The price is the first thing buyers notice about your property. If you set your price too high, then the chance of alienating buyers is higher. You want your house to be taken seriously, and the asking price reflects how serious you are about selling your home.
Several factors will contribute to your final decision but - Always be realistic. Understand and set your price to reflect the current market situation.
This section is quite extensive as it is critical to the sale of your property. Take the time to read through the issues and be ready to apply them in making your decision.
CURRENT MARKET ANALYSIS
First, you should compare your house to others that are in the market. If you use an agent, he/she should provide you with a CMA. The CMA will reflect the following:
- Houses in your price range and area sold
within the last year or so
- Selling prices of houses and if possible original asking prices
- Current inventory of houses on the market
COMPARE HOUSES
Also, try to find out what types of houses are selling and see if it applies to your area. Buyers follow trends, and these trends can help you set your price.
What are the general features of each house on the market that will be competing with yours? It might mean making a few alterations or changes so your house fits these trends
DON’T TAKE IT PERSONALLY
While you might be very proud of the homemade braai your children built, that is leaning lopsidedly, buyers will not attach any value to it. In fact they will be calculating how much it will cost to rebuild.
Do not try and attach a value to your memories or personal likes. You need to put that aside and view the house from a buyers perspective.
HOUSE CONDITION
Another important factor is the condition of your home. Make sure that your home looks ready to be sold. Fix any defects (peeling or faded paint, cracks, stains, etc.) Condition alone can sometimes prompt fast buying decisions. Not only should you fix any defects, but consider upgrading your home by making major repairs and cosmetic improvements before selling.
A nice looking home triggers the emotional response that can lead to a financial response and you should read the section on getting your home ready for the market.
Many people do not have the imagination to see the home after a bit of work. They cannot picture the garden well laid out or a kitchen repainted. You will have to make sure they can see a final product and if not, price your home accordingly.
KERB APPEAL
This refers to the appeal the house has from the outside – in other words, the first impressions. Sadly many buyers do not even view a home that does not have sufficient kerb appeal. They lose out on a maybe excellent property and you lose out on a buyer.
Pull into your driveway and take a good, hard look. Is the yard neat and trimmed? What about the view from the front yard? Then, make a mental note of the things that might put off potential buyers, along with another list of the things that first attracted you to the dwelling. Remember, the home's become a great place for you, but a new buyer will see things that you don't.
QUANTITY COUNTS
The key is to get as many people viewing your home as possible. They tell others and once they have seen your home and it is exceptional, they will begin to offer against each other. In many cases I have seen properties reach higher prices than what was originally asked, in this manner.
If the advertised price is too high, you will limit the number of viewers and therefore the competition.
FALSE PROMISES
Many agents sadly, will promise to sell your home at an inflated price just to get the mandate. Falling for this, will, in most cases, result in you actually getting less for your home than if you had marketed it properly.
A house is “hot” and new for a certain period. It is during this critical time that the sale must take place. Overpriced properties just stay on the market unsold and eventually everyone knows of the home and begins to question why it cannot sell.
Sooner or later the agent will return to you, asking to reduce the selling price. If an agent makes empty promises of inflated pricing, way out of line with the CMA they should of given you, then walk away.
MARKET AND SUBURB TRENDS
Discuss with your agent the current market conditions and in particular any specific trends for your suburb. This will give you a good indication of whether you should price at conservative values or whether you can afford to take it up a peg or two.
Let your agent know of any new developments in the area that you know of. If they are positive, these will make great selling points and allow for a higher price. If they are negative, your agent will know to keep pricing reasonable and push for a sale before it becomes public.
In a sellers market, you can afford to price slightly above the norm – just to see what the reaction will be – you can always negotiate – just don’t go way over the top and chase potential buyers away.
OFFERING INCENTIVES TO HASTEN A SALE
Sometimes cash incentives are as effective as lowering the price, especially in the lower price range where buyers may be "cash poor." You may offer to pay some or all of a buyer's costs.
If you haven't had much traffic through your house and you’re in a hurry to sell, you may want to add the offer of a bonus to the selling broker, in addition to their commission. Discuss this with your agent but they could for instance get the word out that "there is a bonus to the agent who brings a successful offer before Christmas."
Very importantly, is that as part of setting your pricing and bottom line, you do a proper budget and consider your Estimated Net Proceeds.
BALANCING BETWEEN TOO HIGH AND TOO LOW
When setting a list price for your home, you should be aware of a buyer’s frame of mind. Consider the following pricing factors:
If you set the price too high, your house won’t be picked for viewing, even though it may be much nicer than other homes on the street. You may have told your agent to "Bring me any offer. Frankly, I’d take less." But compared to other houses for sale, your home simply looks too expensive to be considered.
If you price too low, you'll short-change yourself. Your house will sell promptly, yes, but you may make less on the sale than if you had set a higher price and waited for a buyer who was willing to pay it.
It is important to know your expectations and covey these clearly to your agent. They will for instance, if you are negotiable use subtle terms like "asking" price, which implies you don't quite expect to get it and will negotiate.
Important - Please read the article on Pricing Implications
SET A SCHEDULE FOR LOWERING THE PRICE
Some sellers list at the rock-bottom price they'd really take, because they hate bargaining. Others add on thousands to the estimated market value "just to see what happens." If you want to try that, and if you have the luxury of enough time to feel out the market, sit down with your agent and work out an advance schedule for lowering the price if need be.
If there haven't been many prospects viewing your home after three weeks, you may need to lower your list price. If that doesn't bring any prospective buyers, you may need to lower your list price again. Plan on doing that regularly until you find a level that attracts buyers. Make a written schedule in advance, before emotion takes over and you're tempted to dig your heels in.
Also, both you and your agent must know clearly what the bottom line is. Your agent is an excellent negotiator but as with any other negotiation, must know what can be put on the table and what not.
FORMAL WRITTEN APPRAISAL
A formal written appraisal (which will cost you a few hundred rand) can be useful if you need confirmation for what your agent is advising you, if there hasn't been much activity in your area recently, if co-owners disagree about price or if there is any other circumstance that makes it difficult for you to agree on a value on your home.
TIP: If you do order a market value appraisal, make it clear you don't need an elaborate, or full narrative report, i.e., the kind that's complete with photos of the house and neighbourhood. Floor plans and a site map is sufficient in most cases.
Bear in mind, appraiser will generally be conservative in their valuation, as they base their estimate largely on historic sales. Your agent however will be considering a host of other factors, such as where the market is heading, specific suburb trends etc.
You will find, without a doubt, that a professional agent provides a much more substantive and accurate service – at no extra cost!
IN CLOSING……
Together with your agent, you have reviewed the market, looked at the Comparative Market Analysis and assessed your own home against all of this. You have prepared a budget and know what you must or want to get out. So a price is set and you are happy – lets go selling!
But what if you were expecting more – are not happy with the agent recommendation? Do not fall into the trap of finding an agent that will simply say whatever it takes to make you happy. If you decide to rather price too high and still attempt a sale, stick with the agent that provided you with facts and honest evaluation. At least you are guaranteed honesty going forward.
If you decide to rather withdraw from the market, discuss this with your agent and set a timetable for re-looking at selling in the future. Your agent will then constantly monitor the market until conditions are right for you
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