The most common mistake sellers make, especially given the current market conditions, is failing to distinguish between the actual value of their home and its current marketability.
According to Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, there are numerous elements that determine a home’s value, just as there are several aspects that impact a home’s marketability.
While the value of a property is determined by things such as its size, features and the readiness of buyers to purchase homes of this kind, marketability is more about the readiness of the property to be sold and relates to aspects such as the home’s condition and aesthetic appeal
“The value of a property is largely determined by the supply and demand in the market. When demand is greater than the supply of available properties on the market, the perceived value increases. Oppositely, home values can stagnate when there are a lot of homes for sale, but not many buyers. Essentially what this means is that value is largely determined by what buyers are prepared to pay for a property of that kind within the current market,” Goslett explains.
According to Goslett, understanding this concept is the key to understanding why renovations do not always guarantee a return on investment. He warns that while a new kitchen or bathroom upgrade will certainly make the home more attractive to buyers and increase its marketability, these alterations do not necessarily mean that buyers will be willing to pay an increased amount equivalent to the cost of the renovation. “Sellers similarly need to avoid over-capitalising on alterations that will price their property above the value that buyers are willing to pay for homes in that area.”
Speaking of renovating to sell, sellers also need to understand that the marketability of their home will affect the value of their home. He explains that marketability increases by ensuring that the home is in its best condition before being placed on the market. Goslett points out that increasing a home’s marketability can therefore often result in a higher selling price for the property.
“Although adding a coat of paint and having the garden landscaped won’t necessarily increase the home’s value, it will increase its marketability and make it appealing to a larger number of potential buyers – even though the actual features of the home have not changed. Staging the property will also increase buyer appeal and help sellers fetch the full value for their home. An experienced real estate agent will be able to provide valuable advice regarding staging the home to increase its marketability,” says Goslett.
Once sellers understand this distinction between value and marketability, it will become easier to ensure that they maximise their potential selling price. “Homes priced incorrectly within this highly competitive market will lose their ‘newly listed’ marketing advantage, which will severely hurt the homeowner’s chance of selling at full value. Sellers will therefore need to work closely with their real estate advisor in order to market their home at a price that accurately reflects both the home’s value and marketability,” Goslett concludes.