As a real estate seller, one of the most critical decisions is determining the right list price for a property.
This is more important now than ever, because while the real estate industry mantra has always been “location, location, location”, economic realities are increasingly forcing buyers to think “price, price, price” first
“Market-related listing is critical across all real estate segments from industrial to residential. It stands to reason that the higher the value of the asset, the more important it becomes to understand the pricing sweet spot if you want to liquidate funds for reinvestment.
“Correctly pricing your high-value fixed asset isn’t only a financial decision but also a strategic one that can significantly impact the duration and outcome of a sale.
“In an ideal world those would be the only two determining factors in pricing property, but as with just about everything else, reality is more complicated because it involves people.
“About 70 years of research confirms what all property professionals know; emotion plays a massive role in real-estate investment decisions.
“This decade, the total global value of real estate climbed above $326 trillion, with a whopping 79% of that tied up in residential property assets.
“Put plainly, people aren’t as rational about buying and selling homes as they are about other, less emotive, investments like comparing the performance of pension funds. Homes are aspirational life choices that merge financial and emotional expectations.
“The danger for sellers lies in emotional decision-making, with a narrative that reads: ‘My home is special, and the right buyer will see it’. If that is the starting point, it’s almost inevitable that sellers will price themselves out of the market before they’re even out of the blocks.”
Pitfalls of Over-Pricing
Dart says in his experience, residential sellers overwhelmingly want to deliver their properties to people who’ll love the space as much as they do.
“But setting a price point to attract only ‘serious buyers’ rather than a market-related price is thinking with your heart, not your head, and could scupper any chance of a sale.”
- Fewer Prospects
- Lengthy Time on the Market
- Discounting Negatives
- Over-Exposure
Sellers will, however, need to be realistic with their asking prices as Seeff says there are definitely higher stock levels in many areas. If your price is out of step, you will need to drop your price, especially if you are selling in some of the more challenging areas such as Gauteng.
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