Overpricing your home in order to leave room for negotiation could backfire and leave you with a house that sits on the market.
When we put our homes on the market, we generally have some idea as to how much profit we are going to make from the deal. We estimate how much is still owing on the bond, factor in things like the estate agent’s commission and hope that we arrive at a figure that isn’t only market-related, but will be deemed fair by those who come to view the home.
Price is always going to be the main reason a property does or doesn’t sell. Those who have sat for months or even years trying to sell will usually end up dropping their price in order to make a sale. However, by the looks of things, it’s not only those who have inflated their asking price who are feeling the heat and being forced to accept lower offers. In FNB’s recent Estate Agent Survey it was noted that 93 percent of sellers were dropping their prices in order to sell.
Furthermore, John Loos, FNB Household and Property Sector Strategist, noted in a recent report that the estimated magnitude of decline for those being required to drop their asking price also became greater. From -7 percent in the 2nd quarter survey, the estimated percentage drop in asking price to make the sale increased to -9.8 percent in the 3rd quarter of last year. In other words, according to the survey, an increasing number of sellers are not only dropping their prices, but the size of that drop is also becoming greater.
All of this is undoubtedly a concern, but does it mean that sellers should up their price in anticipation of receiving lower offers? The short answer is absolutely not. Those who are serious about selling their homes need to price the property realistically, and being realistic doesn’t mean adding on a couple of hundred thousand rand to create a little leeway when it comes to bargaining with a buyer.
Reading the property market in the area in which you live is essential - sellers who take a long hard look at what sort of properties are selling at what price are far more likely to listen to an estate agent’s advice than those who just go blindly into the deal. That famous phrase ‘I’m just going to test the market’ needs to be totally wiped from your vocabulary. Selling property isn’t a game and no one should ever play around with the pricing of their home. The cold truth of the matter is that the longer a property stays on the market, the lower the eventual selling price will be.
Remember, buyers don’t give a hoot how much profit you make or how much commission you have to pay the agent, they want the best deal possible and will overlook your property if they believe the price is too high – even if just slightly.
Basically what we are trying to tell you is to do some research before you decide to sell. Speak to a broad cross-section of agents and ask them to provide a comparative market analysis before you put the home on the market. If, in your opinion, the price suggested by the agent is lower than you expected and you aren’t in a rush to sell, consider holding back and biding your time until the market picks up and the value of the property increases.