Housing Marketplace
Getting the most when selling your home
What’s your home worth
In this chapter we will discuss your property’s value and how best to go about researching and ascertaining same. We will also look at the asking price for your home and advise on how it should be set.
Your property’s value
Every day bring changes to the property market. In Ireland prices are continuing their relentless rise. Double digit price increases have been recorded in all but one of the last eleven years. There will be double-digit price increases again this year and next, which goes to show what low unemployment, a large inflow of foreign labour and relatively cheap money can do in an already house-hungry market.
Because of the above, it is extremely difficult to ascertain your property’s true value in this day and age. The old adage that a property is worth what somebody is willing to pay for it, is very true. The only way to be exact on its value is to sell it. But that doesn’t tell you now, what it is worth, in advance of placing it on the market and you need this information to plan your move.
So how do you go about ascertaining the price of your property?
Just as with any product that a person may market to the general public, it is critical to know what is going on in the surrounding marketplace. The value of your home is usually based on some or all of the following; the price you paid for it originally, the improvements you have made, and prices received by neighbours who recently sold.
It is important, to have an idea on your property’s value, before you invite out an estate agent, for a number of reasons. But firstly, one has to understand the job of the estate agent. They want to get the sale of your property. Some agents will use any trick in the book to get your property on their listing, and therefore a fee for themselves and their firm if the property is sold. One of the tricks used, by the cowboys, is to deliberately overvalue your property. Many gulliable vendors list their property with the most overly optimistic valuer who comes around to view the property. With this in mind you can’t really expect an honest valuation from some estate agent hoping to list your home.
The best way to protect yourself from falling into this and other such traps is to undertake a bit of market research yourself and obtain a more precise estimate of the value of your home. While it may seem like hard work, I can guarantee that, it will save you untold hassle if it helps you appoint the best agent in town. It will also help you realise a better price in less time.
By far, the most important determinant of price, is what buyers are paying right now for similar homes in your neighbourhood. So, pick up property brochures by calling into some estate agents and also register with a few of the local agents as a buyer. Describe your own property to them, perhaps you might say that you are renting and are looking to buy something similar.
Another way is to look through copies of the property supplements available with all national newspapers. In Cork the main property paper is the Irish Examiner’s Saturday edition, “The Weekend Examiner”. If you don’t have copies, you can always call to the local library as they stock back issues. A scan of internet listings and property web sites is another similar method of finding comparable homes and their values. You can find homes, in your neighbourhood, listed for sale at individual estate agents web sites, such as globalproperties.ie, along with the larger search engines such as myhome.ie and daft.ie., realestate.ie and ipav.ie.
An alternative way to get a reasonably accurate picture of your property’ worth would be to take the price you paid for it and inflate this figure by the amount of property inflation in the intervening period. This is actually an easy exercise. The Central Statistics Office has all this information available in relatively easy to read formats on their website.
Another way is to put yourself in a buyer's shoes. What else is for sale in your neighbourhood? How does it compare with your house? How long has it been on the market? What has sold recently, and how much did the buying public value it at? Think like a buyer. What price would it take for you to look at a list and say to an estate agent, "Take me to see that house"?
You may also try calculating the cost per square foot of your home and comparing it to the size and prices being obtained locally. If your house has more features or other desirable quantities you may want to set a slightly higher selling price (but not too high). Beware, as a given street will support only a given price range. If you've invested so much that yours would be the most expensive house on the street, the buying public is not likely to reimburse you.
Always be sure to exercise caution and “common sense” as, some comparisons need to be excluded from your analysis. For example, new homes. Many people will pay a premium to live in a brand new home. It is like a new car syndrome, we would all like to buy a new car rather than a second hand one if possible. There is also significant stamp duty saving to buying a new home. So exclude the price of new properties from your calculations.
When you have utilised two or more of these methods of valuing your property, just get the average. It will be pretty accurate if you have done your homework.
Setting the asking price
After you work out what your home is worth, the next thing you’ll need to do is determine your asking price. A house properly priced is half sold. But there are plenty of ways to price it improperly.
An important factor to consider when choosing the asking price is your time frame. If you are looking for a quick sale, you will probably need to consider a lower asking price. However, if your time frame is more flexible, you can adjust the price you can expect to receive, accordingly.
If your price is substantially higher than the going price for neighbouring homes, you will detract buyer interest and have a difficult time making a sale. On the other hand, if your asking price is too low, you do not actually risk losing money, as bidders will bid up your house to the market value if properly exposed.
Over-pricing a home reduces buyer interest and makes other homes in your area look better value, than yours. It is totally counter productive to ask for a price that is higher than comparable homes. Over pricing is the number one reason why some homes remain unsold for long periods. (They only sell when the market catches up to the price the owner wants, or the owner reduces the asking price.) Buyers are fully aware of prices and values of all properties within their price range and are rarely foolish when spending their hard earned money.
You should note that the market price for any property is not what you think it is worth, neither is it what your estate agent thinks it is worth, but rather what a potential buyer is willing to pay. If you set the price of your home as close as possible to the price you are willing to accept you are likely to end up with some offers and very probably a sale.
Conclusion
In this article we have shown you some competing methods for finding out the true value for your home. We have also given you advice on setting the asking price for your home.
The best way to correctly set the price of your home is to find out what similar homes in your area are selling for. Also talk to other buyers and sellers, selling in your area. Take note of prices from newspapers and internet sites to double check.
By setting the asking price slightly low, you do not loose out. The market will bid up the property to its true value. But, by asking too much you scare away viewers, and you don’t get any bids. While it may seem obvious, if you have no viewers, you will have no offers. Many people still make the mistake of setting an excessively high asking price. Don’t be one of them.
I hope that you found this article helpful. Our next chapter will give you tips on how to choose the best estate agent to sell your home.
