20
www.thevillagenews.co.za
16 October 2019
MY HOME
Valuation and selling price – is there a connection? By Stephen de Stadler Managing Director Fine & Country Hermanus, Arabella and Kleinmond
A
s estate agents we are sometimes requested to give a professional valuation for a home. Many clients are surprised when we indicate that, as property consultants are not (generally) professional valuers, we are unable to give them a valuation. What we can and do give is an expected marketing range (or market value) in current market conditions. A professional valuation is a calculation of the monetary value of an item, always prepared by a professional valuer. The cost valuation of a property is determined by the factual size of the erf, and the expected cost of constructing the home, based on the size, the method of construction, and the quality of finishings, both interior and exterior. Insurance companies use this valuation, escalated by inflation on an annual basis, to determine the required insured value of your home. Estate agents, on the other hand, are
able to provide an expected marketing range, or a market valuation for your home. This is often the first step in the process of establishing a relationship with a potential client; but is also critical from the perspective of ensuring that the home does not unnecessarily ‘age’ on the market. In this technological age, all agents have access to information. We all know and can prove that a new listing gets most of its viewings on the various websites and portals that we use when the home is first listed. This is because buyers have set certain buying parameters for themselves and will get alerts when a new home is listed within their parameters. If that new home is, however, badly priced to start with, most buyers will merely pass by the listing without contacting
the agents. The next time they will look at your home is when the estate agent has price-counselled the seller down to a different price and the listing parameters thus change. In the meantime, the seller has lost several weeks of potential viewings. Allow me to make a bold statement: Beware the agent that gives you the highest marketing range without the ability to support that range, using some sort of empirical evidence. Yes, we can and do get it wrong, but we should at the very least have the ability to show how we arrived at a certain price. Even before taking the unique aspects of any home into consideration, the expected selling price or range should be driven by a combination
of recent transfers of comparable homes, consideration of comparable homes that are currently on the market, as well as some indication of the historical value of your home, escalated by the growth in the area. We do also take replacement cost into consideration, but this is merely to give some idea as to a relative price floor or ceiling for the home. A 400 sqm home with direct access to a beach or cliff path may have a similar replacement cost to a same size and quality home 20 minutes from the beach, but the deemed value of the location can be very different. Your home will ultimately be sold at the price that the buyer decides is appropriate at that time in the market. Buyer sentiment is the most important part of the equation, which you cannot really quantify until the sale is being negotiated. We have all heard about and seen those occasions where a well-priced property is sold, and the next owner demolishes the building in order to build their own dream home. In that case, the buyer wanted the land, usually because of its location, and
was not interested in the house that was built on that land. The buyer has made a decision based on sentiment – and not on the cost valuation of the property. This is obviously not the norm, but is evident is certain parts of Hermanus and surrounding areas where, for example, there are only a very small number of erven with direct, uninterrupted sea views. When a home on the beach comes up for sale, the estate agent is able to – and should – factor some of this potentially positive buyer sentiment into the expected marketing range. My considered advice to any potential seller is to critically analyse the basis on which any estate agent is giving you a marketing valuation. The more work that is done upfront, the more likely your home is to attract the correct buyer in the shortest possible time. The views expressed above are those of the writer in his personal capacity and may not necessarily reflect the views of Fine & Country as a national and international brand.
Tel: (028) 312-3767 | Unit 3, Whale Park, Adam Street, Hermanus Business Park sales@premiershutters.co.za | www.premiershuttersandfires.co.za
Timber & Security Shutters & All types of Blinds
• Fireplaces • Shutters • Blinds • Braais
