Selling your rental property
It’s summer time, the weather is warmer, and more people are out and about looking at open homes. As such, summer is still a popular time to list your property for sale.
If you have decided now is the time to sell your investment property, one of the most crucial aspects of selling is determining a fair market value the home.
So, how do you go about figuring out a fair market value?
If you choose to market your property through a real estate agency, your sales consultant will provide you with a comparative market analysis (CMA).
This will help advise you of the market value of your property by comparing the home with others that have sold recently. Using these properties as a guide, you can objectively work out an accurate market value.
Of course, identical homes are not always readily available, so sometimes you will need to add or subtract the differing features. For example, if one of the comparative properties in the CMA has a single garage yet your property has a double, you can discuss with your sales consultant how much more value that adds to the home. If on the other hand, the other home has three bedrooms and yours only has two, then you might conclude that your property may be worth less.
List with a price or auction?
If you choose to auction, you will be letting the market determine the value of your property. Marketing with a price limits what a keen buyer may pay. Once a listing price has been established for a property, a ceiling has been placed on what a buyer expects to pay for it. Auction, on the other hand, offers a real opportunity to get more for a property.
You may be very pleasantly surprised by the price your property achieves on auction day, however it is sensible to have in mind a fair price you will be prepared to accept.
This is where your CMA will be invaluable.
If you choose to market your property with a price, it is critical to set a fair market price for the following reasons:
• The best buyers inspect first — the longer a property is on the market, the lesser sense of urgency there is amongst the buyers.
• Website activity is at its highest when a property first enters the market. Many buyers have an automatic alert in place to notify them of new listings.
• The right price will attract the right buyers for that property rather than buyers in a higher price bracket inspecting the property and expecting more based on its price.
• Attracts more offers, resulting in a faster sale.
• Urgency creates more realistic offers from buyers and often a better price achieved.
• All listings are perishable and deteriorate with time on the market. Therefore, the longer an overpriced listing is on the market, the less perceived market value it will have.
• An overpriced home makes the competition look good — it helps other houses to sell.
Did you know?
The average time it is taking to sell a home in your market indicates the market climate. It is very important to understand which market you are in and the average time it is taking to sell a property within that market. Ask your sales consultant about the current market in your location.
There are three types of market climates:
A seller’s market
There are lots of buyers and very few homes for sale. High demand for property is in the seller’s favour as properties spend less time on the market and sale prices rise due to scarcity.
A buyer’s market
Often there are literally hundreds of homes for sale and very few buyers. High demand for buyers is in the buyer’s favour as properties stay on the market much longer and sale prices reduce to compete for buyers.
A balanced market
Numbers of buyers and properties for sale are about equal. Neither buyer nor seller has an advantage as properties are not languishing on the market or being snaffled up.
In the end, pricing your investment property for sale can be a challenge on your own, but having a chat to your sales consultant about a realistic price point is a good place to start.
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