Sellers, beware! Here are the risks involved
Photograph: Y Nakanishi/Creative Commons
One of the most difficult decisions to arrive at while looking for the right buyer for your property is the value or list price. If done wrong, a number of risks are to be incurred by the seller.
You put your property for sale in the realty market, with the hope that it will quickly spark an interest among prospective buyers, and certainly you want to sell the property before the expiration date of the listings.
When your property first enters the otherwise comparative market, it needs to be appealing and at some price point equal or preferably lesser than the other comparable properties in your neighborhood. If your property is found not to be at a price lower or similar to other similar properties, it might be overlooked, or even worse, be placed by the buyers into the ‘wait and think’ category.
The more the property sits unsold, the more undesirably it is viewed and perceived as though something is wrong with it.
Also, it becomes too costly in terms of the maintenance expense that you will have to incur as long as you do not find the right buyer.
For every month that your property remains unsold in the market, you are incurring fixed mortgage expenses. In every single month, when your property is going unsold, you are pouring money into it, the one that you won’t get back. With every penny you add in the price, the rate of negotiation goes low.
When that happens and you look at months passing with no buyers, you end up giving money that you could have gone into buying a new property, only if you kept a well-researched price in the first place.
With every month that your property sees being unsold, your neighbour’s has come a lot closer to finding the buyer. Out of your and the neighbour’s property, the buyer will opt for that property, which has same amenities and is priced lower than yours.
So how do you decide on the ideal price that will get you the right buyer in no time?
It is simple! By doing the right thing
What is the right thing to do?
The real estate market will not be on your side if you will have to wait for months for selling your property and eventually will favour the one that is being sold at a much lower price.
The only way to ensure that it does not happen is by doing a CMA.
CMA or comparable market analysis is the analysis of all the recently sold properties, which then helps in establishing a price range of the property.
There are a number of things that are considered while CMA to arrive at a list price and predict an ideal sale price.
Features of the property
Every property has a number of features. Doing a CMA, you will have to pay attention to a number of features that include both interior and exterior. In this exercise, during the interior analysis, evaluate flooring -- quality, vacant and occupied sq ft area, and lastly the number and state of how equipped the bedrooms are.
During the evaluation of external features, look into the roof quality, sidings, and windows -- size and strength, and finally the curb appeal.
Mechanics of a property are the items that the buyer looks at when visiting a listed home! Here, the model, age, and make of the property cooling system, heating system (if applicable), water heater, and all the electrical service points play a major part in defining the value of a property.
Style of residence
When doing a CMA, you should compare ‘oranges to oranges,’ not ‘oranges to apples.’ When doing a CMA on an independent villa style home, you should the use comparable sales data of the last some months, which are in the independent villa style.
Town, city, or village: For the CMA to be successful, it is advised that you compare the prices and/or properties within your locality and the demographics. The unsaid rule here is to compare according to the closeness of the property that you intend to sell. For example: A property, which is 100 metres away from your property should be used in place of a property, which is 750 metres away from yours.
Also the comparison should be made between the properties that share or have a similar set of infrastructure or social facilities like educational institutions, banks, metro stations, bus stops, malls etc., nearby.
For something that has proven to be a crucial decision and has severe repercussions, pricing is the one thing that you should arrive at after an in-depth research.
Currently associated with 99acres.com, Tripti writes on real estate market and trends, both national and global. With a professional expertise in introducing readers to how real estate market functions, she strives to keep her readers updated with every what's what of the turbulent market. Apart from writing what keeps her going is petting dogs, and a thick chocolate milk shake.