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Selling a property
Currently the average time frame for a home to sell is anything from 120 to 160 days. If it taking longer than that, there are only usually 3 factors that may be affecting the delay of the sale of your home, namely, price, marketing and condition.
what buyers look for in value
Overpricing, underpricing and market-related are terms that are often
bandied about in the prevailing tough market conditions, but what
should a seller see in his house's actual value?
Homes are valued for a number of
reasons and the values may vary depending on the reason why the
valuation is done:
- Replacement cost – for insurance purposes
- Selling/Buying
- Estates and family-related transactions
- Divorce
- Emigration
- Security
- Development
These
are just some of the reasons why people buy and sell property.
Buildings frequently do not have the same value to the buyer and
seller. For example, a house that is going to be demolished to build a
block of flats would have a value as a family home to the seller, but
only a ground value to the buyer. The site would actually be of more
value to him if there were no buildings on it as he now has to incur
the cost of demolishing the house before he can build.
When
selling or buying a house there is a lot of emotion involved. The
seller has often put a great deal of time, effort and love into his
home whereas the buyer will not see any value in these personal
emotions.
Buyers buy homes by comparison and buy
what appears to be the best buy for them taking into account their
personal needs, wants, desires and importantly affordability. Buyers
are frequently the best judges of value and price. They see many homes
and are able to compare what each one offers to the price that is being
asked.
Sellers, on the other hand, are often unrealistic in
their expectations, mainly because they are not comparing the price of
houses that have been sold but rather the asking prices of houses that
are currently in the market. These homes are actually the seller's
competition and until they are actually sold, they are no indication of
what people are prepared to pay. The best way to value a home is to
look at sales registered at the Deeds Office.
Do not attempt to value a home on the amount the house has been insured for. Selling prices are normally much lower than insurance values (often
30% or more) and based purely on the price a willing buyer is prepared
to pay. No knowledgeable buyer would buy an old house if he can build a
new one for the same price.
Take the first serious offer
If you must sell your home, sell it now as the market is not going to improve for at least another year.
Homeowners who really have to sell at this stage
should "take the money and run" if they get a serious offer of any
kind. They should definitely not hold out in the hope of higher offers
in the next few months as the market is going to get worse before it
gets better.
It is also not advisable for owners who have to
move to try to let their existing homes now and delay the sale in the
hope that prices will rise significantly over the next year. For a
start, rentals are under pressure at the moment because there is an
excess of stock and tenants are bargain hunting, so whatever rental
income it might be possible to generate is highly unlikely to cover the
mounting holding costs on the property.
Second, home prices
have now started to show a decline even in nominal terms and are set to
go through a further dip before any interest rate drops start to have
an upwards effect. It takes nine months for changes in interest rates
to kick in, so the likelihood is that prices will not be much higher at
this time next year than they are now.
Obviously, it would be better for homeowners to ride out the current downturn and
only think about selling again in 2010, but there are always those that
simply have to sell, in order to relocate, downscale or perhaps
emigrate.
It's also a matter of relativity – if you sell low,
you buy low too. And if you upgrade in this market you will score
because, when the market firms, you will benefit more proportionally on
the more expensive property.
Meanwhile, the competition for
buyers is fierce. The average number of listings we put on our books
each month is 13% higher now than at the start of the year, while the
average number of sales concluded is 40% down. Listing times are also
longer and it is notoriously difficult for buyers to get finance.
Homeowners
also need to listen very carefully to their agent's advice when it
comes to setting a market-related asking price that will attract the
highest number of potential buyers and finally, they need to be
prepared to make a quick decision when they receive their first serious
offer.
Why sellers should also be picky
When
it comes to accepting an offer to purchase, property sellers would do
well now to be just as picky as buyers usually are when house hunting.
When the property market is under pressure many
sellers are so pleased to receive any offer to purchase that they take
all comers.
But sellers should consider offers from buyers who
have solid prospects of obtaining bond finance rather than buyers who
offer a higher price, but whose credentials might prevent them from
qualifying for a bond.
The reason is that
sellers who accept an offer from a buyer, who cannot obtain finance,
effectively take their property off the market and may miss the
opportunity to sell to a qualified buyer.
"In the current
market it is much more difficult to qualify for bond finance. In the
first place, the National Credit Act (NCA) puts the onus on lending
institutions to make sure that consumers can indeed afford to repay the
loan – and they have therefore become much more circumspect with regard
to whom they are prepared to lend money.
In the second place,
the local market has not escaped the ripple effect of the worldwide
credit crunch that started in the US when easy credit resulted in a
property bubble that led to numerous property consumers defaulting on
their bonds, which effectively limited available credit in the markets.
Third,
new banking regulations implemented at the beginning of the year
stipulate the level of reserve capital banks have to maintain when
issuing credit to their clients. All these factors combine to make
banks more cautious about extending credit and they are consequently
cherry-picking the best customers.
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