A property’s true worth
Understanding the real value of your home, and how it’s calculated, will help you establish expectations when it comes to sale time.
Naturally, sellers want top dollar for their homes, but overpricing can prove just as detrimental as underpricing. The old saying ‘you can always come down but you can’t go up’ is somewhat misguided when it comes to effectively marketing a property. And sometimes the cost of a missed opportunity far outweighs a minor price adjustment on your property’s asking price.
Gauging the market
Assuming you engage a licensed real estate agent to sell your home, you’ll most likely receive a Comparative Market Appraisal (CMA) to help you and your agent establish the most appropriate price. A real estate agent is legally obliged to produce a CMA; so, in the unlikely event you don’t receive one, bring this matter to the agent’s attention or ask to speak with the manager, as this is a breach of the Real Estate Agents Act.
The purpose of a CMA, which includes a number of recent sales in the geographical vicinity of your property, is to give you a reference point in order to establish your property’s value. For certain categories, such as high-end properties, the scope may need to be widened to include the whole city – to compare, for example, all high value properties, manors or sprawling historical properties.
The value you arrive at will take into account a series of factors including: location, perspective, land size, dwelling size, age, quality and so on. It’s often difficult to be objective with your own home because you know all the extra effort and money you’ve invested in the property over the years – details that are often overlooked or of no consequence to potential buyers.
No two houses are identical in every respect, so it’s up to you and your agent to work together to reach an agreed value of your home. When you do arrive at an ‘ideal value’, it’s important to consider the absolute ‘rock bottom’ price you would accept.
All going well, your eventual sale price will be somewhere between the two, and on a good day it could be even more than you anticipated. The most common, and successful, way to exceed your expectations is by going to auction. You may have a figure in mind before auction day; but if there’s fierce competition for your home, and if the emotions of bidders are running high, then it could well be your lucky day.
The saying, ‘price it low and watch it go, price it high and watch it die’ has become something of a cliché – for good reason. Therefore, we advise sellers to work with their agents to agree on the property’s true value. If you don’t mind investing in an independent valuation from a registered valuer, this is another option to help you gauge the current market and price your home accordingly.
0800 500 123 | mikepero.com
Mike Pero Real Estate Ltd Licensed REAA (2008)