How to ensure a value-for-money purchase

In order to truly determine whether a property is a good value-for-money purchase, a buyer will need to know the elements that contribute to a property’s worth. 

In today’s real estate market there is much more to a home’s worth than simply the price the buyer paid for it. There are certain aspects that a homebuyer should consider, such as the property’s location and the micro market surrounding the particular sale transaction. Researching these elements will assist a homebuyer in choosing the right property and seeing a good return on their investment over long term, says Adrian Goslett, CEO of RE/MAX of Southern Africa.
He notes that if a homebuyer researches the market and has a good understanding of the various details that are involved in a property sale, along with knowing their own personal and financial requirements with regards to the purchase; they will have a far better chance of finding a home that offers good value for money.
“Determining the type of property you are looking for, the price bracket and criteria that the property must have will make the process of finding the right property for easier,” says Goslett. “The services of a reputable real estate professional could be invaluable in assisting a buyer with assessing their needs and narrowing down the search. An agent with working knowledge of a specific area will be able to provide the buyer with data, statistics and any other information they may require to make an informed decision. They will also be able to provide guidance with regards to the current market in the area and projecting whether the home is a worthwhile purchase based on its asking price, perceived market value and the cost.”
The right price

The price of a home is regarded as what the property is worth today in the current market. However, Goslett says that very often sellers overprice their property due to emotional attachment and it does not necessarily mean that the asking price is a true reflection of the home’s value. This is why it is very important to compare the asking price with other properties offering similar features that have recently been sold in the area. This information will help to indicate whether the asking price is within a fair market value range for the area.
According to Goslett, an accurate gauge of fair market value is determined through the means of a comparative market analysis or CMA.  “It is essential that the comparative selling prices that are taken into consideration are less than six months old and the properties within the comparison are similar in size and condition of the property. While the CMA is a very accurate way of determining the right price, it is not an exact science as there will always be some features or elements of the properties that could differ. A property’s unique features should also be considered when looking at its price,” says Goslett.

Assessing true value

One of the major influences in assessing the value of a property is the current market conditions. “During the boom phase in the market, the perceived value of property was much higher, however during the economic downturn this changed. With the recovery we have experienced since 2010, the value of property has once again increased, in some cases outstripping the values seen in 2007 at the height of the boom,” says Goslett. “While we were experiencing a buyer’s market where property options were plenty, in many areas increased demand and dwindling property stocks have changed this. Demand has a huge impact on the perceived value of property and pricing. Essentially, a property’s value is largely determined by the buyer in the market – not the seller. The more buyers that are willing to pay for the property, the higher the property’s value.”

Aspects that impact what buyers are willing to pay for a property could be personal choice and lifestyle. A buyer may be inclined to pay more for a property if it fits into their lifestyle needs, such as proximity to a certain school, workplace or public transport. What determines value for one buyer may not be the same for another.

Where does cost fit in?

Often sellers believe that they will be able to recoup a large percentage of the cost spent on renovation and improving the property and price it accordingly. While this is true to some degree, depending on the renovation project or upgrade, the value of these improvements is also very much determined by the buyer perception of the said improvement.  “Very often renovation projects are based on the current homeowner’s personal preference or criteria. If the buyer has different needs or preferences, the renovation will have far less value to them,” says Goslett.

While a comparative market analysis is an excellent staring pointing in determining whether a property is a good value-for-money purchase, a property’s true value will largely be subjective based on the buyers in the current market. “As a buyer, only you will truly know what a home is worth to you. At the end of the day, a home is a place to live in – not just an investment,” Goslett concludes.

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 21 Nov 2017
      As more and more South Africans look to invest in property abroad, Spain is offering them one of the best deals in global real estate.
    • 20 Nov 2017
      Since 2012, sectional title complexes have been leading the South African property market, not only in terms of price growth, but sales volumes as well. Remaining relatively strong, even in the face of 2017’s political and economic turmoil, experts say this market segment could offer valuable insight into South Africans’ property purchase priorities.
    • 20 Nov 2017
      Regardless of whether you are purchasing your first start-up home, downsizing or moving in with roommates, finding ways to maximise small spaces can be a big advantage, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
    • 20 Nov 2017
      Property valued at approximately R1 billion is on High Street Auctions’ sales floor during the month of November, including the much-anticipated sale of the Tshwane Mayoral Residence and the land occupied by one of South Africa’s oldest operating gold mines.
    • 17 Nov 2017
      FWJK has announced the launch of its latest residential brand, the Lil’ Apple, which will be launched simultaneously in two developments in Cape Town and Umhlanga totaling 600 apartments. The Lil’ Apple is set to be a brand of FWJK’s New York style apartments which will be rolled out nationally.
    • 17 Nov 2017
      It’s been a tumultuous year on many fronts, with socio-political uncertainty setting the tone for much of South Africa’s economic activity yet despite this and seemingly counter-intuitively, the residential property market has held up well.
    • 17 Nov 2017
      The EAAB (the Estate Agency Affairs Board) recently claimed that around 50,000 illegal estate agents could currently be operating illegally.
    • 16 Nov 2017
      Penthouses are synonymous with New York – characterised by high-rise living that is decidedly luxurious and spacious. While exclusivity comes at a price, you can still create a “penthouse” look and feel in your existing apartment or even the upstairs bedroom of a double storey house with some clever design changes and styling touches.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us