The Real(estate)Story! Part 2.

Property pricing, how, why and the real story!

‘Overpriced yes, but rarely under-priced’ is the general impression given to potential buyers of
property in the Algarve.
So, let us look at why this is often the case. Agents valuing the properties take in to account several
factors. Some are led by the vendor’s own idea of an asking price. This invariably is on the high side
naturally! Why do agents go along with the vendor’s estimate? Well of course they want to list the
property for their agency and not lose the chance! Remember, agents are not neutral! Some are
even paid just to make the listing! Once the contract is signed should there not be a sale for some
time, the vendor can then be encouraged to lower the price to a sensible level. It is not unknown for
agents to show an overpriced property first, which makes the one they really want to sell look even
better value!
Experienced agents will list at a price level that maximises viewings and creates a momentum which
in turn will lead to offers. Taking in to account the location, size of the property, plot area, access,
views, pool, distance from the coast and these days WIFI speed! The other overriding factor in
coming to a sensible asking price is comparison with other similar local properties and what they
have achieved. In addition, the asking price reflects the cosmetic condition and how the property is
presented, its future potential given improvements or updating and the current market conditions
based on supply and demand. Even the level of sterling to euro sometimes has an impact.
Most agents would build in a 5% to 10% excess for negotiation which will depend on how quickly the
vendor wishes to see a sale. In negotiations there are some vendors who will keep on or close to the
asking price and in exceptional circumstances the vendors have been known to increase prices,
encouraged by the high level of interest in their property.
So, given that pricing is not an exact science, how do you gauge property prices? The best tip is
research. Look at several similarly priced properties and as the agents do, compare for yourself to
get a real feel of prices in your chosen area.
Your personal priority list will also need to be taken in to account. A lower priced property may be
the same size and condition as a more expensive one but may not tick your ‘near to the beach’ box
or have poor access road which makes going to the shops a daily chore.
To sum up, do not be afraid to ask the agent their opinion on the price of each property you select.
Find several comparisons, probably best from more than one agent. Once you have the ‘real feel’ of
price levels in your selected area you are now ready to negotiate, which we will discuss in The Real
(estate) story next time.

Copyright: Chris Mayall Director Expat Property Finders May 2021 expatpropertyfinders.com