SA Property - 2011 A whole variety of factors will affect the price of a property
Are you paying the right price for your new property?
How does a homebuyer know if he is offering the right price for the property in which he is interested?
There are certain checks which can indicate whether the seller and his agent are going for a kill or pricing at market-related values.
The first should always be the prices recently achieved on similar homes in the area: a reputable agent, with links to good property statistical services, should be able to produce these on demand. If he or she cannot, this should always be seen as grounds for suspicion and a lack of professionalism.
These figures should include the floor area of the homes sold (in square metres) and sometimes of the plots as well. If the floor area is then divided by the sales price achieved (or asked, in the case of a home now being considered) the metre square price can be a useful guideline to the true value of what is now on offer. If several recent sales are analysed in this way, a reasonably accurate average figure for the area can be estimated. Nevertheless,all prices will reflect special benefits or disadvantages and should be explained and analysed in detail.
Looking at homes in the more afluent southern suburbs, right now, for example, an apartment in the prestigious Intaba block near Cavendish Square might be priced on average at R20 000 to R22 000 per m2 - but there would be a significant difference (perhaps 35%) between a unit with a mountain view and one without it.
Similarly, in any flat complex, the higher units, especially if they have views, will be priced significantly above the lower units. Whether the unit has a garage or secure parking will also affect the price - in urban areas garages have become highly prized and no matter how good the apartment, one without a garage may not attract buyers.
In stand-alone house purchases on their own plots, extras such as solid wood flooring and doors, designer fireplaces, underfoor heating, air conditioning and swimming pools can make it possible for the owner to ask far more than the average price for the area - and in today’s market lock-up-and-go units capable of being left empty for long periods are appreciating faster in value than traditional homes with large grounds. This can cause some frustration for those scaling down to apparently simpler and smaller units which, may cost just as much as their larger and grander home.
It is always a good policy to buy one of the less expensive homes in a good area rather than vice versa. If, however, a buyer does find himself attracted to a home priced higher than the average for the area, there could be a sound reason for this, which should become evident during the course of the inspection and negotiations.
It is not necessarily foolish to buy well above the area average if you like a home - particularly if the buyer plans to stay there for a long time. However, he must expect that when the time comes to sell, the home will take longer to sell.
Although it has to be accepted that the estate agent will be working for the seller rather than the buyer, it is perfectly legitimate to ask him or her directly if the home represents fair value and is market-related even though this question can be fairly decisive in maintaining or turning off the buyer’s interest.
Source: Anton du Plessis (Vineyard Estates)
Courtesy: Agent – The Official Publication of the Estate Agency Affairs Board
“Redressing the Past, Building the Future and Guiding the Real Estate Business towards Professionalism”