I’m always curious to find out what kind of value a property is going for and how that will affect my financial decisions. I have an ‘it’s-been-listed-with-a-real estate agent for almost a year now, so I have a unique perspective on this.’ In my experience, real estate agents do their best to hype the property up and make it seem like a good deal when in reality it is not.
In today’s internet savvy world, many home-owners look to websites like Property24 or Private Property for information. But the questions is, “Should I Trust Property24 to Determine My House Value?”
No...
Don’t trust online listing sites for valuing your home. Here’s why.
Margin for Error
An old adage in real estate sales is “your home is worth what someone is willing to buy it for.” This suggests that there are many factors that go into the valuing of a home.
Online listing sites, on average, can list properties anywhere from 10 to 12 percent higher or lower in home estimates. There are even reports of home values on listing sites climbing in declining market areas.
Let’s think about this for a second. For a R800,000 home, a 10 percent could mean R80,000. For higher-priced markets like Cape Town, a R3 million home could see estimations varying from R300,000 to R360,000 or more. That’s a huge difference in pricing.
These estimates could discourage potential buyers who might think a home is well out of their price range. It might also be giving sellers an unrealistic idea of a selling price point. In the end, this is the starting point of many disagreements home-owners are having with estate agents regarding properly pricing a home.
I know property valuation is a complex and often time-consuming process. I’ve already seen plenty of articles on the subject, but I think we’ve yet to see anything that really addresses the complexity of this particular topic. That’s because there’s no easily accessible resource for property valuation in South Africa.
TIP: Property24 has a really handy tool that lets you see the last sold prices of your street. You can see all the properties in your neighbourhood, or you can pick a specific one to view.
How Does Property Listing Sites Create Estimates
Websites like Property24 and Private Property do not determine the value of your property which means they do not control the listing on its site. They are just mediums through which real estate companies and home-owner use to list their properties to a larger base of potential home buyers.
While professional listings are reliant on accessing public records and user input such as realtor sales. However, they cannot discern if your home is the fixer-upper or completely redone and upgraded home everyone is envious of.
Most people will factor in the size of the house, size of the land, and all features of the home including the number of bedrooms, bathrooms, pools and highlighted features. However, this is a starting point for a true valuation of your home and should not be considered an appraisal or true value.
Estate agents find their estimates using companies like Lightstone and Windeed. But, even with all this data being collected from the deeds office there is still a high margin of error. This is because most Agent and Sellers aren’t actually looking at your home.
The More Accurate Model
Any professional realtor will tell you that pricing a home to sell requires a full understanding of the home itself, the location and current market trends in that area. In fact, most realtors look at online listing pricing with a bit of disdain because it does make pricing and managing realistic client expectation more difficult.
A realtor will take a look at sales in your area, creating a radius based on your pocket rather than an entire area code. They will then compare your home based on size, features, and upgrades to those homes that were recently sold, thus appraised, in the previous 3 to 6 months. This range is contingent on how hot the real estate market is in the area.
The realtor will then compare this information to existing homes on the market, looking at how your home compares to what else buyers are seeing on the market. After all, if yours is a well-kept home being sold next to a completely remodelled home, you might not be able to get the same price per square foot at the other.
Additionally, realtors will consider whether it is a buyer’s or seller’s market. If you want to create a frenzy with a lot of eyes on your property in a seller’s market, you can underprice the home and let the bidding begin. This tactic works in many markets including Gauteng.
