Accurately valuing a property is a skill

Private Property South Africa
Tahir Desai

“There is,” says Tony Clarke, Managing Director of the Rawson Property Group, “no aspect of an estate agent’s work which so clearly reveals the difference between the amateur and the truly competent, professional estate agent so clearly as the market pricing evaluation process.”

“In the 25 years that I have been associated with property,” said Clarke, “I have seen properties on which the market evaluations by different estate agents have varied as much as 20% — with both agents claiming that theirs is an accurate assessment.”

“The simple truth,” said Clarke, “is that to value a property accurately requires training by an expert. Those who work on formulae or mathematical tables will in most cases be out of date, because inflation and interest in growth rates, change not only year-by-year, but sometimes also month-by-month.”

“Similarly,” said Clarke, “those who rely on maths or statistics to arrive at their figures, will also usually be far off the mark.”

“The only sure way of getting the right figure is to compare like with like. This means comparing homes of the same size and quality in the area of the home being sold: the only true reflection of such homes’ values is the achieved sales price. If the agent starts looking at asking prices, he may well find that they are unrealistic – overpricing is in fact the bane of the good estate agent’s life, because it can, and too often does, lead to the client suspecting that the price his agent is suggesting is inaccurate or worse still, that he is deliberately lowering the price to bring about a quick sale.”

“From time to time,” added Clarke, “it will become apparent that the certain quick-buck agents are deliberately overpricing to get mandates. This too,” said Clarke, “has led to many problems in the industry.”

“When four or five agents are fighting for a mandate, it is always tempting to the seller to accept the highest valuation. Before he does this, he should ask the agent to explain and justify how his price was arrived at. In other words, has the agent done a complete comparative market analysis?”

“When an agent overprices,” said Clarke, “he is likely, a few weeks later, to suggest lowering the price and when, as anticipated, this does lead to a sale, he will seldom admit that he has valued it wrongly. He will instead blame changes in the economy, new political developments or other factors. However, having arrived at the right price, he will probably still achieve the same sale commission, although in reality, he should in fact be penalised for wasting three or four months of the client’s time.”

Clarke added that a really good agent will often insist on a sole mandate – when this happens, the client can easily check up on the agent’s proficiency by asking for the names and telephone numbers of those he has recently dealt with. And this will usually give a very good indication of his ability.

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