What does my agent consider when setting my asking price?
While it is possible for homeowners to research certain information online, there is no program or site available online to those outside of the real estate profession that can accurately value your property. To set the right asking price it takes specific area knowledge, market savvy and even a touch of psychology, says Adrian Goslett, regional director and CEO of RE/MAX of Southern Africa.
“With the vast number of possible variants that have an impact on pricing, it is very difficult to set an asking price by merely doing some research online,” he says. “While there could be other homes situated in the same area that offer similar features, there are other aspects that come into play that could place your home at a different value in the market. This is where the services of an experienced real estate professional can be extremely important to the seller.”
So what exactly do real estate agents look at when determining the right, most competitive asking price for a home?
The past is often a gateway into looking at the future. Looking at the sales prices of homes in the area over the last six months will give the agent some insight into what buyers are prepared to pay for homes in that area. Careful consideration will be made to how long each property sat on the market, as well as how the initial asking price differed from the eventual selling price.
A comparative market analysis (CMA) is the accepted method to accurately determine a property’s value. Information and statistics are gathered from various sources and compiled together to determine the average price per square metre of property in the area. By determining the square metre pricing, the agent is able to compare apples with apples. Once this base has been reached, it is far easier to give an accurate appraisal of the property, considering any other factors that might have an effect the properties’ exact value. These factors would include the condition of the property and its size, security features, finishes and fixtures, and any other features that could set the house apart from others in the areas.
The market trends
Micro markets contain unique aspects that influence the sale of homes in that particular area. These aspects could include new companies moving into the area or plans for improving local amenities such as parks or shopping malls. The agent will look at what is affecting the market in the neighbourhood and consider the influence this will have on the perceived value of the home. Both countrywide influences and local factors will have an impact on home’s potential perceived value among buyers.
The perceived value of a property has a lot to do with the area in which it is situated and the surrounding homes around the property. While a home in the same neighbourhood – approximately the same size and age – could have recently sold for a high price, if the seller’s home is surrounded by rundown homes or noisy neighbours they may not have the same fortune. Unfortunately it is largely out of the seller’s hands, but the neighbouring properties can have an influence on how the home is valued by buyers. On the flipside, while bad neighbours can bring down the home’s value, if the grass is in fact greener on the opposite side of the fence, it can have a positive impact on the value of the home.
Finding the asking price that is “just right” from the start is crucial to selling it within the fastest time frame and for the best price. Over-pricing can chase away buyers from the start, while pricing the property too low will leave money out on the table. A property that is inflated by around 10% above its market-related value is much less likely to sell within 30 days of it being on the market, compared to one that is priced within 5% of its market value. An inflated asking price can actually have the opposite effect to what the seller intended, especially if the over-pricing leads to the property sitting on the market for longer than it should and becoming stale. A home for sale becomes stale when potential buyers start to question why is hasn’t sold yet. “There is often a negative association with a property that has been on the market for longer than the average time, which can lead to it eventually selling for below its actual value,” says Goslett.