It is thus not unreasonable to expect that the monthly municipal holding costs on an unsold property at the upper end of the scale could easily be R10 000pm or more after July. And to that one must then add the monthly bond repayment, insurance, maintenance costs and any levies payable if the property is in a sectional title complex or estate. On a property valued at R1,5m, the total monthly holding cost could in fact easily add up to around R25 000.
According to the latest FNB Property Barometer, 72% of home sellers currently have to drop their initial asking price by around 10% in order to achieve a sale, which translates into R150 000 on a home initially priced at R1,5m, for example. “Now many may feel that this is just too big an adjustment to make, but it is our job as estate agents to point out to our customers that the chances are good that they will end up making it anyway, while also possibly incurring several months’ worth of holding costs if their property is regarded by potential buyers as being overpriced and remains unsold.
And those holding costs can quickly add up to a large sum of money that most home sellers could put to much better use - to pay a bigger deposit and reduce the monthly bond repayments on their new home, for example, or to settle some debts, which is what many home sellers are currently seeking to do.
Looked at another way, every month’s delay in selling your home diminishes any profit you stand to make on the sale, so it does not make sense to hold out for an asking price that is above what buyers in your area are currently willing to pay for similar homes. “Indeed, the objective should not only be to get your home sold for the highest price possible, but also get it sold in the shortest time possible, in order to maximise your potential profit.
This is why it is so important to enlist the help of a reputable and professional agent to first advise you on the correct asking price and then efficiently market your home to the biggest possible audience of potential buyers in order to reduce the listing time.
The FNB statistics show that the current average listing time is 67 days, but a good agent should be able to cut that time down substantially, and the need to do so is even more relevant at the moment due to the extended transfer registration times being experienced due to Deeds Office delays.
The average period between sale and registration is now at least three months, and home sellers cannot access the proceeds of their sale until registration is complete, so it is important to get the process started as soon as possible and avoid high holding costs by pricing very accurately.
Courtesy of MyProperty Gerhard Kotze of Realnet