Lake Properties
Lake Properties
1) High-level rules of thumb
- Seller’s market (low inventory, hot demand): Price at or slightly below market to create buyer competition. Leaving negotiation “room” is usually unnecessary.
- Balanced market: Price at market or very slightly above (1–3%) if you want a small cushion. Expect some negotiation.
- Buyer’s market (lots of supply, few buyers): You may need a larger cushion (4–10%) if you list high — but listing too high risks few showings. Better to price competitive and negotiate on terms.
2) How much “room” to leave (guideline percentages)
- Hot / seller’s market: 0–2% buffer.
- Balanced market: 3–5% buffer.
- Buyer’s market: 5–10% buffer (but consider pricing lower to attract offers instead).
Why percentages matter: buyers compare listings and use search filters; if you price outside the typical range you risk fewer showings and stale listing risk.
3) Step-by-step pricing framework (use with your agent)
- Collect 3–6 recent comps (same neighbourhood, similar size/bedrooms, closed in last 3 months).
- Adjust comps for differences (beds, garages, land, condition, renovations) and calculate a likely market value range (low–mid–high).
- Decide objectives: fastest sale, max price, or best terms (e.g., rent-back, quick closing).
- Select pricing strategy: competitive (at or slightly under market), market (fair market price), or buffer (a little higher to allow negotiation).
- Set a listing price and a written minimum acceptable price (your “walk-away”). Don’t rely only on memory — get it in writing with agent.
- Launch with full marketing & staging that supports the price. A higher price needs justification (photos, floorplan, video, highlights).
- Track first 7–14 days: showings, online views, feedback, and number of offers. Most activity happens in the first two weeks.
- If performance is weak, adjust (see price-reduction strategy below).
4) Practical math examples (so you can see outcomes)
Assume market comps point to R2,000,000 fair value.
-
List slightly higher (+5%) to leave room:
List = R2,000,000 × 1.05 = R2,100,000.
If a buyer offers 5% below that list: Offer = R2,100,000 × 0.95 = R1,995,000.
Sale/List ratio = 1,995,000 ÷ 2,100,000 = 95%. -
List slightly under (to spark offers):
List = R2,000,000 × 0.975 = R1,950,000 (a 2.5% underprice). This can attract more buyers and sometimes create multiple offers. -
Price-reduction example (3% cut):
If initial list was R2,000,000, a 3% reduction → R2,000,000 × 0.97 = R1,940,000. -
Work backward from your required net (example):
If you need a net of R1,800,000 after commission and costs, estimate other costs (transfer, repairs, staging) and plug into:
SalePriceNeeded = (DesiredNet + OtherCosts) ÷ (1 - Commission%).
Example (illustrative): Desired net R1,800,000 + OtherCosts R50,000; Commission 6% → Sale price needed ≈ R1,968,085.
(Use your actual commission % and costs — this example is to show the formula.)
5) Offer evaluation checklist (don’t judge on price alone)
When an offer arrives check:
- Price offered (obvious).
- Deposit amount (bigger deposit = more serious buyer).
- Proof of funds / pre-approval (is financing likely?).
- Subject conditions: financing clause, inspection/repairs, sale of buyer’s property. Fewer conditions = stronger offer.
- Proposed closing date / occupancy requests (does it suit you?).
- Inclusions / exclusions (appliances, fixtures).
- Escalation clause or multiple-offer strategy (read carefully).
- Proposed penalties for failing conditions (how enforceable?).
A slightly lower clean, unconditional offer is often better than a higher offer loaded with big conditions.
6) Negotiation tactics (for your agent)
- Counter on terms, not only price: e.g., increase deposit, shorten subject periods, fix closing date.
- Use a “best & final” deadline if you suspect other offers — gives you a fair field without committing to multiple negotiations.
- If you get a low offer, respond with a respectful counter (don’t ignore). Ask for evidence of pre-approval.
- Consider escalation clauses carefully — they can create competition but complicate negotiations.
Sample counter wording (short): “Thanks for the offer. We appreciate your interest. We can accept RX or the current offer with a 7-day unconditional clause and a 10% deposit.”
7) Pricing mistakes to avoid
- Overpricing to “test the market” for too long — a stale listing loses momentum.
- Changing price often in small increments — this signals desperation. Larger, well-timed adjustments are better.
- Ignoring buyer search behaviour — price points (e.g., R1,999,000 vs R2,000,000) affect how many buyers see your listing.
- Letting emotions set the price (e.g., sentimental value) — rely on comps and data.
8) Price-reduction strategy & timing
- Monitor first 7–14 days: if showings and online engagement are weak, consider a reduction.
- Common reduction steps: 3–5% per reduction, reassess after another 10–14 days.
- Repositioning vs reducing: sometimes improving marketing/staging is better than a small cut.
9) If you want negotiation room but don’t want to scare buyers
- Use modest padding (3–5%) in balanced markets, and justify the price with a better presentation.
- Or list at market and be prepared to negotiate — buyers who feel the price is fair are less likely to lowball.
- Consider “charm pricing” (R1,999,000 vs R2,000,000) to capture certain search filters.
10) Final decision rule (simple)
- Get the comps and a CMA.
- Decide your minimum acceptable net (in writing).
- Choose a visible list price that: a) matches your objective, b) keeps you inside what buyers search for, and c) allows for the negotiation buffer appropriate to your market.
- Launch with full marketing. Review performance at day 7 and day 14 and adjust if needed.
Lake Properties Pro-Tip
Price with strategy, not hope. Before you list, put your bottom-line number in writing (what you must receive after costs), pick a target list price and a clear reduction plan. That way every counteroffer is compared to your plan — you avoid emotional decisions and win more profitable, faster sales.
If you know of anyone who is thinking of selling or buying property,please call me
Russell
Lake Properties
Www.lakeproperties.co.za info@lakeproperties.co.za
