How to Set a Property Sale Price
Setting A Property Sale Price
Where To Start?
For those of you who have read my previous article ‘How To Set A Rental Price’, this article is going to sound like ‘deja vu’. Why? Well, because principally speaking, it’s the same process. You follow the same steps for setting a property Sale price for your property as you do for a Rental price…with one or two differences.
If you have not read my ‘How To Set A Rental Price’ article, it would be a good idea to do so, so you are familiar with it and so I don’t repeat myself too much in this article for those that have.
I will therefore be brief! (Why do I hear cheers???)
You may be surprised to learn that there is no scientific knowledge or formula needed when setting a Dubai Maria property Sale price. As with setting a Rental price, there is no magic formula.It is once again purely a matter of subjectivity.
Everything, in the first instance of establishing a Sale price, is governed, in its crudest form, by a ‘best guess’. An educated guess, yes, but a guess all the same.
Only when the Sale price is set and put into the market do you begin to understand if your ‘educated guess’ was a good one or not. The only ‘entity’ that can tell you for certain what your property Price price should be set at…is the Dubai Property Market itself.
Everything in a ‘free-flowing’ property market is governed by one very basic law of economics, ‘supply & demand’.
Too much supply and not enough demand = LOW Rental Price
Too little supply and too much demand = HIGH Rental Price
How To Make Sure Your ‘Best’ Guess Is A Good One
You could ask a Real Estate Agent but my advice, in the first instance, is to do it yourself. It’s not difficult and it’s not rocket science, no matter what you might have been told in the past. It’s actually quite simple.
If you know how to use a laptop, Google & have a simple calculator to hand, you’re good to go!
Steps To Take To Establish A Good Property Sale Price
Dubai has a property regulatory authority called RERA. They do produce market statistics but in essence they are always behind the curve. This is often the case with all published Sales data because once it is collated, you are always looking in your ‘rear view mirror’. It can be used as a historical guide but not an up to date ‘pointer’. Plus RERA data is too generic to be of value.
The best way to find out what you need to know is to go to the following Property Portals and search for properties in YOUR Apartment Building that are similar to yours in Size, floor plan, standard etc and note their current Sale prices. We have to be wary that in Dubai, Sale prices are often inflated for ‘haggle/wiggle’ room, generally 5%+ of the advertised Sale price.
Why Do You Suggest I Take These Steps?
Because that’s where everyone else in the professional real estate market get their Sale price guidance from! It’s as simple as that.
Once you have a list of properties in your building of similar standard, all you have to do is cross reference the Sale prices making sure you only include those listed in the last 30 days or so (Phone the agent to find out if the information is not clearly noted in the search results).
With the recent sale prices you have to hand, add them all together to get a ‘total figure’.
Now, divide the ‘total figure’ by the number of properties you noted.
Total Sale Prices added together = AED 12,000,000
Total number of properties you noted = 6
12,000,000 / 6 = AED 2,000,000
You have just calculated, what is scientifically called, the Average Market Price (AMP) specifically related to your property.
Is The AMP The Price I Should Go To Market With?
I would suggest not. Although you now have more ‘independent’ knowledge than you did before, you still do not know how the market is performing and what prices Buyers are actually paying.
It is also doubtful if a Real Estate Agent truly knows these answers either…unless they specifically specialise in your building .
What Price Should I Go To Market With?
The best strategy, armed with the information you have, is honesty. Honesty because it will save a whole lot of messing around in the future.
The question is…Is your apartment of a standard to demand a ‘top dollar’ property Sale price?
If it is… Sell at an above average Sale price. If it isn’t, then be honest with yourself and sell at a Saleable price
If you truly know your property is not of the standard of an upgraded property, why go through the pains of potential false viewings and time wasting? No one will buy your property at the price you post if it does not reflect market ‘value’.
What I suggest, with an average standard apartment, is that you go to market with an achievable sale price…A price higher than average but not by too much. Leave some ‘wiggle room’ for negotiation. Very few people pay the advertised price these days.
If the price range for your particular unit in your building is for example 2,000,000 dhs then, if you do not have an upgraded property, choose a price above the average; 2,100,000dhs.
Think of the extra 100,000 dhs as a negotiating ‘tool’. The suggested figures are not ‘stead fast’. Your Agent will advise you further but at least you now have a grounding in how the system works.
One last thing, if you REALLY want to sell your property for a higher than average price, present it for viewing in the best possible light! Keep it well maintained and clean.
It is unbelievable how many properties are neglected and presented in a neglected manner to potential buyers. My next article goes in to the whole area of ‘presentation’…so stay tuned!
False Economy & Bad Business
If you try to push and push for a higher property sale price in today’s market (June 2017) you will very unlikely sell your property and you will eventually have to reduce your price further than you would have if you had selected a realistic Sales price at outset.
If you are Seller with time on your hands then it’s up to you how long your property takes to Sell. But be warned, NO agent worth their salt will attempt to sell your property at an over inflated price.
Many agents work on commission only and they pursue the ‘low hanging fruit’ faster than a gigantic challenge.
If your property has not sold after a couple of months, your price is either not realistic, your agent is not marketing it properly…or…the property market is ‘depressed’
It’s a false economy to enter a market at a price that will NOT attract Buyers and agents are unlikely to market it to their clients, so don’t be surprised when your property doesn’t sell in the time-frame you had in mind, if you have set an unrealistic Sale price.
If you strategise well, use the right Sales Agent, your property will be sold relatively quickly in a buoyant market…and you will have maximised your ‘profit’ for the market in its current economic cycle.
We hope you found this article useful in terms of setting a property Sale price for your property. If you have any comments please feel free to leave them and I will attempt to answer any questions you may have.