Get Your Property Price Right - 24/07/10
Too many investors who seek to make profit from renovating their auction purchases are pricing their properties unrealistically and are being forced to rent the property out instead.
Pricing the property too high can sometimes be as a result of desperate agents providing valuations much higher than the property's worth in order to get the property on their books.
With house prices set to fall again, getting the property on the market at the right price is vital. Simple valuation errors can force an investor into holding on to a property longer than they intended as they struggle to sell.
Chris Baguley, director of lending specialist Auction Finance Limited said:
"Properties that are overpriced will not sell. It is better to price fairly according to the climate and have two bidders competing against each other, than have no competition at all.
"First and foremost do your homework and get at least three expert opinions. Having renovated a property for a couple of months there's likely to be some sentimental attachment. What you personally think your property's worth might be completely different from an expert agent's opinion. An outsider can provide realistic comparative market analysis and will investigate sales in your area. Your valuation can make or break your chances of a quick sale so you need to be cautious of agents that give you a significantly higher price than others."
Baguley says the crucial time is the first couple of weeks that a property is on the market:
"Entering the market with too high a price can lead to the property being overlooked straight away. A revised price might be introduced when it's too late and potential buyers have found something else.
"When bidding at auction, remember the reserve price is the value below which the seller will not sell whereas the guide price is the value the auctioneer expects the property to fetch. Properties usually sell for more than their guide price."
Despite the expected fall in house prices, figures for auction rooms are showing signs of improvement. The year-on-year comparisons reveal a 9.5% increase in the number of lots offered at auction for the month of July 2010, compared to July 2009. In total, 3,910 lots were put up for auction last month and a total of £407,020,226 was raised.
