Are you making the decision to put your property up for sale? One of the first things to do to get off to the best start is to identify the right price to propose.
In this guide, you will find examples and best practices from Stefano Petri, founder of Great Estate, who has gained over 25 years of experience in the valuation and sale of prestigious properties. You will receive targeted advice on how to approach valuation, the first fundamental step to a successful sale, in the right way.
You have decided to sell your property, where to start?
In taking this important step, it is essential to be fully aware of the value that can be placed on the property. Here are the 3 most common critical points of an evaluation that a professional method can help you turn into advantages.
- The market fluctuations
Most owners want to achieve a return of 20% or even 30% higher than the investment they made to buy and renovate the property they are selling.
A more than understandable expectation, but one that leads to a perception that is far from the reality of the market. For example, from 2008 to 2020, the value of real estate of all typologies in Italy declined by an average of 2-3% per year, with peaks of even 5-6%, a contraction in property values that we can realistically estimate at between 25% and 40% over about 10 years. From 2020 to 2022, in the two years of the pandemic, there was a booming of purchases and sales, but only in some specific areas and for equally specific types of property, with a slight increase in property values in the order of 5-10%, which certainly did not make up for the losses of the previous decade. From the end of 2022 and into this year 2023, skyrocketing inflation and a major rise in mortgage interest rates, together with great financial uncertainty worldwide, are among the factors that have led to a sharp drop in buying and selling and consequently to a further decline in property values. Double-digit decreases exceed 10% and for some property categories even reach 25-30%. Taking an analysis from 2008 to the present, we can confirm that there has been a really significant contraction in property values which, depending on the area and type, ranges from a minimum of 25-30% to peaks of up to 50%. This means that a property that in 2008 had a value of around 500,000 euro, today fluctuates between 350,000 and 400,000 in the areas and for the categories that have held up best, otherwise we could see that property for sale even below 300,000. Why should the market give your property a higher value, when it has decreased in the last 15 years?
The value of properties, even in the prestige segment, declines over the years and may suffer further falls depending on several other objective factors that a reliable appraisal must take into account for a correct valuation.
- The subjective value
Proven statistical analyses identify the surplus value that each owner tends to attribute to their property within a range of 20% to 50%.
Anyone who has bought a property in their life is well aware of the sacrifices made, how much renovation or maintenance work has cost. Moreover, in many cases the house has been lived in, it preserves memories and bonds of inestimable value for the owner. For each homeowner, their house is unique and better than the others. Translating these considerations to a hypothetical buyer, the perception is completely different and this is why we speak of ‘subjective value’. The buyer we are looking for is willing to invest in your property consciously, therefore on a more logical than emotional basis. Between their point of view and yours lies the objective value, the one towards which the professional valuation tends to approach.
A professional respects the subjective value you attach to your property, remaining transparent and objective in producing a valuation closer to the real sale opportunity.
- Word of mouth
Friends, relatives or acquaintances without a solid professional basis will always tend to confirm or even increase the value that the owner expects to achieve from the purchase.
The ‘subjective value’ can often be shared by people who are familiar with the owner personally or who simply wish to be encouraging and supportive. Positive perceptions, however, can reinforce upward expectations, obstacles to a success-oriented sales strategy. Another possible source of misconceptions are dealings with professionals who promise quick and resounding results, but only in return for considerable investment, or who propose sketchy evaluations that are not properly documented. It is a scenario that may be familiar to those who have a property on the market that they have been unable to sell for several years.
An objective valuation is supported by verifiable documentation and analysis conducted by specialised professionals. By relying on Great Estate you will be fully aware of the value of your property and all the factors that contribute to its attribution.
Now that you are aware of the most common areas of improvement that can affect your property valuation, read the next chapter of this guide to discover how to sell your property at the right price, with two examples taken from real-life cases of properties assessed by Great Estate and sold with vastly different results.
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