Asking an inflated price for your home is likely to cost you in the end
The Western Cape has not experienced a true buyer’s market for many years and people here are more familiar with the record-breaking boom which saw property prices soar.
This means many sellers are struggling to adjust their pricing expectations to current market levels, says Dawn Bloch, area specialist for Lew Geffen Sotheby’s International Realty in Kirstenhof and Zwaanswyk.
Not only are many sellers unaware of the significant change in the market with regard to prices achieved, length of time to sell, and even recessionary and political drivers, they also don’t realise how many properties are on the market in their areas.
She says all this means homes are staying on the market for much longer than expected, negatively affecting an already soft market in which buyers are increasingly thin on the ground, while stock levels are rising.
“I have recently encountered several sellers who have rejected very reasonable offers, opting rather to hold out for a higher price, despite the fact that they were buying a new property which was dependent on the sale of their current home.
“At the moment, most buyers are purchasing subject to the sale of their properties, topped up with a bond, or fully bonded, as cash buyers are few and far between.”
Also,the market has been “such a buoyant pressure cooker” for so long it is difficult to convince sellers that the market has fallen so dramatically in such a short period – by around 30% in the past 18 months – says Chris Cilliers, chief executive and principal of Lew Geffen Sotheby’s International Realty in the Winelands.
“It changed very quickly from a seller’s to a buyer’s market and those who are still buying are not willing to overpay for property any more. Affordability and value for money are now the order of the day,” she says.
“And, with all the stock on the market, buyers are able to shop around until they find a property where the seller is prepared to meet the market in terms of price.”
Generally, she says, the market under R3million is still fairly active and banks are keen to fund these buyers. But, above this mark, the market becomes increasingly sluggish the higher the price.
“In a buyer’s market there are usually some investors who recognise the window of opportunity to purchase buy-to-let properties but, for the most part, the investment sector is listless and these purchasers are now scarce.”
Bloch says the first two to four weeks are critical in the marketing of a new property, especially at a time like now when properties are flooding the market and buyers are spoilt for choice.
“If a reasonable offer is received during this period, then it must be seriously considered by the seller with expert guidance from their agent regarding how many properties are currently on the market and how theirs compares with similar properties, especially on price.
“It is therefore imperative that sellers select an experienced property professional who has a thorough understanding of the market in their area, along with strong negotiation skills, who will assist to conclude a sale.”
Cilliers adds that, ultimately, an agent can only recommend a sale price with the final decision resting with the seller.
“Unfortunately, many prefer to go in with a higher figure, reasoning that it can be brought down at a later stage.
“This is the worst thing one can do in a slow market as the initial marketed price not only determines the final sale price achieved but also the length of time a home spends on the market.
“The longer a property remains on the market the less saleable it becomes and, after around six weeks, you will have lost the interest of potential buyers who might well think that there is something wrong with your home if the price is dropped after it has spent considerable time on the market.”