Sellers
(and some estate agents) are often
faced with a conundrum when sellers decide to sell: How to determine fair value
in the present market.
During
the property boom, this was really a difficult task. Values increased so
rapidly that even the experienced professionals could not do it. The one positive
result of the recession is that prices have rationalized.
So
how do you determine fair value? Most estate agents have access to various
web-based systems such as SAPTG and Lightstone which can assist. These systems,
which are not always as accurate as one could wish for, simply attempt to
compare similar properties recently sold with the property about to be sold.
However, is South Africa we have very limited data available about size and
features of homes. Therefore the data offered by these portals have a lot to be
desired.
Despite
this, most commercial banks rely heavily on data supplied by the likes of
Lightstone to determine risk and will often refuse to do a real valuation by a
real person unless the purchase price is close to the value indicated by a
portal.
This
is even truer with sectional title complex units. No matter how much the unit
has been improved, most banks will simply determine the average value per square
metre in a complex and simply grant bonds at this rate. Owners of sectional
title units are therefore well advised to guard against over capitalizing.
The
bottom line still is that the value of a property is the price that a willing
and able purchaser is prepared to pay at a given date. Unless a seller is
actively involved in the property market, it would therefore always be
advisable to obtain the assistance of an experienced estate agent who is
successful in the area within the property is situated, to assist with
determining value.
The
inserted diagram indicates the importance of determining the correct value of a
property and to enter the market at the correct price. The more urgent the
sale, the more important it is to get this right - first time.
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