How do you know if a property is a bargain? These are some of the criteria that buyers can use to find a cheap property.
A “bargain property” is classified as a property that can be picked up at below market value, says Steve van Wyk, Seeff’s MD in Centurion.
While the property market in South Africa is very competitive and sellers sometimes need to be creative to make their property stand out from the rest, not many are priced below market value.
Sellers who use reputable agents are well informed and well advised, making it tricky to pick up a bargain, but there are exceptions.
Van Wyk says a property’s market value is determined by using a comparative market analysis (CMA). When doing a CMA estate agents compare a seller’s property to other properties that are listed and that have been sold in that specific area.
“Properties generally only sell at less than market value when factors like an economic slump, an unfavourable area, an area with high crime, an oversupply of properties within a certain area and properties in a poor condition come into play. If a buyer is willing to compromise, it is in these situations that they are most likely to strike a bargain
Additionally personal circumstances like debt or emigration could also make a seller more anxious to sell and herein also lay opportunities for buyers.”
Gerhard van der Linde, Seeff’s MD in PTA East, says in his opinion a bargain property is a property that you like and that you can afford.
“A bargain is only worth it if you like it and if you can do something with it. However, if you are an investor you don’t necessarily have to like it, but then you have to be certain that you will get a positive cash flow out of it regardless of area or condition, etc.”
“Anything that puts money into your pocket every month is considered an investment. If it costs you money, it is a liability, whether obtaining it was a bargain or not.”