There is nothing run-of-the-mill about selling a home. It’s a huge undertaking, one that requires careful planning, strategizing and some research to keep you informed and get a jump on the process. And much like buying a home, selling your home can be one of the most important financial and lifestyle decisions you will ever make. So it very crucial to understand the phases of the property market to determine how best to sell, then sell your house when you are ready.
But with the reported possibility of a future home price decline looming, rising interest rates inflationary pressures, and stock shortages, there is no doubt that the process of selling your property can be an overwhelmingly daunting procedure.
But this is nothing to agonise over, because a correctly priced home that is well situated and well-maintained will be attractive to buyers and will sell at the best possible price, within the best possible time frame, said Steven Barker, head of home loans at Standard Bank. So with careful planning and research on the part of the home owner, you will be well on your way to selling your home within a reasonable amount of time at the best possible price.
Fixing the asking price
Firstly, knowing the market value of your property is key. According to Angela Kewney, a property consultant at Durr Estates, property value is determined through a CMA valuation (current market valuation), which is based on what has sold in that area with regards to its immediate amenities- proximity to good schools, shops, access to health care etc.
Broadly, when a CMA is conducted based on these, the results will serve as key determinants of what your asking price should be, but the final decision ultimately rests on the seller, said Kewney.
Basil Moraitis, area manager at Pam Golding properties, noted: “Determining the asking price is a fine art and is critical to the process.”
One way to ensure that you get this right is to use the services of a reputable, and experienced estate agent who understands the area where your property is situated, explained Moraitis.
Your agent will be able to help you “shop around” and give you a printed CMA of the current market and the value of the surrounding homes in your area, then based on that they can calculate the amount that is likely to be a good price on your current market, Kewney added.
Although some people may prefer to sell their houses privately in order to save on the cost of a commission, in the long run this may not be a good move. As Moraitis observed that there is no doubt that an estate agent provides the very best way for a seller to determine the most accurate pricing for the property and to expose the property to qualified buyers.
He added:“Sellers who attempt to determine the value using historical data often prejudice their ability to accurately value the property as deeds office sales records can be up to 6 months behind current market conditions, and in a fast paced property market this can result in large discrepancies.”
It is important to note that the value of your house can decrease from what you originally paid for it. For more information on the depreciation of property value, click here.
Staging a home
Another important aspect to consider when selling your home is the concept of home staging. This is to ensure that your house is ‘show-ready. By making the house appealing you can draw interest from the highest number of potential buyers, which in turn allows you to sell it for more money.
According to Barker, aside from ‘dressing up the home’ for show, a well maintained home with a fresh clean look will appeal to your buyers emotions and endear them to your property as presentation is very crucial.
Although Morities believed that the interior of the home is what seals the deal when it comes to selling a house, Barker pointed out that both the interior and exterior are very important.
Barker suggested that you make all the necessary repairs around the home, clean out all clutter from the entrance and garage, paint the front door, mow the lawns and prune the garden. Also planting colourful flowers in the garden and in the front of the house are a great way to draw attention to your property.
Adele Whiteman, an event planner and florist in Contantia, suggested that you can spruce your indoors up by placing freshly cut flowers in a vase, and placing them on a coffee or dining table, which will make the house homely and smell great. Good furniture and family photos on display will also add a lot of zing to it. Making the house look like a home will endear a prospective buyer to it emotionally, added Barker.
Every so often, house sellers are caught off guard by the costs involved in selling a home. The costs are not “hidden” as many people think, stated Kewney. What it takes is for you to understand the contract agreement and know what every clause means.
Kenwey pointed out, for example, that some people don’t understand the 72 hour clause. This clause allows the seller to sweeten the pot by giving the buyer notice of receipt of any other subsequent bona fide offer which the seller is willing to accept and allow the purchaser two hours to decide whether to waive the “subject to sale” or make the agreement binding.
These are the major costs of selling a property in South Africa:
- The estate agent’s commission for selling the property. The fee is usually between five and eight percent of the property selling price, plus VAT of 14%.
- costs for electrical, i.e. if you have a coastal property, electric fencing (if relevant), gas (if relevant) and plumbing (if in Cape Town) compliance certificates. These certificates each cost between R300 and R500. But if problems are discovered then you also have to pay for the necessary work to be done before the certificate can be issued.
- A bond cancellation fee, is also required if applicable. This is charged by the attorneys if you cancel your bond after selling your property. It is usually between R1 500 and R2 500.
- Early bond cancellation (penalty) fees. If you are intending selling a property and cancelling the bond, then you should let your bank know in advance, in writing (and continue notifying the bank every 3 months until your property is sold). Otherwise the bank may decide to charge you a fee for cancelling your bond early.
- This fee is calculated as three months’ interest, which can be a substantial sum to pay unnecessarily.
- Contribution towards municipal rates and taxes, services and levies (if applicable), usually equivalent to about four months’ payments, to get rates and taxes and levy clearance certificates. This can be a large amount. If your property transfers earlier than anticipated you might get a refund.
- Capital gains tax if you sell your property at a profit (the first R2 000 000 of the profit made on the sale of a “primary residence” is not taxed if the house is registered in the name of a natural person). The capital gains tax rate usually works out to a maximum of 13.3%.
Identifying a good client
To know a good client, one has to FICA them, explained Kenwey. Make sure you obtain their certified ID, proof of address, contact detail for home and work, tax number and company registration and CIPRO detail, as well as residents permit if the buyer is not South African. Then follow up on the information given to ensure that these documents are accurate and real, said Kewney.
For some helpful tips for house hunters, click here.