A buyers’ market
Leadhome Properties’ Principal, Harry Hattingh, weighs in.
“Low interest rates have certainly attracted more buyers to the market. However, when valuing a property, there is a fine line between achieving the best possible return for our sellers and attracting the right buyers. Our Leadhome agents are extremely sensitive to this priority, very experienced in the market and best equipped to advise sellers accordingly. We ascertain a market range by rigorously interrogating the market data, using our valuation tools, portals, property comparisons, sale prices, etc. We meticulously track and interpret this data in order to accurately test the market to understand at what point buyers will commit and offers will be made. In fact, we know our valuations are spot-on.”
Market price vs. listing price
It is well-known that competing agents may provide higher valuations in order to secure mandates, but it is imperative for the seller to ask the hard questions. How did the agent arrive at this number, what is it based on?
“If a property is correctly priced, has good photography, is listed in the right suburb, with the correct description, then there will definitely be interest in it. As a rule of thumb, if a property is getting a lot of traffic and feet through the door at the high end of a valuation bracket this is a good indicator that the property is correctly priced and the seller just needs to be patient. Conversely, if a property is getting no traffic and this is reflected in the data points and collated by us across all the different platforms, then the market – not the agent – is communicating that an adjustment is required.
It is important to remember that ultimately sale prices determine values – not listing prices.”
The elephant in the room
“A seller who lists an overpriced property will often talk around the elephant in the room. They will, for example, ask if the property is being marketed effectively and sufficiently? They will often ask for more spend on social media. However, assuming that it is marketed through a credible agent or agency, across all the correct platforms, then the conversation can really only be about price. Price is the elephant in the room and unfortunately, agents cannot breathe life into an overpriced property.
A seller always has the opportunity to negotiate or walk away from an offer they are not happy with, but it is critical to put a property into a buyer-rich pool to give it every opportunity to get the offers in. It’s really a game of probability.”
The tough conversation
The challenge then is how to move an overpriced property out of an unrealistic bracket and into one that attracts a pool of buyers who are willing to commit. This often heralds the start of a debate as to what that bracket might be. “In this instance going back to the valuation and revisiting the data usually informs the agent’s process of advice to the seller. Bear in mind, however, that a new price bracket will not catapult the property back onto the front pages of the portals. That early window of opportunity is now closed.” Says Harry
What is a price bracket?
A price bracket comprises the upper and lower price range increments appearing on a property search portal. When one conducts a property search on Property24, for example, properties priced below R1 million increase in R100,000 price bracket increments. Properties below R2 million increase in R250,000 price bracket increments. Properties over R3 million, R500,000 increments, and so on.
Why is this important? Buyers browse portals and create alerts based on their own pricing motivation and criteria. If we look at a property valued at R925,000 but listed at R1,1 million we see that the property is testing an unrealistic price bracket of R1 million to R1,25 million. However, the actual price bracket for this property is in fact R900,000 to R1 million. The largest buying pool that the seller needs to access is within this range. Moving down into this bracket and listing the property at R975,000, for example, will spark this buyer pool as well as the next bracket down of R800,000 to R900,000. This provides the property with maximum exposure as the lower the bracket the bigger the buying pool.
How many viewings are required to sell a property?
“Currently, the number of viewings required to sell a property is actually very small, contrary to the perception that a large number of feet through the door are required in order to conclude a transaction.”
Based on experience, a good agent will be able to tell you what the average listing price and selling price is for a two or three-bedroom property in a specific area. Understanding the market ceiling of a particular suburb, taking into consideration locality within the suburb, property features and using the agent’s discretion, will determine if you should list below, in-line, or test above it.
Transparency and certainty
Leadhome Properties provides sellers access to Bloom, a Leadhome proprietary tool that transparently manages and monitors the sale of your property, providing sellers with real-time market data, feedback and reaction to their property’s performance, 24/7.
We are happy to hear from you. Read part one of this two-part conversation: In a buyers’ market, why correctly listing your property is so important
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