Buyers Frenzy offers a red-hot opportunity for Sellers
Currently prospective sellers can ensure the best price for their property due to the buyer's frenzy in the Northern suburbs of Cape Town.
The latest interest rate cut on the 23rd of July 2020 brings the repo rate to a four-decade record low of 3.5% and the prime commercial lending rate to 7%. As a result, we find that there is a shortage of available properties for sale to match the buyers' demand.
With the COVID-19 pandemic and associated economic havoc, the financial pressure is increasing on many property owners and an avalanche of properties is expected to hit the market. Job losses, short time, payment cuts, little hope for yearly bonusses or salary increases and payment holidays ending, will pressure more sellers to sell.
However, this avalanche is taking longer than predicted, mainly thanks to the payment holidays and temporary relief arrangements from financial institutions. With the uncertainty of the Lockdown and Coronavirus, many sellers that planned to sell during 2020 to upgrade, are currently also holding back. Since the price is determined by supply and demand, this leaves an unexpected gap for sellers to still achieve a great selling price if they act before the flood of properties hit the market.
According to Erna Sciocatti, from RED Properties, the lower to middle price brackets in the Brackenfell and Durbanville areas are now in high demand, with many buyers competing with each other and driving the prices up. However, the higher price pockets are showing signs of strain, and in some cases, there is a large gap between the asking and selling price.
Some practical tips for the prospective seller:
- Choose the right agent. With COVID-19 safety regulations the marketing of property has changed. You will need an experienced and innovative agent to guide the buyers and sellers step-by-step through the process. With no show houses allowed and only 2 prospective buyers with 1 agent allowed to view strictly by appointment, this limited access and viewing time is a blessing in disguise. The agent will now focus on serious, pre-approved Buyers, which will save the Seller a lot of unnecessary time and inconvenience.
- If you are selling to upgrade or downgrade, make sure you get pre-approved as a buyer and get a valuation from an experienced area agent before starting to hunt for your dream home. Knowing what profit you will make from the sale of your house, as well as what you qualify for, will indicate what you are able to afford.
- What Seller costs are there? We have asked Henno Nothnagel from Greyvensteins Attorneys, to provide a handy checklist of likely costs that a Seller needs to plan for.
- Bond cancellation costs: This is a fee paid to the Conveyancer to cancel the existing bond registered over the property being sold. It ranges between R3000 to R6000 and is usually deducted from the proceeds of the sale to be paid to the Bond Cancellation Attorney.
- Early termination penalty charged by the bank: You need to give a 90-day notice to the bank that the bond is going to be cancelled to avoid paying this penalty. The penalty becomes less and eventually R0.00 after expiration of 90 days.
- Rates and taxes: From a cash flow perspective, it is important to remember that Municipalities require an advance settlement of the rates account of around 3 to 4 months, before they will issue a Rate Clearance Certificate required by the Deeds Office. This proves that all the outstanding debt on the property has been paid by the Seller. The Seller receives a pro rata refund on registration for what he was not actually liable to pay. The clearance figure issued by the Municipality is paid via the Conveyancer. Luckily this is not a double payment and the Seller can stop paying the monthly municipal account as soon as the Rate Clearance Payment has been settled.
- Levies: Where there is a Home Owner's Association or Body Corporate an advance Levy payment is required to get the Clearance Certificate. The amount may differ, but the average payment is normally equal to 1 month's levies.
- Compliance Certificates: Depending on the region where the property is situated and the stipulations in the Sale Agreement, an electrical; plumbing; gas; electric fence and/or beetle infestation compliance certificate is required from the Seller prior to registration of transfer. The cost hereof might vary according to the number of repairs that needs to be done to ensure compliance. Payment thereof is made directly to the service providers, although and undertaking may be given to pay the service provider on date of registration of transfer.
- Commission: This is the agreed payment for services rendered by the Estate Agent, which is deducted from the proceeds of the sale, and paid to the agent by the Conveyancing Attorney on transfer of the property.
- Approved plans: If the Seller made additions to the building after he became owner, but never had the plans approved and registered with the Municipality it may incur cost.
- Occupational Interest: This might occur in the event that the Seller is unable to move prior to or on the date of registration of transfer. This is rental that is then due to the Purchaser, once he becomes the owner. The full occupation interest is paid monthly in advance to the Conveyancing Attorney, who will ensure pro rata payment and refund thereof to the respective parties.
- Moving costs: The moving cost depends on the Sellers choice of mode of moving.
If you are thinking of Selling, we at RED Properties would love to assist you with a free, no obligation valuation on your home. We work and live in our areas and believe in honest, practical advice. Our aim is to help the Seller get the best price, in the shortest time and to do it in such a way that the Seller is happy that they chose us to market their property.
