever provides the highest valuation.”