Independent property advice can mean the difference between experiencing seller’s remorse and making a healthy profit says CEO of Propell National Valuers, Bart Mead. Mr Mead is urging sellers to rethink the traditional processes of property selling by seeking independent valuations in addition to real estate agents’ advice, to better negotiate with buyers and avoid selling in desperation.
With 22 years experience in the property industry, I am accustomed to ever changing market trends which differ from suburb to suburb, region to region, state to state. As the trends change, so too does the advice offered by valuers. While there are a few rules in the industry which will always be in vogue, a shift is needed in some traditional processes to align with present day expectations.
Traditionally, selling a property used to mean getting three real estate agents to come in and provide an estimated price the home could sell for, and then proceed with the most promising agent. I believe property owners in today’s climate are still savvy about shopping their property around, however many still think of real estate agents as their first and only point of contact. Selling a property is a complex transaction, and smart sellers will arm themselves with as much advice as possible.
Valuations vs Sales
There is often a misconception that a sale price is always what the property is worth or conversely, that a property should always sell for the same dollar figure it has been valued at. In the current property climate which favours buyers, sellers need to be well prepared with sound advice and solid figures to negotiate the best price. Securing a valuation from a professional and independent valuer can provide the ideal starting point for negotiations when you come to sell.
While real estate agents are armed with experience and knowledge of property sales in local areas and can professionally manage the marketing and negotiating of properties, without an independent valuation report sellers miss critical information which can form a valuable bargaining tool. With an independent valuation report at your finger tips, you can be confident throughout the negotiation process knowing you have industry experience and integrity on your side. After consulting with a valuer, you might actually choose to delay putting your property on the market for a more opportune time.
Current market conditions are making it difficult for sellers to accurately price their property, and expectations of high priced properties can cause grief in the long term and lead to seller’s remorse.
In seeking the highest price possible for their property, sellers may be persuaded to list their property with a high price tag attached. However it is important to understand that property sales are influenced by numerous variables and this could mean eventual compromise by the seller. In a slow market, listing a property with a high price tag could result in a low level of buyer interest, which can prompt a seller to grow anxious and begin dropping the price of their home. A panicked seller may accept a low offer from a buyer, potentially costing them thousands of dollars in the negotiation process.
A typical scenario
Let’s assume an average four bedroom, two bathroom property in a residential subdivision needs to be valued. Ten surrounding properties with similar features have sold in the last three months for $400,000, so based on existing evidence and comparable market conditions, a valuer values the property at the same figure of $400,000. When it sells for $360,000, questions arise.
Reasons abound which can cause such an outcome - we could find that the seller was in desperate financial need due to any number of reasons and the buyer, sensing this, simply made a “low ball” offer that the seller accepted. Perhaps the agent convinced the seller to put a lower price on it for a quicker sale, or the marketing used to promote the property was aimed at buyers who were simply not in the $400,000 price bracket.
It could also have transpired that the buyer, desperate to secure this particular property, was happy to offer $420,000 and pay “over the market value” for it. In either circumstance, the new sale figures now need to be considered with future valuations, where the valuer will need to determine if the sale figures reflect a new accepted value for the area or if there are extenuating circumstances involved.
If you are looking to buy or sell, the best thing you can do is get a valuation conducted on the property so that you can approach the buying and selling process with some direction. It’s not going to guarantee the price it sells for, but it gives you the best estimate for a starting point from which you can begin negotiations. This can save you a lot of time and worry and possibly thousands of dollars.
Valuation reports offer so much more than price information. The report contains statistics on neighbouring residential and commercial facilities, past trends, suburb analysis, comparable sales, market rental assessment and property defects – arming you with comprehensive information to help you make the right decision.
Bart Mead is the Chief Executive Officer at Propell National Valuers. Propell National Valuers provides property and land valuation for residential and commercial purposes across Australia. Valuers are local experts supported by national resources and infrastructure to enable the delivery of professional, timely and accurate present day and retrospective valuation services. Propell National Valuers has offices in Victoria, Queensland, New South Wales, South Australia, Western Australia, Tasmania, Australian Capital Territory and Northern Territory. www.propellvaluers.com.au