Achieving The Best Possible Price For Your Home In The Shortest Possible Time
Category Sellers
It is a well-known fact that purchasing a home is probably the largest investment that most people make. This statement has been repeated many many times. BUT...
what is even more important is realising the value of your investment...and that happens the day when you sell it!
That is why it is so important to ensure that you are well versed and knowledgeable when you put your precious investment on the market. Due to the fact that time is money you need to get your money in the bank as soon as possible. The theory behind the 'time-value of money' is indeed very relevant here. The long and the short of it is that any amount of money is worth more... the sooner it is received! That is why we say: 'The best price in the shortest possible time!'
Now, in order to establish how to achieve this, we need to reflect on why properties sometimes take so long to sell. Once you have made the selling decision things must happen...and fast! There are only two reasons why a property does not sell within the shortest possible time (roughly within 6 weeks): it is overpriced or no-one knows that it is on the market!
So the two important aspects to contemplate are pricing and marketing.
PRICING YOUR PROPERTY TO SELL:
The selling price of a property is referred to as market value as it is the price that a willing, able and informed purchaser is prepared to pay for a property. To establish up front what this price is, is no mean feat. How do you know what a purchaser will be prepared to pay? In other words: how do we estimate the market value of your property?
- A professional and well-trained estate agent should do exactly that for you. Firstly, you need to do a Comparable Market Analysis (CMA) to establish the price at which comparable properties have sold for in recent times, but keeping in mind that market conditions can change rapidly. Overpricing your property when it initially goes onto the market will probably be the main reason why it does not sell as soon as you would like it to.
- The length of time that a property is on the market is bound to affect the price. If it is overpriced initially when it comes onto the market, it will most probably sell at below true market value because the price has been reduced by over-exposure to the potential market of purchasers.
The following factors need to be considered simultaneously with the CMA when estimating property values:
1. The utility of a property which in turn is influenced by:
- the physical nature or appearance, accommodation offered, size of the erf and improvements, age, current condition;
- its location or proximity to amenities, view and accessibility; and
- the legal use to which the property can be put
- any restrictions influencing the value of the property such as zoning, servitudes or restrictive conditions on the title deed.
2. The relative scarcity of the property, i.e. is it one of a kind or built in a very popular style that is scarce in the area.
3. Market forces of supply and demand, which are influenced by such factors as disposable income; the availability of credit; people moving into or out of the area or simply the taste and current preferences of property purchasers.
Clearly, pricing your home correctly at fair market value is the way to ensure a quicker sale at the best possible price. When the selling price is established at fair market value it is more likely that more seriously committed and qualified buyers will come to view your home and this will increase the chances of a speedy sale.
The next step in a professional analysis of estimating fair market value is considering the future potential net income that a purchaser (investor) could derive from his/her real estate investment. Here one establishes the return on investment in the first year as well as capital growth over time that a purchaser can expect to realise should he/she buy-to-let.
If your property is one-of-kind and there are no comparative properties that have sold recently, then one would be compelled to estimate its value by using the 'cost method' where the replacement cost of the building, taking depreciation into account, is added to the value of the land. This approach should, however, be used cautiously and be limited to unique properties as the CMA would provide a more accurate outcome, being based on market activity.
MARKETING YOUR PROPERTY TO SELL:
As mentioned earlier, one of the two reasons why a property does not sell, is that no one knows that it is on the market!
Marketing is essential to get that message out, but should not be approached in an unimaginative and boring way. Things have changed from the days when we only advertised your home in the newspaper! Marketing needs to be strategised in such a way that the best medium or media are selected for a particular property.
One needs to consider the following in order to select the most appropriate method for your specific property and this choice should be based on:
- the profile of potential buyers;
- the most suitable advertising medium to be used;
- properly preparing the property for sale;
- establishing a show house* timetable;
- using 'for sale' boards;
- preparing brochures if required; and
- ensuring that there is access to the property as and when required.
*The hosting of show houses is an almost indispensable marketing tool when planning the marketing strategy for particular properties.
Planning for a show house is extremely important and it is imperative that the estate agent on duty at the property possesses a thorough knowledge of the particular property and of the area.
In the digital age electronic media is, of course, the way to go, and Websites and new media need to be utilised effectively, depending on the target market. One must also never underestimate the value of personal marketing, especially if your estate agent possesses an up to date data-base of potential purchasers.
So, focusing on correct pricing and targeted marketing seems to be the solution to selling at the best price in the shortest possible time!
Pam Snyman CPRE (NQF Level 7)
(MPhil, Dip Advanced Property Practice, Dip Property Investment & Valuation)
Author: REDZetc
