Determining the true market value of your property or of one you may be interested in buying can seem difficult, but it’s made easier when you follow a simple process.
So what’s a property actually worth? Consult an experienced estate agent in the area and check the information you receive by getting an online property valuation that provides sold prices for similar properties in the suburb, street or complex.
The best way to increase your chances of a successful sale is to ensure that your property is priced correctly right from the start, says Adrian Goslett, CEO of RE/MAX of Southern Africa.
Typically, homebuyers only look at those properties that are within a price range that they can afford. But, he says, the pricing of property is a tricky business, with a Goldilocks-type familiarity. “If your property is priced too high, expecting that buyers will negotiate with you, you may just miss the boat by not attracting the right kind of buyers to view your property in the first place.
“Price your property too low, and you can lose out on making more money than you would like to. The trick is to get the pricing just right to suit the current state of the market.”
So what is real market value? Goslett says real market value essentially refers to what a seller could expect a buyer to pay for their property in a competitive market.
“However, it must be remembered that even though the market value of your home is usually set by a professional, in the end the true market value is determined mainly by what a buyer is willing to pay for the property,” he says.
The easiest and arguably most accurate method of establishing the market value of your home is to get a real estate agent to evaluate your property. Most estate agents, says Goslett, offer free home market appraisals to anyone who is a potential client. “There is no obligation to list your home with any particular one of these agents, and you can learn a lot from how they appraise your property and what they have to say about what the market is doing in your particular suburb and its surrounding areas.”
Goslett says that homeowners must remember that a good estate agent is well versed on the general and area-specific property market trends, especially those trends relating to the areas in which they operate. They know what is selling and what is not, who is buying and for how much, and where the area is heading in the near to medium term.
The method used by most estate agents is a comparative market analysis (CMA), says Goslett. “A CMA is a method used to determine accurate market values by comparing other similar properties that have recently sold in your area; what estate agents refer to as ‘comparables’.
“Analysing what houses of a similar size as yours sold for over the last three to six months, as well as determining the average price per square metre the homes in your area are commanding, the CMA provides agents with a solid price base to use to determine a reasonable asking price for the property in question.”
If you’re selling, or for that matter buying a property, you can also get an online property valuation that will allow you to check the information that the agent has supplied and feel doubly comfortable that you are getting a true market related value.
Any experienced agent will tell you however, that there are other factors that will affect the value of your property, which also need to be taken into consideration. These include market demand and the condition of the property, its size and elevation, does it have a view, the state of the garden, the age and modernity of the kitchen and the bathrooms, various security features, as well as various cosmetic updates, such as the flooring, fireplaces, light fixtures, and whether the home has been painted with a fresh coat of paint for example.
“Just like people often eat with their eyes, the same is true for shopping for a property – if a house looks updated, clean and well-kept, and it boasts tasteful, modern décor, finishes and window dressings, then it will have a much higher commercial appeal to a much wider audience, and you may be able to enter the market with a slightly higher asking price,” says Goslett.
The main element, he says, in determining an accurate value is current market conditions. “The keyword here is ‘current’. If nothing else, recent market fluctuations have shown that property can be worth one amount one day and something else the next.
“Last year, for example, residential property price growth showed dramatic changes during the course of 2010 – peaking at around mid-2010 at 11,1%, and slowed down significantly to an average of 2,6% y/y in the second half of the year.”
Readers' Comments Have a comment about this article? Email us now.
Print
