The Property Game - Determining a selling price.
When it comes to determining a fair price for your property a seller is inclined to make some silly mistakes, in so far as a business will sell for the price a willing buyer will pay for it, the same applies to property.
If you are going to price right, rather make your comparisons with the properties of a similar form and content that have actually been sold. If you want to, and depending on where the property market finds itself in terms of the property cycle, you could make certain price adjustments to ensure that you achieve the best possible price for your property.
To explain this in an example, consider that when the property cycle is heading towards he boom phase, prices will be rising. Hence any property, even if initially overpriced may turn out to be a bargain if enough time is allowed to elapse. Likewise, when the boom period is over a slightly overpriced property will become extremely overpriced in time. The really astute property investor will price accordingly, and will objectively review the asking price as necessary.
Just as with investments in the stock market you can sell too soon or too late and thus miss out on some of the profit that could have been made had your timing been better. Unfortunately you cannot time the sale of your house with as much control as you can sell shares in the stock market. But fortunately property prices do not share the same levels of volatility seen in the stock market. That said, should you push for a faster sale or slower sale? The obvious answer is that it depends on where the property cycle sits at the time of your decisions to sell.
When the property cycle is heading towards a boom phase you would ideally be patient about selling your investment property or indeed your own home. If, however you are a buyer faced with the rising prices so characteristic of the boom you would want to buy before you sold particularly if you are looking for a residence for yourself. Ideally you would only buy on the condition that you sold your residential property.
If the property cycle is heading towards a slump phase you would want to sell as fast as possible. This would be true if the property concerned is an investment property or your own residence.
If you are a buyer during a slump phase you would be patient about buying a property, as property prices are usually static or falling at this time. However, if you have a property to sell you'd want to sell it as quickly as possible to maximise your price particularly if you are looking for a residence for yourself.
If time is not really at issue, there are several common sense reasons for concluding a quicker sale. The most obvious being that you will be in a stronger financial position knowing exactly how much you can put into a new property and how much you can afford. This allows you to negotiate from a position of strength rather than from uncertainty. Sellers are more reluctant to accept a deal that can fall through because it is suspensive on the condition that you couldn't or wouldn't sell your property within a certain timeframe. By making a cash and bond offer, you allow yourself to be a little cheekier when making your offer to purchase.
Never equate the commission that you may have agreed to pay to an agent to the amount of time taken to conclude a sale.
In my experience, a priced right property is more likely to generate an interest from estate agents who will encourage qualified buyers to quickly view the property "so that they don't miss out" and if your property compares well with other similar priced properties by offering better value for money, a number of interested buyers will view the property over a couple of days. Agents who are aware of this are also more likely to encourage their buyers to make offers close to or even above your asking price to make sure that their purchaser secures the property.
Article by: Dave Welmans - (www.thepropertygame.co.za)