Q&A: Importance of Accurate Property Valuations

How does an accurate Valuation affect your Property Sale?

One of the most important decisions when selling your home is making sure that you obtain an accurate property valuation. What your property is worth to you doesn’t always line up with its market value. It is difficult to put special family memories and emotions aside to objectively value your own home when the time comes. As home sellers who do not have experience in the property industry and specifically in property valuation, there is also a lot you probably won’t think to take into account when arriving at the correct valuation for your property.

We asked Bryan Rowsell from Leadhome to answer a few quick questions so that we could share the importance of an accurate property valuation and what must be taken into account when valuing a property.

Question 1:

What does a Buyer’s Market versus a Seller’s Market mean and what are the advantages of each?

Answer:

The type of market depends on supply versus demand – a buyer’s market would typically have more properties listed on the market than buyers looking to purchase, which leads to lower property prices over time and it is advantageous to be a buyer in this type of market. A seller’s market would have fewer properties listed than buyers looking to purchase, resulting in a greater demand and higher property prices over time – which works in the seller’s favour.

Question 2:

Are we currently experiencing a Buyer’s or Seller’s Market?

Answer:

When considering the property market in South Africa, our national market is more of a Buyer’s Market at present, with more properties on the market than buyers or investors looking to purchase.

Question 3:

What are some common problems encountered when valuing a residential property?

Answer:

A fair market-related valuation incorporates many factors, and homeowners will look to obtain the maximum value for their property when they decide to sell. Several areas often lead to unrealistic expectations such as renovations or improvements to the home, the transfer fees paid upon purchase and the maintenance costs or levies associated with the property. These costs are not always recovered in full upon the sale of the home due to period of ownership, current market conditions and the value that these have added to the property.

Question 4:

When deciding on a price for a property, what must be taken into account?

Answer:

Many factors must be considered when deciding on a price because each home and homeowner’s situation is unique. To name a few of these factors, the location of the property, the specifications or the features of the home, the condition of the home, the size of the property, the comparable listings in the area and the comparable sales in the area all need to be considered when deciding on a fair market-related price.

Area growth or decline also plays a role. Buyers compare your home to similar ones on the market and they are not going to spend more than they need to – especially in the current market.

The biggest mistake you can make is to overprice your property. This could cost you a lot! Reason being that you lose the competitive tension between buyers as you have not managed to get the initial traction in terms of viewings and offers early on. Secondly, buyers see that your home has been listed for a long time, and they know they have the upper hand in negotiations. The longer your home stays on the market, the more your bargaining power reduces. 

Question 5:

What are the dangers of valuing a property incorrectly?

Answer

An inaccurate valuation can lead to false expectations and could result in a property either selling for under market value or not at all because the price is too high. My suggestion is to obtain a fair, market-related value from a local property expert, who can analyse the relevant data, and provide professional advice on the value of your home.

We hope that this has answered a few of your questions and comes in handy when you begin the process of marketing your property and arriving at the correct property valuation. Our advice is to always ask an expert and make sure you get the process started right, from the start!

A big thank you to Bryan and the Leadhome team for answering our questions. If you have any more property related questions, give our Conveyancing Team a call at 041 502 7200.

This article is for general information should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact an attorney for specific and detailed advice. Errors and omissions excepted (E&OE)