When a homeowner has lived in a property for an extended period of time, it can be difficult for them to detach themselves emotionally when setting an asking price.
Many sellers set the asking price slightly higher than they want, anticipating buyers putting in lower offers. Goslett notes that although there is truth in the fact that buyers are offering less than the asking price, the danger of an over-priced property is that it could chase away buyers altogether. This is true if there are other homes in the area offering similar features, but at market related prices. "The fact is that an asking price that is market related will appeal to a far larger range of buyers, than one that isn’t,” he says.
Goslett adds that a property that is inflated by around 10 percent above its market related value is less likely to sell within 30 days of it being on the market, compared to one that is priced within 5 percent of its market value. He says an inflated asking-price can have the opposite effect to what the seller intended, especially if the over-pricing leads to the property sitting on the market for longer than it should and becoming stale. A home for sale becomes stale when potential buyers start to question why it hasn’t sold yet.
“There is often a negative association with a property that has been on the market for longer than the average time, which can lead to it eventually selling for below its actual value.”
Goslett says the only way that sellers can know whether their home is priced correctly is by knowing how a property’s value is determined.
Market conditions pay a vital role in determining a home’s current value, along with what buyers are willing to pay for it, he says. This varies from one area to another, taking into consideration factors such as location, strength of the local market, type of properties in the area and demand for them, as well as access to amenities. "It is impossible to separate property prices from demand - the more sought-after the area, the higher the value of the property,” Goslett says.
He adds that a way to determine what buyers have paid for properties is by speaking to a reputable real estate agent who specialises in that area. They will have a record of how much properties with similar offerings to the seller’s home have recently sold for in the last three to six months. Goslett says that although it is the seller’s decision, a real estate agent will have the expertise to guide them with regard to setting the right asking price by performing a comparative market analysis.
He notes that a comparative market analysis (CMA) is the accepted method to accurately determine a property’s value. Information and statistics are gathered from various sources and compiled together to determine the average price per square metre of property in the area. “By determining the square metre pricing, the agent is able to compare apples with apples," he says. Once the base has been reached, it is easier to give an accurate appraisal of the property, taking into consideration any other factors that might affect the property's exact value. These factors would include the condition of the property and its size, security features, finishes and fixtures, and any other features that could set the house apart from others in the areas.
Goslett says that working with a reputable, experienced real estate agent and making sure the asking price is correct from the outset, will ultimately make all the difference in achieving the seller’s goal.
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