Pricing Your Property to Sell

The Current Property Market

The current property market plays a significant role in determining a property's value.
In Gauteng’s sales market, buyers are spoiled for choice - thanks to ongoing semigration to coastal hotspots, a sluggish economy, political uncertainty, and global inflation placing pressure on household budgets.

Understanding a Buyer’s Market

A buyer’s market means an oversupply of properties, forcing sellers to lower their asking prices. Banks become more competitive, offering favourable bond terms to win over clients, while qualified buyers feel confident enough to make cheeky offers.

Why Sellers Overvalue Their Homes

Sellers often attach personal value to their properties - both emotional and financial. This makes it difficult to objectively assess a property's true market worth, often resulting in unrealistic pricing, missed sales deadlines, and homes that sit unsold.

Factors such as what the seller paid for the property, how much they’ve spent on renovations, their emotional attachment, or what they need for their next purchase have little bearing on market value. Buyers assess a property based on current market conditions and comparable sales, not the seller’s personal investment.

Key Economic Drivers of Property Value:

In addition to market sentiment, economic factors also play a major role in shaping property values.

• Supply and demand, along with building costs, are key drivers of market value. 

• Inflation directly impacts the cost of building.

• Interest rates and disposable income influence buyers’ purchasing power and overall demand.

When interest rates fall, property becomes more affordable, encouraging tenants to enter the market as first-time buyers and enabling homeowners to upgrade. This increased demand can drive prices up.

Other considerations, such as location, property condition, age, layout, and prevailing market trends, also significantly affect a home’s value.

The Costly Mistake of Overpricing

Overpricing a property in a stagnant market can result in it sitting unsold for an extended period - a stressful and costly scenario, especially if the property is vacant and not generating rental income.

A listing that remains on the market for too long often signals to buyers that it is either overpriced or has underlying issues - deterring interest even further. This can lead to the dreaded “stale listing” effect, where properties linger on the market and are overlooked, even after price reductions.

Eventually reducing the asking price may also create the perception that the seller is desperate or that the property is worth less than market value, inviting offers well below its true worth.

How to Accurately Determine Property Value:

To accurately determine a property's value, reputable property practitioners rely on a Comparative Market Analysis (CMA).

This approach assesses: 

• Age, condition, location, and the general appearance of the property.

• Current demand.

• Comparable sales of similar properties recently sold in the area.

The goal is to establish a realistic and marketable asking price - aligned with what buyers are currently willing to pay. Knowing your property’s market value helps set a fair and competitive price that will attract the right buyers.

Advantages of Pricing Your Property Correctly:

•  Stimulates immediate, genuine interest from serious buyers.

• Creates the impression of good value in the current market.

• Maximises exposure across marketing platforms and listing sites.

• Attracts stronger, more competitive offers from qualified buyers.

• Leads to a faster, smoother sale process.

• Minimises costs and stress for the seller.

Risks of Overpricing Your Property:

• Reduces the overall response to advertising and online listings.

• Attracts the wrong type of buyer, often those looking for unrealistic bargains.

• Discourages genuine, well-informed buyers who recognise the property is overpriced.

• Eliminates the likelihood of receiving serious offers.

• Results in extended time on the market, leading to buyer scepticism and potential price reductions.

In a market where buyers are well-informed and sales stock is high, pricing your property objectively and competitively is key to standing out. Work with a knowledgeable agent, stay aligned with local trends, and remain open to reasonable offers to ensure the best possible outcome.

Planning to Invest or Sell in Randburg?

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