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2014

Here's the bottom line on home pricing

Published: Sat 27th June 2015
Author: Barry Davies

 

Prospective buyers may like the location of your home, the security of the area and even the way the property looks, but if the price is wrong, it is really, really unlikely that they will even view it, let alone buy it.

In short, pricing your home correctly from the outset is still the single most important factor that will determine whether it sells quickly and for the highest possible price.

And here’s another thing you need to know: When you put your home on the market, it creates the most interest among potential buyers within the first few days – especially among those who get “alerts” from their favourite property websites about new listings that match their requirements – and if you lose their interest at that stage because they consider your asking price too high, you will lose it for good, no matter how many times you reduce the price after that.

You can be certain they will compare it to the other, similar homes that are on the market in your area, and that if they believe it to be overpriced relative to those, all you will be doing is helping other people sell their homes by making those properties look like better value. Your property, meanwhile, will languish in the market for a long time while you keep dropping the price and ultimately sell for much less than it should, if it sells at all.

Okay, that’s the bad news. The good news is that this does not have to happen if you engage a properly trained and qualified agent who is familiar with your area to help you market your home. The first thing such an agent will do is prepare a Comparative Market Analysis (CMA), which will show you what homes like yours have been selling for in recent weeks – that is, the actual sale prices they achieved, not necessarily the prices you saw advertised, and how long they took to sell. Once again, you can be sure that those which sold soonest after being listed were the most accurately priced.

Such an agent will also be able to explain to you why you can’t base your asking price on the insurance value of your property, the municipal value of your property or what you need or want to get out of the sale in order to buy another property.

The blunt fact is that none of these are remotely relevant to what qualified buyers might be willing to pay for your home – and the only way to predict that is to find out what they recently paid for very similar properties in the same area.

So setting the asking price should be very much a strategy, not an emotional or casual undertaking, and with that in mind, you might also consider that:

  • R900 000 is actually a more appealing price to buyers than R899 999 as they will perceive your home as a quality product rather than a discounted item;
  • Similarly, consumers prefer fours and sevens, such as R894 000 or R897 000, or even R944 000 or R947 000, because such prices look much more “considered” and accurate – like you really thought about the value of your property; and
  • Consumers don’t want to have to work too hard to understand pricing, so R1-million works much better than R1,000,000. Similarly R900 000 works much better than R900,000.00