Real Estate Investor Magazine South Africa November 2015 | Page 40

INVESTING

Property and Profit
Growing The Market
BY MEYER DE WAAL

T

he property market and the way we all view
property changed the moment the business
went online. Property websites, search engines
and mobile applications have altered the way the
buyers, agents and client are able to communicate with
one another.
In the old days almost everything was done in hard
copy and passed on either by hand or verbally. Buying
a home was a whole-day process of contacting agents,
heading to Sunday show houses and deep analysis of
the hundreds of classified images in the newspaper. The
changes towards a digital property market have been
swift and entirely for the better. Updated information,
images and local property price comparisons can be
done in seconds, allowing the buyer the chance to
gather more information than ever before.
Not only can the buyer find more information but
can easily pre-qualify for a home loan through similar
channels. These technological boosts have meant the
seller needs to start thinking like a buyer, using all
the tools at their disposal to get the most out of their
property.
With the ability to instantly compare properties
in an area, buyers have a far greater understanding
of the property values. Many service providers also
offer a comparative market analysis (CMA) that
provides information about the properties sold in that
neighborhood. The CMA provides the buyer with
a whole host of general information related to the
property in question, including an estimation of the
property’s current worth, local price trends, recent sales
and selling history. Armed with this knowledge, the
buyers can compare “apples with apples” and figure out
exactly what they should be paying for a property in
that area.

There is a significant danger to this overload of
information. The value of a good estate agent is to get
the seller the best possible price on their property, while
still earning a commission on the sale. Most estate
agents will do a property valuation of their own and
then try to secure the sole mandate by offering a markup they believe they can achieve in that area. Sometimes
the mark-up is purposefully too high, a point that can
be avoided with a proper CMA beforehand.
The seller is almost obligated today to do some form
of research to protect themselves against any “price
padding”. However, there is a point to increasing an
asking price in an area. The only way a property market
can grow is through an increase in sales prices, and it
is the job of the estate agent to do this. There would
be almost zero growth, resulting in a stagnant market,
if every seller stuck to the CMA value of the property.
The obligation of an estate agent is achieve the best
possible price in the shortest period of time. The use
of a CMA not only helps the agent figure out the best
possible price but also helps against any undervaluing,
allowing the seller to get the maximum return on their
investment.
So what does this new era for property sales mean?
Quite simply it’s a more open, honest and upfront way
of selling property. Not only can buyers see exactly what
is happening in the market around them but also estate
agents and sellers can use that information wisely to
create steady growth in the market. Harnessing tools
like the CMA benefits all parties and, when used
properly, ensures everyone involved can walk away from
the table satisfied they got the best deal possible.

RESOURCES
www.irent2buy.co.za