Price it right the first time: Here's why

If there's one myth about selling property, it's that it should be priced as high as possible so buyers "can negotiate down". 

"At the risk of sounding dramatic, this is the biggest mistake a seller can make. Pricing a property too high simply takes it out of running from the get-go," says Willem Lottering, property expert and principal at Leapfrog Vereeniging. 

But in a similar vein, you also don't want to price a property too low. Not only does it not make sense in terms of financial loss, but it also leaves buyers wondering why it is priced so low. 

"Pricing in property, as with almost all products and commodities, has a complex psychological element to it. And while I'm no psychologist, my years of experience in property has demonstrated again and again that if a property is priced too low, it can create the impression (or the suspicion) that there is something wrong with it," Lottering goes on to explain. 

The short of it is that it is vitally important to price a property for sale right, the first time. And that applies whether it's a modest townhouse or an extravagant beach villa. Properties that are priced right - relative to its features, location and market conditions - are almost guaranteed to sell faster than those that are not. 

So how is that sweet spot determined when it comes to putting a property on the market? 

The market sets the price 

The seller, with the help of a property professional, sets the price but it's the market ultimately that determines what is reasonable and attainable. Similarly, what the property was bought for, how much was spent on upgrades and renovations, or even what the seller thinks it is worth, has little bearing on what the market will accept as the selling price. 

"It is tempting to think that because you paid X for the property 10 years ago, it should sell for X times 2 today. Pricing is far more nuanced than that, which is why it pays to work in close consultation with a property expert to get the price just right," Lottering says.

Similarly, any investment into renovations or upgrades don't simply get added on to the price of the property. The value in this regard can be very subjective and, again, tends to hinge on the general market appetite. 

Location, as always 

Location is everything. Consider that a three-bedroom house in suburban Bryanston is highly unlikely to be priced the same as a three-bedroom house in upmarket Bishopscourt, even if the size of the plot and the property is the same. That's simply the effect of the market, and associations with its appeal. 

To this end, properties that are priced right are priced comparable to similar properties in the same area. 

Buyers today have access to multiple online property portals and generally have a very good idea of relative and reasonable property prices in a specific area, which "forces" the seller to be competitive in order to stand a chance. 

Price is a number, not an emotion 

Lottering shares that sellers always have a number in mind when they start to think about selling. But it is useful to regard that merely as a guideline and rather work closely with industry experts to get it right from the start. 

"It is understandable that sellers feel strongly about a certain price, emotional even. But my advice is always to see it as a number and, as far as possible, to remove the emotion," he says. 

Consider the difference between price and value. Price is based on a market-related estimate for your property, based on industry trends and research, demand in the area, as well as the features of your property, while value is more subjective and determined by what a buyer is prepared to pay for a property.