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Should I Buy or Sell first?
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Improve marketability of
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your property by pricing it correctly
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Price is the most important negotiation factor to the
buyer
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Price compensates for property's shortfalls and inadequacies
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Interest sells properties - not time
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Price creates interest
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Initial marketing time is crucial
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Combine realistic asking price with initial surge of
interest
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Choose an agent on competence and not "promised price"
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Buyers buy on comparison and elimination
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Buyers compare price and value for money
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How do you know if you are dealing
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with a true professional?
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When is my house really SOLD?
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Sole Mandates all you need to know
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SHOULD I BUY OR
SELL FIRST ?????
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‘Should we buy or sell first?’
I am asked this question numerous times.
The cautious amongst us will always say, ‘I would like to find a new home before I commit myself to selling my
current home’.
This is understandable, but not always a wise decision. By all means, have a look around and acquaint yourself with
the different areas, visit show houses over weekends.
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Do your homework
and get a feel for the areas that you would like to live
in. Acquaint yourself with the prices and what is good
value for money, but signing a Deed of Sale
‘subject to you selling’ can often result in
pressure and heartache.
As an example, you walk in to a house, fall in love with
it and put in an offer subject to you selling your
current home.
You have not even put your house on the market.
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Maybe it is not
worth what you think
it is and the true market price of your house will
severely affect your buying power in respect of buying
your new home. In this example let us say that Seller
accepts your offer, but, quite rightly to protect
himself, he inserts a
‘Meet and Beat’ clause in to the offer. In layman’s
terms, this means that should the Seller receive another
offer on his house, subject only to bond finance i.e. no
house to sell, he can give you notice on your offer, to
either remove the clause relating to the selling of your
own property, failing which your offer becomes null and
void.
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The
period of time will vary
from offer to offer, but it is generally around 48 hours
(2 days).
This means your dream home will have
‘gone down the drain’ unless you can sell your home
in the next 48 hours.
Alternatively,
you receive an offer on your house, but it is very low and,
not wanting to lose the house that you have put an offer
on, you take the low offer, not realising the full
potential price of your property.
To make buying and selling a smooth, hassle-free affair,
hopefully the following pointers will be helpful:
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1.
When you have
decided to sell your home,
find out how much your property is worth.
A professional Estate Agent will be able to give you a
market price based on a comparative market analysis.
This means they will compare your property with similar
ones that have
sold in your area. (not the ones that have been advertised,
but the actual selling price)
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2.
Subtract the costs for selling i.e. commission
inc. vat, bond cancellation, beetle and electrical
inspection fees and next deduct the current bond that
you have to settle with the Bank.. Work out a
budget and decide how much you can afford to pay on a
bond each month. Any bank will be able to work out
exactly what you qualify for, or call us at our offices
and we will do the simple calculation for you.
Financial institutions will grant a maximum bond where
the monthly bond repayments do not exceed 30% of your
gross basic salary.
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3.
Once you
know your buying power,
decide where you are going to buy.
Do some homework in the areas – visit show houses on a
Sunday to get a feel for the area. Also drive past at
busy times to see what the areas look like in the week.
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4.
Now you are ready to
place your house on the market. Choose your Estate Agent carefully, remember a good track
record speaks for itself,
ask for recommendations.
Ensure that your Estate Agent knows, that once you have
sold your house, only then will you commit yourself to
putting in an offer on another property. Therefore, the
offer they present to you must give you sufficient time
to find a new property, which may be as long as 2 - 4
months.
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5.
Once you
have sold your house
and
all suspensive conditions have been fulfilled, i.e. your
buyer’s bond has been approved, any other conditions
have been met and your buyers 5 day cooling off clause
has expired (if applicable), you are ready to buy. In
the property business you are now known as
‘a good buyer’,
not a browser. You have a better negotiating power, because
the sellers know that your offer will be a definite sale
and will not fall flat because you have not sold your
house. If
there is more than one offer on the same property the
seller may view an offer not subject to selling in a
much stronger light than one that still has to sell.
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It is always recommended that you get a pre-approved
bond from a financial institution. Armed with
this and your conclusive sale on your property, you can
now sign a Deed of Sale on a property and know when it
is accepted that it is a firm offer and you will not
lose your dream home because of a ‘subject to’ clause.
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PRICING TO SELL -
THE FACTS
Improve marketability of your
property by pricing it correctly
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A purchaser will buy property based on price and will
eliminate based on price.
At newspaper level when the buyer is sitting with pen and
paper, he will eliminate those he cannot afford.
You will improve the marketability of your property by
pricing it correctly.
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FACT:
Price is the most important negotiation factor to the Buyer.
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Buyers look at price, at area and at the accommodation
offered. Those are the three factors
which the Buyer will use when he eliminates properties
at newspaper level.
Of those 3 factors, price is the most important.
Remember if you over price your property those clients
that see it will not want it and those that want it will
not see it! |
FACT: Price compensates for property’s shortfalls and inadequacies.
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A home on a busy road can sell, just let price compensate
for that fact.
This is why properties that do not have a good kitchen, are
small or are in poor decorative order still sell.
Any property will sell depending on the price.
Price can compensate for any shortfalls, inadequacies
or any other problems.
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FACT: Interest sells properties – not time.
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The only effect that time has on the price of property
is to bring it down.
The longer a property is on the market the less money
the Seller will receive.
Interest pushes up the price of a property, not time.
If there are three interested buyers on a property, the
effect this has, is to chase up the price.
The more people looking, the better the chance we have
of securing a higher price. |
FACT: Price creates interest
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Price your property at market value and when the buyers
compare your property to other properties, which are
overpriced, your property comparatively will look like
better value.
Buyers buy by comparison.
The more buyers who are interested in your home the
likelihood is that you will achieve a better price. |
FACT: Initial marketing time is crucial
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In the beginning of the marketing period more buyers
will view your property than at any other time.
A new release always creates interest in the market
place.
During the first 30 days you will have more buyers
looking at your property than at any other time.
This initial marketing time is crucial, as the property
has an excited audience who is noting this new listing. |
Combine realistic
asking price with initial surge of interest
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Why would we overprice your property when everybody is
looking at it and then bring down the price after they
have all walked out the door?
It makes no sense to have a good asking price in month
number three and a bad asking price during month number
one.
We need to combine realistic asking price with the
initial surge of interested Buyers. |
Choose an Agent on
competence not on ‘promised price’
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Do not necessarily choose the Agent who promises you the
highest price.
Remember he is not buying your house, he is acting as an
Agent between Buyer and Seller.
An experienced, professional Estate Agent will have
access to information in order to prepare a comparative
market analysis. From this information you can compare your home with other
similar homes that have sold in the last few months. Do not be tempted to price your house higher than others in
your area. |
FACT: Buyers buy on comparison and elimination
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A Buyer purchases property by comparison.
When the Buyers look at your property, how will it
compare to the other properties in the market place?
Will your property represent good value for money? |
FACT: Buyers compare price and value for
money
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You can make your property more sellable not by under
pricing, but by pricing it correctly during the first
month.
Price in month one at the price that you will accept in
month three, this creates interest and pushes up the
final price. |
HOW DO YOU KNOW IF
YOU ARE DEALING WITH A
TRUE
PROFESSIONAL
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Selling a property is a big
decision.
Do not trust your most valuable asset to someone who is
inexperienced, untrained and unqualified, even though they
say they will charge an unrealistically low commission.
Remember, cheap does not necessarily mean good value
for money. Poor
quality is remembered long after the price is forgotten.
A professional Estate Agent,
ideally should be a member of the Institute of Estate Agents
and be happy to show you their credentials.
They should
continue with their real estate education and ensure that
they are always up-to-date with the latest in property
related subjects.
Such qualifications can be seen on their business cards and
stationery, such as CRS(SA) and CIEA.
These qualifications are held by a very small
percentage of Agents.
MAKE SURE YOU DEAL WITH THE
TOP PEOPLE.
A true professional will have a good track record and
you should see a number of their Sold Boards in your area,
after all anyone can put up a For Sale Board! They should be
able to introduce you to many satisfied Sellers and
Purchasers in your neighbourhood.
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WHEN
IS MY HOUSE REALLY
SOLD ???
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Many Sellers wrongly assume that as soon as they have
signed a Deed of Sale with a prospective Purchaser that
their house is sold. |
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It is important that you pay particular attention to the ‘subject to’ clauses,
ie subject to
bond finance, subject to the Purchaser selling his
property, subject to the Purchaser obtaining a state
guarantee, etc. Until these conditions have been
fulfilled you do not have a valid sale. If the Purchaser
is not successful in obtaining bond finance the sale
will fall through.
The Purchaser may tell you that he qualifies for a
particular bond, but this does not automatically mean he
will get a bond.
He may have an adverse credit record, the Bank may not
find value in the property, the client may be paying too
many other loans, hire purchase agreements, etc and,
although they qualify on paper, the Bank may decide to
restrict the amount of the mortgage bond that they will
grant. If the Purchaser, however, has a pre-approved bond
certificate, it means he definitely qualifies for the
amount of the loan as stated on the certificate, but the
sale is still subject to a favourable Bank Valuer’s
report on your property. |
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Once the Purchaser has received bond approval in writing
and the conditions on the bond letter from the Bank have
been met, then the condition relating to bond finance is
fulfilled in the Deed of Sale. |
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Often the Bank will give a loan, but it is subject to
the applicant obtaining a guarantee or collateral from
his employer.
It is imperative that it is ascertained from the
Purchaser’s employer that such a guarantee or collateral
for the required amount is forthcoming, otherwise the
sale could fall many weeks down the line causing a lot
of upset and heartache on both sides. |
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If the Purchaser is buying your house subject to him
selling his property, he may sell his property and, in
turn, that Purchaser may also have to sell.
As you can imagine, the longer the chain of
transactions the more complicated it becomes. |
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This is why it is imperative that you use a professional
Estate Agent who can check all these transactions and
ensure that they are all valid sales, i.e. all
‘subject to’ conditions have been fulfilled.
You should be confident that these conditions have been
fulfilled before you purchase your next property. |
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It is always advisable to insert a condition into your
Deed of Sale that it is
subject to the conclusive sale of your property by
a certain date. |
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If you accept an offer and sign a Deed of Sale on your
property subject to the Purchaser selling his property,
it is important that you ascertain
important details from your Agent.
Where is the Purchaser selling his property?
Is it on the market at a reasonable price?
Remember a prospective purchaser can pay a high price
for your home provided he obtains an unrealistic price
for his home.
Often Sellers get excited when they receive a high offer
on their home, but, as you can see, if the Purchaser’s
property is not priced realistically, the Deed of Sale
you have signed is a worthless contract.
It also means that you may wait weeks or even months
whilst your Purchaser tries to sell his property and
then be told after wasting a lot of time that he is
unable to sell. |
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A
‘subject to selling’
offer is only as good as the saleability of the home in
question. The ultimate Purchaser is one who does not have to sell and
therefore there is little likelihood of problems
developing later down the line before your property is
transferred. |
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If your home is No 4 in a chain of house transactions,
which means there is a buyer and a seller, and maybe
three different attorneys (a transferring attorney, a
bond registration attorney and a bond cancellation
attorney) for each transaction. If you multiply this by
4, you can now see how many people have to perform in
this whole story to ensure that the transactions go
through on the due date.
This is often why there are delays with the transfer
process. |
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Understand carefully what the words
‘subject to’ mean.
If that particular condition is not fulfilled you have
no transaction.
Ensure that
‘subject to’
conditions do not have long time consuming dates that
could leave you in the lurch many weeks later if the
conditions are not met. |
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A reputable, professional Estate Agent will guide you
through these clauses and ensure a realistic amount of
time is given for the Purchaser to fulfill these
conditions. |
SOLE MANDATES
FACT: A sole mandate will
sell your home faster, at the best price possible.
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In ignorance of correct real estate marketing
techniques, home owners invariably grant selling rights
to a number of Estate Agents in the mistaken belief that
the more agents they have working for them the better
their chances will be of obtaining a quick sale.
This is not the case!
“Too many cooks spoil the broth.”
Property listed indiscriminately with every Tom, Dick and
Jane is cheapened.
Buyers wonder why the efforts of so many Estate Agents are
required to sell it.
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You cannot expect an Agent to try and get you the best
possible price for your property knowing that a dozen
others are offering it also. He will do what you have forced him to do.
He will put pressure on you to accept the first offer
made. |
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With a sole mandate, the Agent has greater inducement to
study the property thoroughly, to devote time and effort
and incur the expense of finding a willing and able
buyer to purchase your property at the best market
price. |
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By giving a sole mandate to a reputable agent, he will
advertise your property properly, he can offer it freely
in the best channels and in the best method to attract
buyers. The transaction can be concluded in a calm,
relaxed and dignified atmosphere, because you and he
would be protected against piracy. |
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A competent and self-respecting agent would rather list
ten properties exclusively than take one hundred open
listings.
If you are one of the ten, your chance of selling at a
good price, are much better than if you were one of the
hundred. |
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List your property with one live, wide-awake firm.
It will serve you better than ten dead ones who list
everything offered but sell little. |
If you expect an agent to
protect you, you should,
as a matter of
fairness and reciprocity,
be willing to protect him
by making him your exclusive agent.
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