New figures released by Lightstone’s property data analysts show that owners are waiting for close to 10 years before selling. What does this mean, and if you want or need to sell now, what can you do to realise the best return on your investment?
Paul Stevens, CEO of Just Property, says investors have become more market savvy and are holding on to their properties to maximise capital growth on their properties. The trends that Lightstone are reporting are unsurprising, given that the South African property market has been under strain for over a decade. Bond approval rates were last at their highest in 2007. However, lending criteria appears to be slackening, which is good news for the market. Stevens says, “making property finance more widely available to people will be a catalyst for the local market”.
Is your property increasing in value as time goes by? Are you achieving a good rental return? Is your property creating wealth in the long run? If yes, then it is a good idea to hold onto that property for as long as you possibly can, Stevens says. However, if your personal circumstances or goals have changed, selling may be the right thing to do.
Determining if you can or should sell
There are a number of factors to consider, including the costs of selling a property that go beyond the commission you will pay the selling agent and your ability to secure finance for any subsequent property purchase. “There is a handy reference tool that we developed at Just Property Head Office. It unpacks all the ‘hidden’ costs involved with selling a property and is available across our social media channels, says Stevens.
If you plan to purchase another property to replace the one you are considering selling, it would be prudent to get advice from a bond originator or your bank before putting your property on the market. For example, you may have qualified for a specific bond amount at the time you purchased the property. But your salary may not have increased in line with inflation or your financial situation may have changed. If this is the case, you may not qualify for the same bond amount again. You need to factor all of this in when deciding whether to hold or sell.” he says.
So, when is the right time to sell? Stevens recommends keeping an eye on market trends, and consulting an area expert as to the growth and current value of your property. He acknowledges that one’s personal situation will always have a bearing. Do you need something bigger? Will holding onto the property cause financial strain? Have you received an offer that is above the market value of your house? Have you seen a “bargain” property and need to sell your current home in order to realise the opportunity? These are all good reasons to sell.
Positioning your property to sell
If you do want to sell, Stevens cautions against inflating your asking price. “This is when we see properties sticking on the market,” he warns, but adds that there are cost-effective ways to ensure your property attracts the best offers. “A simple lick of paint can add so much to the general appeal of a property. If you cannot afford this, at least wash your walls, outside and in – ensure there are no finger marks (especially around light switches).
“There is no need to renovate your house in order to sell it quickly but do make sure it’s neat and in good condition.” Broken door handles, broken or loose light fittings, broken toilet seats, loose shower curtains etc. are all factors that Stevens says can affect the price offered. “Experienced investors might be able to look past such maintenance issues, but your average first-time purchaser will assume there are other issues with the property, and consequently rather look for something that is move-in ready. Even your garden, if you have one, should be well maintained. Cut the grass and trim the hedges.”
Stevens also recommends investing in a professional photo shoot: “Ensure that the photographs you use to advertise your house show it uncluttered and as clean and as neutral as possible.” Home staging is another cost-effective option; it’s the art of making your house look as attractive as possible without doing major renovations. There are companies that specialise in this but there are also real estate agents, like Just Property Port Elizabeth agent Megan Holden, who go the extra mile and offer this as part of their services.
Sometimes, a relatively small investment can yield great returns, especially if it positions your property more competitively in the market. Built-in cupboards, refined finishes and off-the-grid infrastructure like solar panels and rainwater tanks, can substantially add to the value of a property if you have the budget to make such additions. Upgrading the security of the property will also add value and result in a quicker sale. “Burglar bars, remote-controlled gates/garage doors, and electric fences are all good options, if not non-negotiable these days.”
“At the end of the day, you don’t want to over-capitalise. Does it really make sense to add granite countertops and SMEG appliances to a studio apartment in a predominantly student-orientated building where the sales value is capped? Consult your area expert to determine what would add value to your home that can be recouped when you sell,” says Stevens. “Take a walk through the property with a trusted contractor to determine what the improvements would cost you, and then compare it to the potential purchase price. Is it worth it and how much will it add to the value?”
Stevens concludes on a serious note, reminding sellers to ensure that they are financially prepared for the possibility that their property does not sell quickly. “Make sure that you have sufficient funds available to service your bond, pay the rates etc. during the time that the property is on the market. If you’re in a worst-case scenario and really need a quick sale, ready yourself to negotiate on your asking price. If a property does not sell, it is usually because it’s overpriced. Today’s purchasers are very well informed.”