One of your primary jobs as a real agent or property dealer is to assess the value of the property of your clients. Arriving at the ideal price is not a matter of guesswork. Skilled agents recommend purchase or sale price only after carefully studying the property’s condition, location, structure, amenities and functionality. This review is also influenced by the realities of the economic environment and other properties in the market.
Vast majority of purchasers of a property rely on housing loans and seek financing from banks and housing institutions. These financial institutions require an appraisal in order to certify the value of the property and to ensure that the funds being lent cover a certain percentage of the real value of the property as assessed by an impartial third party. An appraiser analyzes and documents the conditions and attributes of the property and analyses its value through a process that usually involves comparing the property with sales of comparable properties in the market area.
Appraisers arrive at a home’s value by deductions and credits for features the home either has or doesn’t have when compared to similar properties in the market area.
While looking at valuations, important thing to keep in mind are
Sold properties
Sold properties provide the most valuable demonstration of market value. They’re properties for which sales have happened, transactions have been closed and ownership has been transferred. The price reflects where the market is willing to do the trade and buyers and sellers are willing to change hands of the property. Look at only recent sales in markets where a lot of appreciation and depreciation is happening.
Active properties
Without good advice, sellers look at prices being asked for other homes and want to place their prices right at the top of the range. To avoid unrealistic expectations, take the following actions
- Explain that the active properties are accompanies by asking prices are not the sold prices
- Explain to your seller that while the seller has only one house to sell, the buyer has several options to choose from.
Developing your pricing strategy
In real estate markets, price is the king. Price trumps all factors including sales and marketing. Don’t promise sellers prices that are difficult to achieve, as there is loss of face later on. Also avoid starting at a higher price and then ultimately reducing it for sale.
