What is the true market value of your property?

When trying to sell a home, the most vital element is always the price. This may appear obvious, but it is astounding to see so many vendors burying their heads in the sand and sticking to a value that may have been sensible two years ago but which is now too high.

Although the market is showing clear signs a slow recovery, anyone who is serious about making a sale must accept that the value of their property is less than it was at the peak of the market in mid-2007.

The demand for property in Malta has probably increased over the past two years but the supply has doubled. It's a good time to buy, especially if you are buying at a higher price than the price you are selling. If you sell your property at 10 per cent less than what it was worth two years ago, you will also be buying at 10 per cent less.

This, naturally, is a saving for you. Interest rates are the best they have been in years, choice of property is better and rents have gone up by at least 15 per cent. People talk about depression and hesitate to buy only because they have not sold their overpriced property and do not want to take a chance on a bridge loan.

The key to a good move is to buy at the right price and to sell at the right price. However, if one wants to sell, one must be aware of the rules of thumb, calculating what one should realistically expect to achieve.

Before finalising a price, one needs to make sure that the price will be appealing to buyers. If the price is too high, then the property will risk staying on the market for a long time. If too low, the buyers might think there is something wrong with it.

To find the true market value of one's home, one first needs to determine whether the property is valued more as a site rather than a home, where it is located, what the values and asking prices of similar properties are, and what it would cost to bring it back to shape. Being honest with oneself about the value will also help.

One must question if a builder would be interested in purchasing your property to make a profit by demolishing and converting it into flats. If so, one would have to see the value of the sales of those properties and deduct the value of the cost of the building and an approximate 25 per cent profit margin. This should give the value of one's property.

Another important factor is location. If a villa is located in Birkirkara and you are asking for a price similar to a villa in Madliena, there is something desperately wrong. One must check asking prices of similar properties even if they are located in different areas. By doing this, one would have a better choice of properties to choose from and be able to determine the correct value.

One must not be tempted to overvalue one's home even if one has spent money on it. Prepare your home well and be realistic. One can definitely achieve a quick sale even in the present downturn.

Remember that new kitchens and bathrooms do not add an exorbitant overall value. This is because most buyers expect that these items would have been renewed from time to time during ownership. A simple renovation can do a lot to make a property look pleasant.

It is far from simple to value one's own property. It is normal for us to believe that our home looks better and is worth more than these of others. A good real estate agent can help you determine the right price for your property. One advantage of hiring a professional is that the latter are more able to look into the minds of potential buyers.

Mr Faure is managing director, Malta Property Auctioneers.