In a market that is currently seeing a great deal of activity, the sale pricing of US$2 million and above private homes or condominiums predominantly in the Seven Mile Beach corridor (West Bay to north George Town), is one that I would like to concentrate on in this update.
In particular, I want to focus on the movement between the list price of such high-end homes and the actual sale price, because, more often than not, the movement between the two is quite substantial. And to clarify, I am not talking about the final list price, but at the price the property was initially listed.
What I have noticed is that it is not unusual for homes of this ilk to sell 10 to 20 percent below the current list price. In turn, in many cases the current list price will have been previously reduced. This means that the market is stating clearly what it sees as value. In realistic terms, it seems that buyers understand the market and know what price they are prepared to pay.
Get real with pricing
As a result, my recommendation to sellers is that, to save time spent on re-marketing, re-advertising and refreshing their property when their property does not sell, they should be guided to placing a realistic price on their property at the initial point of listing. The price at which a property comes to market needs to be reflective of what the market is prepared to bear, otherwise time will be wasted.
I also believe that overpricing a property is a disservice to the owners as they can miss out on real qualified buyers.
Vendors need to appreciate that the most excitement that is generated with regard to a property that is for sale is at the period of initial listing, when it first goes to market. As a result, the vendor really needs to fully capitalize on this. Otherwise, pricing a property too high runs the risk of deterring people who might otherwise be able to afford it, which means the vendor immediately misses out on possible quality buyers.
Don’t get left behind
We are currently living through an extremely active period in real estate movement, especially in certain sectors of the market such as the Seven Mile Beach corridor, and will continue to do so for the foreseeable future. I believe it has the potential to continue at this pace into the mid and long term.
There are many converging factors that are guiding my predictions. Investment activity in redevelopment is strong, as is our financial services industry, while our tourism industry seems to be growing in leaps and bounds.
This means that all eyes are looking at Cayman, so, for sellers, it is very important that they question whether they are pricing their property realistically. You do not want to lose out by pricing yourself out of the market when first listing. One thing is for sure – the market will not wait for you.
James Bovell is broker/owner at RE/MAX Cayman Islands.