ARE YOU PAYING THE RIGHT PRICE FOR YOUR PROPERTY?

How does a homebuyer know if he is offering the right price for the property in which he is interested?

There are certain checks which can indicate whether the seller and his agent are going for a kill or pricing at market-related values.

The first should always be the prices recently achieved on similar homes in the area: a reputable agent, with links to good property statistical services, should be able to produce these on demand. If he or she cannot, this should always be seen as grounds for suspicion and a lack of professionalism.

These figures should include the floor area of the homes sold (in square metres) and sometimes of the plots as well. If the floor area is then divided by the sales price achieved (or asked, in the case of a home now being considered) the metre square price can be a useful guideline to the true value of what is now on offer. If several recent sales are analysed in this way, a reasonable accurate average figure for the area can be estimated. Nevertheless, all prices will reflect special benefits or disadvantages and should be explained and analysed in detail.

For example; let’s look at Sonheuwel 1 houses recently sold in the security complex (not loose standing houses) and what rand per square metre they achieved. R6 389 m² x 220m² = R1 400 000.00.

In stand-alone house purchase on their own plots, extras such as solid wood flooring and doors, designer fireplaces, underfloor heating, air conditioning and swimming pools can make it possible for the owner to ask far more than the average price for the area – and in today’s market lock-up and go units capable of being left empty for long periods are appreciated faster in value than traditional homes with large grounds. This can cause some frustration for those scaling down to apparently simpler and smaller units which, may cost just as much as their larger and grander home.

It is always a good policy to buy one of the less expensive homes in a good area rather than vice versa. If, however, a buyer does find himself attracted to a home priced higher than the average for the area, there could be a sound reason for this, which should become evident during the course of the inspection and negotiations.

It is necessarily foolish to buy well above the area average if you like a home – particularly if the buyer plans to stay there for a long time. However, he must expect that when the time comes to sell, the home will take longer to sell. Although it has to be accepted that the estate agent will be working for the seller rather that the buyer, it is perfectly legitimate to ask hom or her directly if thehome represents fair value and is market-related even though this question can be decisive in maintaining or tuning off the buyer’s interest.

For more advice, contact your local Agent Articles by Basie Botha. Don’t take it personal if your property market valuation doesn’t meet your expectations. It is not about you, but the market and market conditions.

By: Basie Botha: 013 752 2700