But what does this mean and how is a realistic price determined?
Adrian Goslett, assistant regional director of RE/MAX of Southern Africa, says that a realistic price is what is achieved when the market speaks and all parties concerned listen. "Most of us think our properties are worth more than what they are and we base our assumption on the prices that have been achieved over the last five years."
But, did you know that as an industry standard, as reported in FNB's Residential Property Barometer, Q3 2009, the percentage of properties sold at less than the asking price declined slightly from 86% in the second quarter to 83% in the third quarter? Goslett says that if a home is correctly priced it will almost always sell within the industry average. According to FNB's Residential Property Barometer this has declined from a high of 21 weeks and 1 day in the second quarter to 16 weeks and 4 days in the third quarter.
"The trade-off of highest price vs. shortest time is a fine tightrope to walk, but consider this for a moment: you own a property that is currently being marketed at R1,2m. In your heart of hearts, you're willing to accept R1m. By marketing your property at a 'realistic' selling price you will generate more interest. This means more calls, more people through your show days and ultimately more offers," says Goslett.
Goslett says he would always look at pricing his home slightly under the average comparative market analysis (CMA) value in order to undercut competition which would be surrounding homeowners with similar properties looking to sell their homes.
But why? Why not price my home high and wait for the highest offer? "Your home will take months, if not years, to sell and inevitably that high offer is unlikely to be achieved," says Goslett.
"If I gave you R1m today and you invested it for a year in a high-interest bearing account, you would have recouped some of the shortfall or better yet, if you are looking at purchasing another property, the power of negotiation now rests in your hands. A cash buyer is hot property (excuse the pun) in this market."
Goslett advises that sellers and buyers alike request their agent to prepare a detailed CMA of homes in the area that have sold in the last year that are similar in nature to the particular property being put up for sale. "Don't look at advertised prices in the newspapers or websites, get the real numbers."
Goslett further advises sellers not to sign a sole mandate with an agent simply because they valued the property at the highest of the four listing presentations. "Unscrupulous agents will take the listing at all costs and look to knock down the price later in the process. This wastes your time and creates a negative perception of your property," he says.
In his commentary on FNB's Residential Property Barometer, John Loos, FNB Home Loans Property Strategist, notes that the decrease in the number of properties being sold at less than the asking price, coupled with the shorter times that properties are sitting on the market, may well be the start of a move towards greater pricing realism.
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