Pricing a home correctly from the outset is key to maximising returns and ensuring a smooth selling process. Setting the right asking price can mean the difference between a quick, successful sale and a prolonged listing that struggles to attract buyers.
“Every home owner wants the best possible return on their investment, but the highest valuation is not necessarily the right valuation and listing a property at an inflated selling price is likely to result in the property selling for less than it should have after a longer period on the market,” says Arnold Maritz, Co-Principal for Lew Geffen Sotheby’s International Realty in Cape Town’s Southern Suburbs and False Bay.
“A well-priced home will generate immediate interest from serious buyers whereas if a property is priced too high, it risks sitting on the market for months, leading potential buyers to assume something is wrong with it and, unfortunately, properties that undergo multiple price reductions can lose credibility, making them less attractive.
“On the other hand, pricing too low might lead to a quick sale but at the cost of maximising your return on investment. The goal is to find the sweet spot where your home is competitive yet accurately reflects its true market value because an appropriately valued property increases the chances of receiving competitive offers, sometimes even leading to bidding wars in high-demand areas.
“Additionally, if a buyer does make an offer, and the appraised value comes in significantly lower than the agreed-upon selling price, the bank could decline to provide the buyer a mortgage.”
He adds that buyers today are well-informed and often conduct extensive research before making an offer so if they see two very similar properties, they are likely to opt for the less expensive and most realistically priced.
Maritz says that it’s understandable that sellers often find it difficult to be objective about the value of their properties because they have both a financial and emotional stake in their homes, especially if they have lived there for a long time and have upgraded the property.
“However, at the end of the day, your home’s value is based on what buyers in the current market are willing pay, and this market value is also contingent on numerous key factors that will be taken into consideration by agents and appraisers.”
What you need to know about property valuation in South Africa
An official valuation and a real estate agent’s market assessment both provide an indication of the property’s value based on the location, its condition, and multiple other factors (which we’ll delve into further in the next few paragraphs). The difference is that a property valuation can technically only be conducted by licensed appraisers. Some, but not all, real estate agents are licensed to provide an official valuation. But, all licensed real estate professionals will have the requisite expertise and access to information to provide a fair market assessment of the home’s value.
Valuing a property involves assessing various aspects relating to the market and the property, and Maritz cites the following key factors that are taken into account:
1. Location: This is one of the most influential factors in property valuation and includes proximity to schools, business districts, shopping centres, transport links and lifestyle amenities which significantly impacts a property’s desirability and price.
2. Market Conditions: The property market is not only cyclical, it fluctuates due to economic conditions, interest rates and demand trends. In a seller’s market, where demand exceeds supply, properties tend to sell for higher prices. Conversely, in a buyer’s market, sellers may need to price their homes more competitively to attract buyers.
3. Property Size and Usable Space: Whilst larger homes do generally command higher prices, what matters most is usable space. Well-designed layouts that maximise living space and functionality are valued more highly than homes with awkward or impractical layouts. The number of bedrooms and bathrooms in your home may also impact the overall value of the home and the appraiser will compare your home to others in the area with the same, or similar, number of bedrooms and bathrooms to make a value comparison.
4. Condition and Age of the Property: A well-maintained home with modern finishes will attract a higher valuation compared to one that requires major repairs or renovations. And older homes with outdated features may be priced lower, unless they have unique architectural value or heritage significance.
5. Comparable Sales in the Area: Estate agents and property valuers look at recent sales of similar properties in the same neighbourhood to help to determine a home’s value. If comparable homes have sold well in a specific price range, yours will likely be valued within that range.
6. Unique Features and Upgrades: Special features such as a swimming pool, security systems, energy-efficient installations (such as solar panels) or high-end finishes can increase property value. However, it’s important to ensure that renovations and upgrades align with buyer expectations in your area to achieve a strong return on investment – you don’t want to over-capitalise.
Although there are many factors over which sellers have no control when it comes to the selling price of their homes, Maritz says that there are several proactive steps they can take to enhance its value and appeal to potential buyers before placing it on the market.
- Improve Kerb Appeal: First impressions do matter. Enhancing your property’s exterior with a fresh coat of paint, a well-maintained garden, and an inviting entrance can instantly boost its perceived value.
- Make Necessary Repairs: Fixing issues like leaks, cracks, broken tiles and faulty fixtures can make a significant difference in the valuation because buyers are generally more likely to place competitive offers on homes that don’t require immediate maintenance.
- Modernise Interiors: Simple upgrades such as updating kitchen cabinetry, installing modern lighting, and repainting walls in neutral tones can make a home feel fresh and contemporary.
- Declutter and Stage the Home: A well-presented home appears more spacious and inviting so decluttering, deep cleaning and staging rooms with tasteful furniture and décor can significantly enhance buyer perception.
- Invest in Energy Efficiency: With the increasing cost of electricity in South Africa, energy-efficient homes are more attractive to buyers so installing features like solar panels or water-saving systems can be a strong selling point.
- Provide Up-to-Date Documentation: Having up-to-date property documentation, such as approved building plans, rates and taxes clearance certificates, and zoning compliance, can help streamline the selling process and avoid delays.
“Ultimately, an accurate property valuation is a cornerstone of a successful home sale,” says Maritz, “and by understanding the factors that influence property valuation and taking strategic steps to enhance their home’s appeal, sellers can position themselves for a swift and profitable sale.
“Likewise, working with an experienced estate agent or property valuer ensures a professional, market-driven assessment, helping sellers set a competitive price from the outset, increasing the chance of an efficient sale.”
