Pricing your Property to Sell

When listing your property for sale one of the most important factors is establishing an asking price. As the seller you don’t want to price too low and miss out but equally you must not price too high as you will not generate interest and put off would be buyers.

The first step to pricing a property is to have an industry professional value it for you.

Valuation is the process of estimating the most probable price which would be paid for a property under typical market conditions applying at the date of valuation.

A sale at fair market value is by definition: The amount of money a well-informed buyer would pay and a well-informed seller would accept for the property that has been on the open market for a reasonable amount of time, assuming neither buyer nor seller is acting under pressure. When a sale is deemed valid it can be used to help determine fair market value for other similar properties. The goal is to value all properties fairly and equally, while being as close to fair market value as possible.

3 methods to valuing a property;

The MARKET APPROACH involves comparison of a property with the characteristics of similar properties that have recently been sold.

There is also the COST APPROACH which involves estimating the replacement cost of a structure, and adjusting that estimate to account for depreciation.

Lastly, the INCOME APPROACH is an analysis of a property’s value based on its capacity to generate revenue for the owner. Due to the embryonic nature of the Phuket property market the “Market approach” is most commonly used.

The market approach in more detail;

The residential valuation model used is the Market Approach. Homes are valued based on what an average person would be willing to pay for a similar property. This data is derived by looking at current sales in Phuket. Every attempt is made to use sales that have the same characteristics as the property to be valued (subject property). These would include but are not limited to; area, number of bedrooms, bathrooms etc. If a subject property doesn’t have enough matching sales, adjustments are made to the sale properties most closely resembling that property to create a more equitable value.

Consider what you paid for the property, how long you have lived there, local comparable property prices, any improvements added, present condition of the property, ask about the current property climate, and arm yourself with the facts. By not establishing a realistic price from the beginning, many home sellers end up costing themselves hundreds of thousands of baht.

Do not over price the property thinking you can wait and are not in a hurry to sell as this has the opposite effect. The buyer sees it has been on the market for one year or longer and asks what’s wrong with it?! It is a mistake to be greedy and ask for an unrealistic selling price as buyers have a great choice to choose from and will go elsewhere.

Supply and demand will play a factor in determining the value of your property. If there are a lot of sellers and few buyers, prices tend to go down and homes take longer to sell, referred to as a “Buyers’ market”. When the opposite is true and there are many buyers but few homes for sale, prices will rise and homes will sell very quickly – a “Seller’s market.”

A common error in Phuket is for owners to over price their property when initially listing it. This is not necessarily an owner being greedy but simply not having access to the correct information to value their property accurately for the current market conditions. Often as brokers we hear owners tell us they want to price their house for X because their neighbours house is on the market for a higher price or, they heard a house just sold down the road for X price. Unfortunately their neighbour’s house is probably overpriced too and won’t ever sell at that asking price. With re-sales it is difficult to find widely available information on the actual selling price so when a neighbour tells you they got a great price for their house take it with a pinch of salt! And ask your broker for an accurate valuation.

For more information about this article contact Kevin Hodges, Siam Real Estate (SRE) Tel: 076-324042 Email: ; www.siamrealestate.com