When do I sell my property?

Many property owners contemplating selling, wonder when the best time is to list their property for sale. Do you wait for summer? Is it best during school holidays? Do you wait until the market improves?

These are good questions, and as with any investment, your return depends very much on your timing. So just when is the best time to list your property?

To a large extent, this will depend on what you intend to do once you’ve sold. For example, if you are intending to upgrade to a larger or more expensive property, then waiting for the market to improve means that you may well sell for more by waiting, but you will also have to pay more when you purchase. The corresponding increase in your purchase price will be more than the increase in your selling price – thus costing you more. In such an instance it may be better to sell now when the cost of upgrading is less.

The converse is true if you are downgrading to a property less expensive. Your gain by waiting is greater than the additional cost of purchasing a less expensive property later. We’re assuming property values do escalate.

Is it better to list in the summer months? Whilst it’s true that a home shows better when a garden is in bloom and the sun is shining, the impact of the weather is far less important than the state of the market. We’ve seen the market at its’ hottest in some winter months.

The best time to sell is when buyers are buying. The state of the market is dependent more on the economy than the weather. You will sell for maximum market value when buyers compete for your property. This means that you should sell in a market where there are more buyers than sellers.

There are a number of economic factors that impact the appetite buyers have for property. They include the interest rate and the inflation rate – which have a direct impact on buyer affordability. When these rates increase buyers qualify for less finance – and this has an immediate impact on what they can offer for property.

Additionally, the appetite the banks have for home finance has a significant impact. When banks are more cautious and avoid high loan-to-value (LTV) bonds (such as 100% bonds), then many buyers fall out of the market. Banks also price in their risk – so the higher the LTV the higher the interest rate, thus reducing the amount a buyer can afford.

The best time to sell is when the market is stable. If panic sets in and the market is flooded with listings due to economic pressure on homeowners, then property values drop.

There is growing uncertainty as to the impact of our newly acquired “junk status” and how this will affect interest rates and banks’ appetite for finance. The smart move is to sell before these effects are felt.  Now is a great time to sell…

Steve Caradoc-Davies
Principal
Harcourts Platinum

Questions sellers should ask an agent when selecting who should sell their property

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Selling a home is stressful. Having a good relationship with your agent and them having an understanding of your expectations right from the start, will go a long way to ensuring a trouble-free process. The following questions will hopefully help you make the right choice:

  1. How well do you know the area and what insight do you have with regard to trends and selling prices?
    Your agent should be able to give you stats on their company’s market share within the suburb they specialize.
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  2. What qualifications and training have you received?
    In addition to what courses they have attended, your agent should be able to present you with their own unique Fidelity FundCertificate. They are not allowed to practice without one.
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  3. How did you arrive at the suggested marketing price?
    Agents must be able to provide stats of similar properties recently sold within a similar area. They should also be able to supply you with the currently competing properties that are on the market at present.
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  4. How do you plan to market and expose my property?
    An agent should provide you with a combination of various advertising methods they plan to use to attract the most amount of buyers in the shortest possible time.
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  5. How often will you provide me with feedback on the progress with the marketing and how will this feedback be given?
    One of the main reasons sellers become dissatisfied due to a lack of communication from the agent.  A reputable agent should send weekly written feedback with comments from all buyers that have viewed the property.
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  6. Of all the properties that you have had on the market, what percentage has your company sold?
    Choose your agent wisely. Don’t pick an agent simply because they charge a lower commission. This could cost you in the long run. Sellers often realise too late when they’ve made the wrong decision.

Growing legal shift away from voetstoets clause

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Property sellers should not rely on the “blind protection” of the voetstoets clause if they don’t have approved building plans, warns Liesel Greyvenstein, one of the directors of Greyvensteins Attorneys.

According to Greyvenstein, there is a growing legal shift away from the protective blanket of voetstoets for second-hand property sellers with illegal or unapproved structures.

“The courts now place the responsibility of ensuring that there are approved plans for the property directly on the seller,” says Greyvenstein, adding that while the voetstoets clause remained valid within the realms of common law and was a standard provision in sales agreements, it no longer offered blanket ‘as is’ cover, nor the guarantee of a smooth property transaction.

Tightening of legal requirements

Saying that unapproved building plans were now the biggest headache in property transactions today owing to the tightening of legal requirements around approved plans following the promulgation of the updated SANS 10400 building regulations, Greyvenstein warned that there was a strict process to follow in terms of extensions, alterations and the building of all structures on a normal freehold property.

“Buyers and their banks now almost always want plans of the property, without which sellers run some serious risks,” she warned. “Aside from the legal implications, getting illegal extensions approved could include lengthy delays in the transfer process. Then there is the risk of the banks withdrawing the financing of the property. The banks are less and less willing to finance property purchases unless provided with registered plans. If it comes to light prior to registration that there’s an illegal structure on the property, and even if the seller is genuinely unaware that there are no plans for it, the conveyancers cannot willy-nilly retain funds on registration of transfer for remedy since, by law, the full proceeds on registration are trust funds and belong to the seller. Banks are aware of the risk associated therewith, especially as the property constitutes their security.”

The seller could also be forced to relocate or demolish the offending structure, she continues, adding that there were potentially high costs associated with all this. “Litigation is expensive and no seller wants to be the test case,” she says.

Courts finding in favour of purchasers

Citing ‘precedent-setting’ cases such as Banda and Another v Van der Spuy and Another (where the buyers successfully challenged a defective roof), and Naidoo v Moodley (where the purchaser found out that there was no certificate of occupancy, a requirement for the property to be registered), Greyvenstein says sellers’ voetstoots arguments and assertions that they were not aware of the absence of plans or illegal constructions were now regularly being overruled by the courts. “The trend is for the courts to find in favour of the purchasers, with the reasoning that they are entitled to assume that all legal and municipal requirements have been adhered to.”

Ignorance no longer an excuse

The introduction of a seller’s declaration by the Estate Agency Affairs Board (EAAB) in recent years means that sellers are now routinely questioned about approved plans, says Greyvenstein. “Right up front, along with the signing of the mandate, sellers have to complete a declaration regarding the existence or lack of approved plans. It’s also something that prudent agents investigate when they take mandates, so there’s no getting away with the excuse that they didn’t know.”

Common problems

According to Greyvenstein, the most common problems experienced by conveyancing attorneys and estate agents today include building line transgressions, with particular reference to carports and entertainment areas built on to boundary walls, and building over servitudes. “People also regularly build over manholes, drains and gulleys, and enclose balconies in apartment blocks without the requisite permissions.”

She adds that purchasers also need to watch out for sectional title units that had been extended, since approval was required from the body corporate as well as the municipality, and plans had to be registered with the surveyor general and the Deeds Office.

In circumstances where plans were not available, she continues, the parties would have to come to an agreement to have “as built” plans drafted and submitted in order for the transaction to proceed. However, she points out, the seller ran the risk of the purchaser wanting to pull out of the sale. “It will then be at the bank’s discretion as to whether to go ahead with financing or not, but it’s very likely that the bank will withdraw the financing,” she warns.

If the municipality was unable to approve “as built” plans, she said remedial action would be required and the purchaser would have to be compensated with regard to the costs of relocating or replacing the offending structure.

Safekeeping of plans

Greyvenstein also points out that home-owners were responsible for the safekeeping of their own plans. “It’s therefore in all property owners’ best interests to have municipal-approved plans which will save time and pre-empt problems down the line when the time comes to sell,” she advises.

As a rough guide, Greyvenstein says the cost of approved plans for a basic three-bedroom, two-bathroom house is about R10,000, provided there were no restrictive title deed conditions. “Compare this cost with that of a failed transaction and that once a sale falls through, a property quickly gets a stigma attached to it, so the chances are it will sit on the shelf. No matter which way you look at it, it makes sense to get approved plans now,” she concludes.

5 Ways Sellers Sabotage Their Own Sale

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Selling your home? Every seller wants the same thing:  To sell their house for the most money possible, as quickly as possible and with the least hassle. This is exactly what your real estate agent wants too. That said, there are usually two things keeping this from happening: price and condition of property.

Price and condition are always the deciding factors for buyers, and they also affect the amount they may offer. Luckily for you, these are also the only two things you have control over!

So let’s take a look at the top five mistakes you may be making if your home hasn’t sold yet.

Mistake #1: Thinking your house is special.

As a homeowner, you are proud of your home. You might even think it’s superior to all others in your neighbourhood. This might be because of the time and money you spent remodelling it. Perhaps you hand-picked every tap and tile and personally laid them, or chose a ridiculously expensive gold leaf wallpaper that you just had to have. You may assume if you spend a lot of money on bells and whistles that MUST make it worth more, right? Wrong.

Buyers are looking at your home, trying to envision it as their home. They’re easily distracted by your loud, hot pink bedroom walls and won’t consider that it was a custom colour made to match the loud pink zebra comforter and matching curtains. They’re also mentally calculating how much money they need to spend to refinish those hardwood floors, repaint and have that wallpaper removed.

You must understand your house isn’t special to anyone but you, so it’s always best to cater to buyers by showing them your home’s cleanest, most neutral face. You need to clean your home until it shines, ditch the clutter, paint, make needed repairs, and keep up with your landscaping.

You need to trust your specialist real estate agent on where to price your home. And remember one important thing: Just because you spent R200 000 on a kitchen remodel doesn’t mean you’re getting every penny back (despite what your shoebox full of receipts might be telling you).

Mistake #2: Thinking you’re a salesperson.

As a seller you may think you’re being helpful by sticking around during showings to help agents and potential buyers see how special your home is. You might think the buyer’s agent can’t possibly know how to showcase your home as well as you can, or have any clue what the really important things are to point out.

So you stick around, you smile super big and you’re super nice to everyone. You point out the hardwood floors, custom wallpaper and things that you love about the house, because you are a better salesperson than some real estate agent who has never lived there, right? Wrong!

Actually, you’re not coming off as super nice, but annoying (at best) and more than likely cocky or creepy. While gushing over all the things youlove, those may be the very things the buyer hates.

The best thing to do is leave the house and give the buyers some space. Buyers want privacy. They don’t want to be cornered into awkward small talk with the homeowner or feel rushed when making the most expensive purchase of their life.

Mistake #3: Thinking they will come back.

Imagine you had a long day at work. It’s a hot, muggy day. Your car’s air-conditioning is acting up, making you stick to your seats on your longer-than-usual commute home. Your kids are bickering and everyone is starving. Then your phone rings. It’s your real estate agent calling with a last-minute viewing request… in ten minutes. This is NOT what you need right now, but you want to sell your house.

You have two choices. Option A: plead for the showing to be rescheduled, because you mistakenly assume the buyers and their agent will gladly rearrange their schedule around yours and come back.

Or, Option B, remind yourself that you want your home sold, and these buyers may only have the next hour or so to see as many homes as possible before making a decision because they’re relocating from out of town (or whatever their unique situation may be).

Never, ever, go with Option A.

No matter how you feel or what kind of day you’re having, you need to be accommodating. Sometimes you just have to bend over backwards. Buyers hold all the power because they’re the ones with the money and ability to make your dream of selling come true.

So as you load up your hungry, fussy kids, you smile and wave as you back out of the driveway and head to the nearest drive-through. You’ve made the right decision! You realize you must suck it up and make your house available… even when you really don’t want to, because buyers will rarely come back at a better time.

Mistake #4: Not being willing to negotiate.

So you got an offer on your home, and you’re happy with the price! Congrats! Regardless of how long your home had been on the market or what the final terms are, this is exciting because it means all the viewings and showhouses will be over and you’re a signature and 3 months away from moving on.

Reading the terms and conditions, the buyers ask for some repairs to be made.This is where you, the seller, need to be willing to meet in the middle and show the buyer that you’re serious about selling. Otherwise you risk your deal falling apart and being stuck with the house which you’ll eventually shell out more money to fix anyway.

Sure, you can always re-list your home, but it may sit on the market for 30, 60, 90 days or more. Meanwhile you’ll have to deal with more showings, keeping the house spic & span, and losing sleep due to the anxiety of the unknown.

Your first offer is usually your best offer, and oftentimes your only offer. Once you secure an interested buyer, you need to trust your agent and work with them and your buyers to get the home sold and not waste time on bickering over a R500 light fitting or a borer beetle certificate.

Mistake #5: Pets.

Last but not least, not everyone is a pet lover. Many people are allergic to cats or dogs, or have sensitive noses that can smell urine and stinky litter boxes on the other side of the house.

When you’re selling your house and you have pets, you really need to make the home look and smell as if no pets ever stepped foot in it. Your cat’s favourite spot on the couch that’s coated with 4 inches of matted fur needs to get scraped off (with a lint roller a few hundred times if need be). The food bowls, cat trees, pet toys, pet beds, scratching posts, cat condos, etc. need to be out of sight too. So do the fur babies themselves.

Before you leave, make sure your backyard is free of landmines. You may as well put Whiskers’ litter box in a garbage bag and store it in the garage or closet or someplace out of sight and smell.

When a buyer leaves, they’ll remember their first impression, so you want it to be a good one. Pet odour can be a deal breaker, even if everything else about your home is perfect.

To summarize…

Your home isn’t particularly special to anyone but you, so keep it clean and showing beautifully and as neutral as possible at all times. Don’t try to be the real estate agent (i.e. be sure to leave the house during viewings), and take the pets with you! Don’t assume that buyers will bend over backwards to see your house—you need to do the bending, and you need to be flexible with negotiations too.

If you follow this advice, you shouldn’t have a hard time selling quickly and you’ll avoid the unnecessary stress that many sellers endure because they become their own worst enemy by sabotaging their own sale.

 

Residential Sales – Foreign exchange

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Appointing the right person or company to help you deal with your currency requirements can be an extremely difficult thing to do. In these days of “get rich quick” mentality, choosing who to trust is becoming more and more difficult.  If you choose the right broker, your deal could go quickly and smoothly, achieving the best exchange rate, service and figure you were looking for. However, choosing the wrong company can lock you into a lengthy listing contract that may ultimately cost you a lot of money with very little benefit.

  1. Can foreign funds be brought into South Africa for property acquisition?

    Yes.  The funds can be paid into any South African nominated bank account, preferably the conveyancer’s trust account. Certain information must be provided to the bank before the funds can be released. Should the foreign funds be paid into the conveyancer’s trust account, the conveyancer will supply the required information to their bank. Once the funds are released the conveyancer will receive a deal receipt, which is the record of the introduction of foreign funds. This deal receipt must be kept by the purchaser for future repatriation of the funds.
  2. Can non-residents borrow money locally to purchase property?Yes, but the amount that they will be able to borrow is restricted. Non-residents can borrow funds equal to the amount of foreign funds that they introduced into South Africa. Non-residents must supply the documents prescribed by the Financial Intelligence Centre Act, in order to qualify for a South African mortgage bond.
  3. Can non-residents open local banking accounts?Yes, non-residents can open a local bank account but they will only be able to open a non-resident bank account. Most of the retail banks will be able to assist a non-resident with opening an account. A non-resident account however has restrictions on the funds that can be deposited into the account.
  4. May the conveyancer’s documents be signed overseas and, if so, what is the procedure?Yes, conveyancer’s documents may be signed overseas and the procedure that must be followed will vary, depending on the place where it is signed. When documents are signed in the United Kingdom, Zimbabwe, Lesotho, Botswana or Swaziland it must be signed in front of a Notary Public, who must then affix his/her official seal or stamp.  When the documents are signed in a country other than the abovementioned the documents must be signed in front of a Notary Public who must affix his/her official seal or stamp. The Notary Public must then have his/her signature authenticated and an apostille must be annexed to the documents. Alternatively the documents can be signed at a South African embassy and the embassy official will need to affix his official seal or stamp.
  5. May the proceeds be taken out of the country when the property is sold?Yes. Non-residents may repatriate their sale proceeds provided that they can supply all the required documentation in order to obtain reserve bank clearance.
  6. Are non-resident owners liable for South African income tax on disposal?If the property is sold for more than R2,000,000.00 the withholding provision becomes applicable. In terms of the withholding provision 5% of the gross selling price must be withheld and paid over to SARS, if the seller of the property is a natural person. The non-resident is however able to apply for a tax directive in terms of which the actual CGT obligation is paid over to SARS and not the entire withholding amount. 33.3% of the capital gain will be included in a natural non-resident seller’s annual taxable income and be taxed according the applicable tax bracket. If the non-resident seller is a company or close corporation 66.6% of the capital gain will be included in the taxable income and taxed at a rate of 28%. For non-resident trusts 66.6% of the capital gain will be included in the taxable income and taxed at a rate of 41%.
  7. The capital gain made on the property is calculated by deducting the base cost from the selling price. The base cost include all the direct cost associated with the purchase of the property.Yes, any person selling immovable property in South Africa is required to declare any capital gain made on the sale to SARS in order to be taxed accordingly. For a non-resident the procedure to be followed with regards to Capital Gain Tax (CGT) varies depending on the gross selling price of the property. When a non-resident sells the property for less than R2,000,000.00 he will be required to declare the capital gain made thereon at the end of the financial year wherein the property was sold.
  8. Is estate duty payable here in the event of the non-resident owner’s death?Yes, estate duty of 20% will be payable in the event of the non-resident owner’s death. Non-residents will only pay estate duty on their South African estate. They will be entitled to a rebate of R3,500,000.00 but this rebate will only be applicable to assets situated in South Africa.

For more information on this topic, please contact SGM-FX on currencysa@telkomsa.net.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your property professional for specific and detailed advice.  Errors and omissions excepted (E&OE).