Even though there has been much more activity in the property market lately, prospective buyers are value conscious and are virtually ignoring any home they think is overpriced, while zeroing in fiercely on property they think is correctly priced.
There are always two things that matter to a seller, price and terms, and both are open to negotiation.
According to Lew Geffen, chairman of Sotheby’s International realty in South Africa, their attention is so focused that the sellers of well-priced homes are once again starting to receive multiple offers to buy – a market phenomenon that has not been in evidence for the past five or six years.
He says this is a good scenario for serious sellers. He says the banks are still being careful about granting home loans, and it is great to have a back-up offer in hand if the first buyer’s bond application should fail. “It is also useful if the first buyer’s offer was subject to the sale of an existing home and that sale does not materialise in the time allowed.”
However, he says, a multiple offer situation can be stressful for prospective buyers, so there are a few things they need to remember, the most important being that it is not always the first or the highest offer that is accepted.
Geffen says there are always two things that matter to a seller, price and terms, and both are open to negotiation. If, for example, the sellers have received a higher offer that is subject to the buyers being able to sell their own home, they might as well accept a lower offer that is non-contingent, depending on how quickly they themselves would like to move.
“Speaking of which, a particular seller may also have a special need, perhaps a quick exit so he or she can start a new job elsewhere without having to worry about a lot of small repairs, or perhaps a need to stay in the home until a school term finishes and buyers who are willing to be flexible on such points can often cinch the deal without having to offer the highest price.”
But, Geffen says in the current market the offer most likely to appeal to sellers is one that comes from a buyer who has taken the time to obtain proper home loan pre-approval (not just pre-qualification) and has cash in hand to meet any deposit requirements and the buying closing costs, such as transfer duty, bond registration costs and legal fees.
He says buyers should take care not to get carried away in the heat of a competitive situation and increase the amount of their offer without giving it some serious thought.
He says bearing in mind that the banks are still valuing property conservatively, they might not obtain a home loan for a higher amount, even if they can afford it.
“And on the other hand, increasing the price offered could affect the buyers’ ability to pay the deposit and transfer costs, and could also result in higher monthly loan repayments that could have a long-term effect on their lifestyle.”
