All indications are that it will remain a buyer’s market for a while longer, yet your new client insist on putting a premium price on their beloved family home. Overpricing is one of the biggest mistakes that sellers make, here are a few more with some expert advice on what to do.
Setting an asking price that is way above market price is one of the biggest mistakes that sellers can make says Lanice Steward, head of training for Pam Golding Properties. “Homes for sale have to compete with other comparable properties on the market. And in a slower-paced, buyer’s market such as that currently being experienced, in many areas price-conscious purchasers are able to pick and choose from a broad selection of homes.”
If the seller is asking way over market price, the property will either sit on the market and not sell or it will result in receiving offers way below asking price. Sellers have to realise that it doesn’t matter what they paid for their home, the current market will determine the current value.
Information is key – James Lewis, managing director for Seeff Southern Suburbs and Hout Bay, says his advice to agents is to get as much information about the market and sales in the area as possible and present these to the seller so that he/she can be fully informed not only about the state of the market, but also the economy and how this affects asking prices. The estate agent has to give them a comparative market analysis, adds Steward.
Hyper-local – In a challenging market, a local area expert agent is someone who is hyper-locally focused and know and understand the area intimately, says Ross Levin, managing director for Seeff Atlantic Seaboard, Waterfront & City Bowl. With this knowledge they can guide the seller with market conditions, sales in the area and buyer profiles. If you go to your client armed with detailed information about the area, you will inspire trust – that is also why hyper-local expertise is so important in today’s market, says Lewis.
Take out the emotion – Lewis says sellers generally have an emotional connection to their property and will therefore often think that it is worth much more than the market reality. Agents need to approach this with sensitivity and remind the seller that they need to approach the sale of their house like a business transaction. You need to guide the seller to accept an asking price that will place the property in the right range on the online portals otherwise buyers will simply overlook it.
Build up trust – You always have to win their trust through the transaction says Brendan Miller, principal of Live Real Estate in Cape Town. Once you’ve gained their trust you can guide them through the process and where their house is in the market. All sellers have high expectations when they start, but once you’ve got their trust/confidence you can also guide them through similar offers so that they can see what is available at a lower asking price.
Sisonke Borris Makapela, intern agent with Leapfrog Gordon’s Bay is one of the success stories of the Umbono Educational Trust. He says he always gives his clients a comparative market analysis to show what buyers are paying, but should they then still insist on a selling price that is way above the market price, then he leaves them be. This he found built trust so that later on they are more receptive to his recommendations for a more market-related selling price.
“An honest broker may lose some initial over-priced listing opportunities, as the homeowner does not value their honesty and valuation. However, they will often pick up the same property months later after the price has been reduced as the homeowner realizes their valuation was correct. The trust between homeowner and broker is critical, not just with pricing but the broker is representing their most valued possession, their home. Property is often not just an asset the owner is selling, it is a life and trust with their broker is critical, knowing their best interests are being protected,” says Jolene Alterskye, estate agent with Live Real Estate.
- Renovations don’t always add value
Another mistake that sellers make is to add the capital they’ve spent to the selling price of the property. No matter what has been spent on finishes and renovations, the home in its current state needs to be compared with what similar homes in a similar condition have recently been sold for says Steward.
“Here, agents will need to ensure that they provide a full analysis of the neighbourhood and the price trends. All areas have price ceilings, and just because the seller’s house is massive with high value finishes does not mean that it will sell for a price well above the market ceiling,” advises Lewis.
- Property portals and listing prices are not pricing guidelines
Steward says sellers should not base their assessment of what their selling price should be on the listing price of other homes in the area – rather look at the actual prices homes sold for, the number of price reductions, the time on the market, the cost of running the property each month and the time value of money. As properties for sale have not yet sold, the asking prices may be too high, and some may have been sitting on the market for some time.
It will be counterproductive to list an overpriced property which will then not attract buyer interest, says Lewis. He adds that having to reduce the price at a later stage may also result in buyers viewing the property with some degree of suspicion. Agents should also understand the reasons for selling, for example if financial, then pricing becomes even more important to work towards a quick sale.
- Empty homes vs staged homes
Miller says the problem with unfurnished homes is that people can’t see a finished product. An empty property always looks smaller, darker and feels colder than a staged property agrees Alterskye. “Sellers are often reluctant to spend the upfront money to stage an empty property, but it certainly does assist with selling the property both faster and often at a higher price,” she says. Viewers are more likely to stay longer in a furnished property than an empty one, they are more likely to sit down, get comfortable and feel the property as opposed to just view. But if there is nowhere to feel comfortable and relaxed, they move onto the next with few positive memories of the vacant airy property. “Staging an unfurnished property may involve a small upfront cost but I would certainly recommend this to all sellers as the cost pays off in the long run,” she adds.
Alterskye continues that she advises those selling an occupied home to declutter. “Our clients do not want to be tripping over baby bath toys whilst having the family dog jumping up and knocking them over.” A home should be presented in the best possible way – estate agents understand if it cannot be 100% all of the time as the owners are living there, but they should at least pack away the unnecessary, clean up the dog mess and have the basics done before any viewing.