Selling Your Home? Check Here First...
Category Sellers
This is not going to be a walk in the park, so don't let anyone try and fool you. After all, this is your home! You have spent many hours and you have many memories and emotional ties right here that are now going to be alienated!!!!
- You have to get used to the idea.
- You have to decide at what price you are going to sell.
- Which procedures and compliance certificates are you, as the seller, responsible for?
- What terms and conditions of sale are you prepared to accept?
1. Get used to the idea (Are you prepared for strangers opening your cupboards and looking into your drawers?)
Putting your property on the market can be a traumatic experience. As a potential seller it is imperative that you must be absolutely sure that you in actual fact do want to sell. Do not put your property on the market in order to "test" the market or to find out what price your property can fetch. There are other far better ways of establishing this that are far less stressful!
When you are certain that you want or need to sell, it is essential that you prepare yourself and all the occupants of your home to know what they can expect and what is expected of them in order to facilitate the process.
2. Pricing your property correctly
The seller must instruct a reputable REDZetc estate agent who is familiar with the area to prepare a market related evaluation of the home, in other words what is the amount estimated to be the market value based on actual sales in the area. This comparative market analysis (CMA) value should be combined with a value based on the capitalisation of income. This second method of estimation is imperative in the case that possible investors are interested as potential 'buy-to-let' purchasers. Estate agents who know their business should base an estimation on these methods and provide the seller with a written document verifying the facts.
Amongst other factors, they take into consideration:
- that market conditions can change rapidly due to a myriad of external factors;
- that the property market is a very local market and that conditions in one area do not always influence prices in another; and
- that market forces of supply and demand regulate and influence the price of property
Here are some home-truths about property pricing that sellers may want to take cognisance of:
- The price that you paid for your property, the amount of money you have spent on it, the average capital growth on properties and the municipal valuation are not necessarily particularly relevant to the present value of your home.
- Overpricing your property when it initially goes onto the market will probably be the main reason why it does not sell as soon as you anticipate or would prefer.
- The length of time that a property is on the market is bound to effect the price. If it was overpriced initially when it came onto the market, it will most probably sell at below true current market value because the price has been reduced by over-exposure to the potential market.
- The length of time on the market will not increase the price of the property, i.e. you will not necessarily receive a higher offer if you wait longer. Take the time value of money into account.
- The value of a home is determined by what a willing, able and informed buyer will pay a willing seller on a specific date.
- Pricing your home correctly (fair market value) is the way to ensure a quicker sale at the best possible price.
3. Which procedures and compliance certificates are sellers responsible for?
As the seller, you are responsible to provide certain compliance certificates to the buyer before date of transfer of the property into the name of the buyer.
The following certificates are required in terms of applicable legislation:
- Electrical Compliance
- Gas Compliance
- Plumbing (in certain municipal areas)
- Beetle (in certain provincial regions)
The seller must do a thorough investigation in order to be in a position to appoint reliable and professional compliance companies that can take care of all of the above requirements. On the seller's instruction, the estate agent will arrange for the necessary inspections by registered technicians. (Remember to enquire whether the estate agent receives kick-backs from the companies that they suggest, as this may not always be in the seller's interest!) At REDZetc our agents are not allowed to accept kick-backs of any sort!
As the property seller, you also need to appoint a property conveyancer to execute the transfer of ownership to the purchaser. It is not in the interest of the seller to waive this right and agree to purchasers appointing a conveyancer of their choice. (This rule does not apply in KZN where purchasers elect the conveyancer). Be sure that you have done your homework so that you can appoint a capable conveyancer to guard your interests throughout the transferring process.
4. What terms and conditions of sale are you prepared to accept?
A professional REDZetc estate agent will always supply the seller (the agent's mandator) with a standard copy of the agency's agreement of sale document up front, when he is mandated to market the property, to ensure that the seller is aware of the terms and conditions of sale long before an offer is presented. No surprises... The seller must be sure to consider the following basic terms and conditions (over and above the purchase price and how it is to be paid) before accepting an offer to purchase (OTP):
- Is the purchaser qualified to enter into the agreement of sale?
- Has the purchaser been informed of all the possible defects and legal requirements regarding the property that the seller and thus the agent are aware of?
- Is there a specific date by which the seller needs to vacate the property and does the OTP provide for this?
- In the event that the purchaser needs to take occupation before the date of transfer (not a good idea), does the offer make provision for the payment of occupational consideration? (ensure that no tenancy will be created as this may cause the seller problems)
- Does the purchaser have to apply for a mortgage loan in order to purchase or perhaps sell another property first, in other words will the offer be conditional on a future event?
- Is the purchaser buying in his/her personal capacity or on behalf of a legal entity and if so, is he/she duly authorised?
- Have you been given reasonable time to accept or reject the OTP without feeling pressurised?
- Is the estate agent that is presenting the OTP the effective cause of the sale?
Ensure that you understand each and every clause in the agreement before you sign as your signature is an indication that you are in total agreement with every aspect thereof.
In our next article we will discuss the financial implications of purchasing and selling a property by looking at what the secondary financial implications are in depth, i.e. the costs of buying and selling as well as the taxes you may be liable for when acquiring or disposing of your property.
Pam Snyman CPRE (NQF Level 7)
(MPhil, Dip Advanced Property Practice, Dip Property Investment & Valuation)
Author: REDZetc
