Think like a buyer when pricing your home

It’s tough to accept that your home might not be worth as much as you thought, but if you really want to sell, it helps to think about the price from the buyer’s perspective.
“All agents have at one time or another encountered a seller who is adamant about an asking price that is too high for current market conditions,” says Berry Everitt, CEO of the Chas Everitt International property group, “but there are two things that such homeowners need to bear in mind.
“The first is that estate agents are not trying to cheat you when they estimate a selling price that is perhaps lower than you expected. Their only objective is to help you achieve a satisfactory sale as soon as possible, and in the current market, that process must begin with making sure your home is attractive – in financial terms - to as many potential buyers as possible.”
The second thing for sellers to think about, he says, is the wider financial implications that a home purchase holds for any potential buyer. “Many sellers who have owned their properties for some time are unaware, for example, just how much upfront costs have increased since they bought their properties.
“Such costs include the cash deposit of 10 to 20 percent of the purchase price that the financial institutions now require almost all buyers to have, as well as transfer costs; bond registration costs and legal fees. On a home priced at R800 000, for example, the so-called hidden costs are currently about R43 500.
“In addition, sellers need to consider what sort of income a potential buyer would have to earn to qualify for the loan required to meet their asking price, given that the banks are very strict now about applying the National Credit Act and making sure borrowers will not be over-indebted.
“For example, to qualify for a R720 000 loan (after paying a 10% deposit for a house priced at R800 000), a buyer would need a gross monthly income of around R22 000 and a net income (after expenses) of between R7000 and R8000 “
Doing these calculations, Everitt says, can help sellers and their agents to compile a financial profile of the sort of person who could afford to pay their asking price. “And if they believe that the potential market is just too limited at that price, they might well consider lowering the price in return for the probability of a quicker sale.”

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