According to a recent FNB Estate Agent Survey, the average time properties remain on the market is around 15 weeks and 4 days - a reflection of unrealistic pricing.
When asking prices are set in line with current market conditions, the average time a property is on the market is slashed by half, to eight weeks or less. The best way to increase your chances of a successful sale is to ensure that your property is priced correctly right from the start. This is according to Lee Siebert, Broker/Owner of RE/MAX Helderberg, who emphasises that homebuyers typically only look at those properties that are within a price range that they can afford.
The trick is to get the pricing just right to suit the current state of the market. So what is real market value? “Essentially, real market value 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,” says Siebert.Siebert says that the easiest and most accurate method of establishing the market value of your home is to get an experienced real estate agent to evaluate your property. The method used by most estate agents is a comparative market analysis (CMA). “By 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,” explains Siebert.
Adrian Goslett, CEO of RE/MAX of Southern Africa explains that there is more to setting the right asking price than simply establishing a value based on a comparative market analysis. “While such an analysis will provide a crucial guideline in terms of the pricing a particular type of property can achieve in the specific area, other factors should be taken into account, most importantly the psychological effect of a certain price range. This is not an exact science, but rather a skill acquired through knowledge of the specific market and experience with buyers, and highlights the value an experienced estate agent can bring to a property sale,” he says. Siebert agrees that any experienced agent will take into account the other factors that will affect the value of a property. 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.But the main element in determining an accurate value is current market conditions.
A recent FNB Estate Agent Survey revealed that the percentage of sellers having to drop their asking prices remained unchanged from the previous quarter at 81%, with the average price drop estimated at -12%. “This indicates that many sellers in South Africa are still hoping to obtain unrealistic prices given the current state of the market,” says Siebert. “The consequences of unrealistic pricing are clearly reflected in the average time properties remain on the market.”The need to adjust house prices to suit current market conditions is not a South African phenomenon. Sellers in property markets across the globe are facing similar challenges, and although the exact percentages vary from one market to another, the trend of reducing asking prices is a global one.For example, in the UK, it has been widely reported in the media that home owners are being forced to accept offers of 10% below the asking price in order to sell their properties. On the other side of the globe, data released by the Real Estate Institute of Western Australia reveals that 67% of sellers in Perth are prepared to drop the asking price by an average 6% to get a sale. Furthermore, the most recent data from Trulia.com, a real estate listings website in the US which tracks 50 major property markets in North America, shows that 20% of asking prices for current home listings were reduced at least once. “Sellers in South Africa should take note of these global trends and apply the learning: setting a realistic selling price is only way to effectively sell a property in the shortest amount of time possible. The basic economic law of supply and demand will always prevail. When an oversupply situation exists, and the number of buyers is severely limited by the availability of finance, selling prices will be subdued and overpriced properties will simply not sell,” Siebert concludes.