Assessing a property’s true market value

26.07.16

“Knowledge is of no value unless you put it into practice.”
Heber J Grant

Assessing a property’s true market value is rarely a simple tick-box process. The asking price may seem reasonable, based on Western perceptions, but only by checking out the competition will you know if it’s a fair deal. An essential first step is to ascertain whether the property has been quoted to you in ‘local’ or ‘foreign’ pricing. Many countries maintain a ‘two-tier’ system and for good reason. With new build property - UK agents earn hefty commissions for marketing overseas projects, with those fees recouped in price mark ups. But you won’t know about it until you start speaking to trusted local agents, visiting properties and seeing what else is on offer. A further ‘hidden’ profit margin unlikely to be flagged up in the sales pitch, are resort fees. Often listed as administration or transaction costs, this charge is over and above basic annual operating expenses. If the figure seems artificially high compared to other resorts – challenge the developer.

Dual pricing isn’t only applicable to new homes. In popular tourist spots, it’s not unusual for a resale property to have a built in premium calibrated towards “wealthy” second-home buyers. This happens because there’s an assumption that foreigners will typically pay more because it’s cheaper than a similar property at home, but also because many people have unrealistic expectations about their property’s value. In some instances estate agents will apportion fees to both buyer and seller, effectively doubling their commission. So keep your eyes and ears open and don’t be afraid to negotiate if the numbers seem high. Ignorance is no excuse for paying over the odds.

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