Too Much Too Soon…

Private Property South Africa
Lea Jacobs

Logic plays an enormous role when buying or selling property.Ask any estate agent and they will tell you that the biggest stumbling block linked to selling property is price. Sellers just can’t seem to understand that their houses may be worth far less than they think. While it may not be a problem that is unique to South Africa, sellers may be shooting themselves in the foot by demanding too higher a price. If you think about it, what other commodity offers the same returns as property? No one in their right mind would consider buying a car, using the vehicle for five years and then expect to sell it for a major profit fully paying for the next fancier car. The same goes for any other second hand item – the best you could hope for is to get some of your money back. Property of course is different and investors have been making money from bricks and mortar for years. Investors who make a living buying and selling property for the most part, understand the dynamics. They certainly do not expect the sales price to cover the entire price of their next investment. This unfortunately does not appear to be the case with the average South African consumer.Finding a dream home is one thing, expecting the sale of an existing home to cover the full amount of the purchase price for a bigger and better property is quite another. Simply put, it just isn’t going to happen unless the property has been in the family for years, the property was bought for a very low price and the home has been kept in an immaculate state. That said, even this is not an exact science and other factors do come into play. The area in which the house is situated plays an enormous role in the selling price. Attempting to sell your home in what is considered a middle class suburb and expecting to use the money to make a cash purchase for an upmarket home in Bryanston is more than likely going to end in failure. We appear to have disregarded the idea that the profit made from the sale of a home can and should be used as a deposit on a more desirable more expensive property. That is how our parents and grandparents operated, building their investment slowly but surely. They certainly never expected that the sales price of the home that they had grown out of, would cover the entire cost of something bigger and better.Logic plays an enormous role when it comes to buying property. The fact that sellers want the sales price of their existing home to equal the price of a newer better home is both unrealistic and totally illogical. Sadly, instant gratification has become the norm in our fast paced modern society. No longer willing to wait, we want it all and we want it now. Unfortunately, in the cold harsh reality of life, this is often impossible and as has been seen in the recent economic crisis, getting too much too soon can come back to bite.Property has and always will be an excellent investment delivering solid returns. Savvy investments, clear thinking and knowing when to buy and sell are rules that need to be followed. Keeping a cool head, marketing your property at a market related price will ensure that profits are made and will lead on to bigger and better things.

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