Please note that you are using an outdated version of Internet Explorer which is not compatible with some elements of the site. We strongly urge you to update to a newer version for optimal browsing experience.

How is a property valued? Tips for buyers and sellers

01 Oct 2015

A home is often a person’s biggest financial asset, and selling it at the right price is crucial if one is to make it work to future advantage.

Van Rooyen says evaluating a property’s value correctly can be a challenge: undervalue it and the seller loses financially, overvalue it and it won’t sell. But how does one determine the true value of a residential property?

The challenge lies in evaluating the property’s value correctly: undervalue it and the seller loses financially, overvalue it and it won’t sell. But how does one determine the true value of a residential property?

Steven van Rooyen, Principal of Leapfrog Property Milnerton, says a property valuation is based on a number of factors.

“A professional estate agent will be able to determine the value of your property based on its size, location and by looking at what similar homes in the area are selling for. Ultimately the property is only worth what a willing buyer will pay a willing seller.”

Van Rooyen uses Milnerton in Cape Town as a case study to illustrate this.

He says the R1 million to R2 million market in Milnerton has done well in 2015, mostly due to stock shortages. However, this situation has led to higher expectations amongst a number of sellers who have raised their asking prices.

“At the moment we’re experiencing price resistance due to this and other economic factors, and sellers who have inflated their asking prices are finding that their homes remain on the market much longer,” says Van Rooyen.

He says he believes that most of the price growth expected for 2015 has already been achieved here, and that prices will likely not increase much further towards the end of the year.

That being said, there is also no need to make the opposite mistake, by undervaluing a property, says Van Rooyen. Milnerton, for example, has seen a lot of growth as properties in Cape Town itself become more expensive and the MyCiti bus route makes commuting into town easier and cheaper.

Sectional title properties in particular are increasingly popular, and in Milnerton Central these now sell for around R835 000 on average, up from R715 000 in 2014.

Freehold properties have struggled slightly with an average price of R2.39 million, down by R200 000 from 2014.

“Here is a perfect example of where an estate agent can assist by making a proper determination on price: at the moment buyers are looking for affordable, ‘lock-up and go’ homes, hence the sectional title market is doing better than the freehold market in our area. As such sellers of freehold properties need to know that an inflated asking price won’t float at the moment,” says Van Rooyen.

“My advice to sellers is not to be misled by emotion; trust accurate market evaluations from respected agents and let that determine your sales price.”

He cautions sellers and buyers to educate themselves on the market value of properties in a particular area so as to make the most informed decision possible when it comes to either selling or buying property.

This can be done by working with a trusted property advisor and relying on a comparative market analysis, says Van Rooyen.

Print Print
Top Articles
Savvy buyers can find great property options at lower prices in times of reduced confidence, and with signs of recovery and banks giving more bonds, it's a good time to buy...

While the commercial market may be slower than in recent years, it is by no means stagnating and demand in certain sectors continues to drive ongoing development.

Tourists are paying up to R4 400 per day in Cape Town’s mixed-use Waterfront and Foreshore, with visitor numbers expected to climb to 21 million by 2030. Read on...

Loading

Your browser is out of date!

It looks like you are using an outdated version of Internet Explorer.

If you are using Internet Explorer 8 or higher, please verify that your Internet Explorer compatibility view settings are not enabled.

For the best browsing experience, update to the latest Version of Internet Explorer or try out Google Chrome or Mozilla Firefox.


Please contact our Property24 Support Team for further assistance. Tel. +27 (0)861 111 724