'Buyers have the final say on home values'

07 September 2018

The property market in the northern suburbs of Johannesburg is currently largely being driven by the price that buyers are prepared to pay for a property.

This is the view of Debbie Justus-Ferns, manager of Renprop Residential Resales, who points out that, as has been said many times in recent years, properties that are well-priced sell within a reasonable time frame.

"Unfortunately the reality is that sellers are still more often than not overpricing their properties," she says. "It is understandable that setting the selling price of a home can be an emotionally charged event for sellers as they are attached to the house they bought and the price they paid for it."

"However, one major factor that sellers need to keep in mind is that potential buyers are not concerned with how much they need to make from the sale in order to afford the property they want to buy, or that they need to get x amount out because they paid so much for it."

Justus-Ferns says that the only thing buyers care about, and even more so in the current market, is whether or not they can purchase a home that offers them value for money at a fair, market-related price. "Overpricing a home is the one thing that will achieve the opposite of the objective of selling within a reasonable time frame," she says.

It's a well known fact that overpriced properties sit on the market for much longer than their well-priced counterparts and end up losing the seller money. The financial loss a seller can experience from having their home on the market for too long because its overpriced goes beyond the extra bond repayments and the cost of keeping it clean and available to potential buyers, Justus-Ferns explains.

"It ultimately affects the price that the buyer chooses to pay because it's a stale listing that was overpriced for too long. Buyers these days do their homework, and will put in cheeky offers on properties that have been on the market for a while. Sometimes desperate sellers end up taking these offers, which could have been avoided had the property been correctly priced to start with."

So how do you know if your property is overpriced? Justus-Ferns says that in the case where two or more buyers put in the same offer, or offers within a similar price bracket, sellers need to understand that the price offered is the price the market is prepared to pay, and therefore what their home is worth.

So how should a property price be determined with accuracy? Justus-Ferns says that there is never an exact right price, but rather a reasonable price range within which a seller should work. "Pricing a property comes down to an educated opinion based on the evaluation of similar properties in the area, current market trends and other factors that could influence the price like the state of repair the property is in etc. A professional estate agent will be able to provide a seller with a reasonable price range within which they can expect to receive offers," she says.

So while the prospect of making more money by hiking up the property price may be appealing, and a factor that often leads to many uninformed sellers often choosing to work with an estate agent who suggests the highest listing price, this is the absolute worst mistake a seller can make. "At the end of the day, it doesn't matter how much you think your home is worth, or even how much your agent thinks its worth. The buyer has the final say in property value in today's market and any home is only worth what a willing buyer is prepared to pay for it," Justus-Ferns concludes.

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