adminreach of many potential buyers.
The aspect of pricing a property is the most fundamental in the selling process, for it largely determines the time the property is going to be on the market.
There is no need for emphasis that the seller and agent benefit the most when a property is purchased at a higher value than it is worth.
Realistically, it is ultimately the buyers who determine the value of the properties on the market. The crux of a property price is juxtaposed between the seller’s ability to fully benefit financially and the buyer’s ability to derive satisfaction from paying the least amount possible to secure a property.
To achieve the price that satisfies these opposing views requires an independent valuation. Independence is important so that the selling agent is not motivated to overprice, as a form of gratitude for being awarded with the mandate to sell.
When a seller hears that their property might fetch more than they anticipated, there is naturally a feeling of excitement and an inclination to assume that the agent will achieve that price without considering other factors like prevailing market trends and the liquidity crunch.
For one have a general idea of how much the property will fetch on the open market, a sure start will be a thorough assessment of similar property prices within the same catchment and their duration on the open market.
Why I mention the duration of the property on the market will help one assess if that particular property is overpriced and reasons behind the overpricing.
It will be foolhardy to follow hot on the heels of one who has overpriced, because the result will only yield two very unsaleable properties on the market.
There is a natural bias that overwhelms the seller of a property in relation to the true value of the property they intend to sell. Unless the sale of the property is encouraged by the buyer, sentimental value cannot be converted to monetary value whatsoever, the fact that one married and bore all their children on the property cannot be compounded to an extra US$30 000 on the asking price. When it comes to determining the actual value of the property, an unattached third party objective assessment should be made, that is why I recommend the services of a professional.
The price of a property is inversely related to the demand on the market and it is demand not time that actually sells properties.
If one increases the price the demand lowers and if one lowers the price, the demand increases. It is important to realise that properties are normally not bought on whim; most buyers assess the options available way before they view the property through advertisements or other media. The price of the property is also inversely related to the interest that will be created in the person of the potential buyer.
If the property is overpriced, chances are the potential buyer will just ignore the property and the seller loses at the first hurdle.
If the potential buyer does view the property, at the back of their mind they will be comparing with other properties they would have seen previously that were either priced higher or lower.
To sellers who are unyielding to reason and intrinsically believe that their properties are worth far more than what was determined as value, there is a chance that some agents will use that particular property as a pawn to sell their other similar properties that are rightly priced. This is highly detrimental to the seller.
Firstly, the property will end up becoming stale on the market raising suspicions of possible problems with the property.
Secondly, that it also drives the seller on the desperate side forcing them to end up agreeing to a price that would not have been conceivable had the property been correctly priced from the beginning.
It is wise to remember that a realistic price will certainly assure one of a sale in the shortest possible time, even at this time of the year. The property is not intended to eliminate all the financial problems that one may face; it can, however, certainly reduce them up to its value.
- Vengai Madzima is a property investment consultant and analyst with Wisdom Properties Real Estate. He can be contacted on 0772468093; email: [email protected] Facebook
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