JOIN USMaking a sales pitch?
Selling your house is a big decision. Of course you will look at the deal in terms of making a profit. But, the constant worry seems to be on fixing the right price for your home.
There was a time when residential prices were a single number based on which transactions could be conducted in terms of sale and purchase of homes. But now price bands for a single residential area come in ranges and hence the same area can have varying prices, making it difficult to evaluate a home and get the right price for it.
An example to illustrate this would be Koramangala. Prices in this area were around Rs 1,250 per sq ft around five years ago. By the year 2008, the price band was between Rs 7,000 and Rs 8,000 per sq ft. Fixing a price for a home with such a vast range of figures can be a bother.
The differentiators...
There are several reasons that could be cited from such varying price bands. Every residential pocket has got a pyramid like ranking and the present range in price bands hovers around 25 per cent. This differentiation is based on the location of your home, the possible label of a builder that it may carry, the additional amenities that come with it and also whether it can be classified as a luxury or super-luxury or whether it fits into other levels of housing.
A difference in pricing of homes could also be the result of the age of a specific property and demand for a newly constructed structure in place of those that have been around for a while. If you look at the profile of the purchaser today, you are looking at youngsters in their early 30s for whom amenities play a very important role. The phenomenon of variation in residential area pricing seems unique to India. R Balaji, CEO, Propmart cites an example of a recent transaction.
He says, “An 18-year-old construction in Chandra Layout of Vijayanagar goes at a price Rs 2500 per sq ft. But a new construction, very close to this sells at Rs 4,000 per sq ft. The difference in pricing due to age is between 30 per cent and 40 per cent.” He goes on to compare the cities of Chennai and Bangalore pointing out that construction in Chennai is largely based in the north and only 10 per cent of importance is given to age.
“In Bangalore, around 60 per cent of your pricing is dependent on location and 40 per cent is distributed between amenities and age. Freshness of a property is vital here,” he explains.
To get a better idea of where your home stands, Karun Varma, Managing Director - Bangalore, Jones Lang LaSalle Meghraj talks about which type of house is slightly difficult to sell. Is it the middle-range homes or the high-end?
He feels, “Much would depend on the location. Generally, high-end homes have a less price-sensitive buyer niche, which is not the case with the mid-income segment. Moreover, there is a lower supply of genuine luxury homes in good locations. It would therefore be harder to sell a non-competitively priced mid-segment home in a mediocre location than a well-located high-end home that has all the right features.”
Options for mid-range buyers
R Balaji reiterates the point when he says that mid-range buyers have more options to choose from. Therefore one may get many enquiries but very few conversions. As far as high-end homes go, people always want to upgrade. So if a home in the CBD goes on the market for Rs one crore, you will find niche buyers. If the price is reasonable then there is always a buyer.
Considering that the market has been pretty low this past year, there may be several potential sellers who have become jittery about the prices their homes will sell at.
This could lead them to lower the price a few notches in the hope of at least breaking even, if not make a profit. The fact is that pricing your home too low may lead to false impressions about the quality of your home. If you sell at a lower price too soon, you may end up not getting the right price for your home.
Commenting on the possible hurdles of getting the right price for your home, Karun says, “In Bangalore, there is currently an oversupply situation in many locations. Selling a residential unit in one of these areas would prove challenging, since there would be a wide selection for potential buyers to choose from. This, in turn, would put pressure on the pricing, which is yet another hurdle. If one has not researched the existing rate trends in a particular location, one would be likely to price the property out of the market.”
For a better deal
One of the best things you could do is to evaluate your home in conjunction with the surrounding area. If you are in a hurry to sell, make sure your pricing is on par with similar mid-range homes in the locality.
For example, a good price range for a five-year-old flat in JP Nagar of south Bangalore will be around Rs 2,300 to Rs 3,100 per sq ft. Projects with a label could start at a slightly higher Rs 2,600 per sq ft. To further entice a potential buyer, you could throw in features like getting the house painted for them or adding a couple of fixtures.
If you are looking to sell a home in North Bangalore, which is still largely being looked at as a place of investment with hopes of appreciation; then depending on your location, places like RT Nagar come in the price range of Rs 3,000 to Rs 3,500 per sq ft. R Balaji advises that the best way to go about evaluating your home is to get it professionally done.
This will ensure transparency in the deal. As a seller, you will need to spend some money on providing your evaluator with all the necessary information. You can get a premium added to the price for locational advantages such as area, corner site, Vaastu compliancy, the surrounding areas etc.
As far as getting the right price for your home is concerned, R Balaji feels that this is more psychological. He says, “If you know the value of an area is Rs 4,000 per sq ft and your Rs 3,500 per sq ft for your property, you will be happy.
“More often it is financial status of the seller that will determine what a good price is for the seller. “The best way to ensure a good price is to evaluate your home in relation to similar homes in the area.”