One would assume that going through the channel of getting an estate agent to physically inspect your property to produce an accurate evaluation would in fact be a fair enough assumption. This is not always the case.
While you should always make use of professional opinion, at the end of the day you are still dealing with opinion and there three major snares to avoid when obtaining a property evaluation. Frankly speaking, an estate agent stands to gain at your expense by offering you an inaccurate evaluation, they could gain by;
1. Over valuing your property.
Why? Because it’s the easiest way to win new business. If an agent puts dollar signs in your eyes by promising an unrealistically high price for your property and another agent comes around offering you a substantially less, albeit realistic amount you are more inclined to follow the high price.
The danger here is that once you are locked into a contractual agreement with the agent, you’re stuck with a property that will in all likelihood take far longer to move or end up having to reduce the price anyway.
You may say to yourself that if you price high you have a chance, no matter how small, to attract a fluke buyer and you’re going to end up reducing the price anyway so what’s the harm as opposed to going in at a lower price. This false start would have put off serious buyers and will now give them the perception that there is something wrong with your property or that you are now inclined to be manipulated a little more easily.
2. Under valuing your property.
Agents might under value your property so that it sells quickly and they can push a sale through and collect their commission.
3. Under Value for personal profit.
In rare but not completely unheard of situations, property traders offer bribes to agents. Traders find ways to get their hands on properties at cheap prices to turn around on markets. This goes beyond just bad practice and is for obvious reasons, illegal.
So where does that leave you? How can you ensure that you acquire an accurate price for your property? Do your homework. Often agents that over or under value a property can be compared to against other evaluations, so get a few agents to each give their opinion and soon you will be able to decipher who might be taking you for a ride.
For each agent you should grill them for as much information about the property as possible. Find out,
- What the current and previous owner paid for the property; and
- On what dates these transactions took place;
- At what price similar properties in the area are selling for or have recently sold for;
- What prices similar properties in your area are currently listed at;
- Typically how long properties in your area take to sell.
You can and should find out this information from the Deeds Office as a way of hedging your own bets and testing to see if your estate agent really knows what they are talking about.
We’re not dealing with the stock exchange here and there is actually no reason for emotion or sentiment when it comes to valuing a property. An agent should be able to mathematically justify the asking price for a property. No excuses.
There is however no need to throw the baby out with the bath water either. What is considered fair practice, is to take the evaluated price and add 10-15% to test the market and see what kind of bids get made. Your agent should be clear about this and communicate this part of the process to the seller.
For online resources for evaluating property in South Africa visit: