Why Do Properties Sell for Less Their Worth?

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Properties Sell

What is the worth of your house? People often find themselves looking for answers and questioning their peers. In the words of Warren Buffet, investing is all about buying bills that are the ceiling for cents in the market. It means there’s a huge difference between the quoted valuation of an investment. 

Market trends keep varying because of the fear and greed of sellers and buyers. Prices can go either high or low. But in real estate, a house that costs a million could be sold for less than its worth because of these ups and downs in the local market. Maybe you sold your old house and bought a new one in adams housing in Multan, you must have felt the difference in buying and selling costs of the house. 

Hence the question arises, “why there’s a difference in both values?”. In this blog, we will answer the reasons behind the difference in property’s worth and selling cost. 

1- Seller duress 

The primary reason for a property being sold under value is because of seller duress. It’s easy to assume that free market prices for properties are not seriously taken by the buyer or the seller. They aren’t in any rush to close the deal because they are aware of their property’s value. 

In reality, several sellers are undergoing financial duress. They are laid off from their jobs and therefore other ongoing expenses and credit card bills are racked up making them suffer losses. This is why the fast answer lies in selling the property faster. So despite the high value of the property, sellers are willing to offer a bargain to get quick cash. 

2- Seller’s ignorance 

Another assumption is that the seller is fully informed. It is a possibility that it’s a far-fetched idea. The reason is that not everyone is familiar with real estate prices. They can only estimate the price range of a property’s value in a certain neighborhood.

Therefore it’s more likely that their lack of knowledge about the local market trend, neighborhood, or predictions can lead to selling property at a lower cost than its worth. Another reason is that the seller is not aware of the premium charge they can impose because of the added amenities and features. 

3- Creative improvements 

When certain creative improvements are made to the property the strategy is to create a positive cash flow. It means that once you buy a property, let’s say a 2-floor family house in Adams Housing Society, now only a limited number of families would be interested in the 1 Kanal house. Some might be interested in buying a 5-Marla or 10-Marla house instead. Therefore the availability of the type of properties is what should be kept in mind too. 

The real estate industry is all about investment and making millions in profit. But with the proper improvement in a property (like maintenance and repair) can improve the selling price too. A fully furnished property will vary in price so keep the features in mind. 

 4- Uninformed selling agents 

If your real estate agent is unfamiliar with the local market and neighborhood, they may sell property under the price.

It can be that the agent is familiar with the city zones either, and due to a lack of experience and expertise, they may advertise the property as a potential duplex development however planning rules may be different.

5- Selling to a known person 

Usually, people hire a real estate agent to get the property sold. But if anyone from your family or friends is the buyer they often expect a bargain on the property being sold. Because of the sentiments, you are bound by the generosity to make it more like a family transaction than a business transaction.

In such a case it’s best to sign a contract and not rely on word of mouth. Verbal agreements do not hold any value and the other party can always refuse to agree to terms. In such conditions, it becomes necessary to sign a contract regardless of the goodwill of the buyer or seller.

More than often properties get sold below their market value. It’s best to understand these reasons and not sell your property in a rush either to avoid any ambiguity.