11 Apr 2012
While there have been many positive indicators that trading conditions within the South African property market are continuing to improve, distressed properties are still a market reality.
This is according to Peter Gilmour, Chairman of RE/MAX of Southern Africa, who also heads up the group’s specialised distressed property department. Gilmour says that in January and February this year, they received over 300 new sole mandate distressed property leads from various financial institutions and over 100 of these properties have already been sold.
Last year the agency reported that distressed properties spent an average of 48 days on the market and fell predominantly into the R250 000 to R2 million price range.
The majority of distressed properties they listed last year were in Gauteng, which accounted for 70% of the total number of distressed properties compared to the Western Cape’s 10% and KwaZulu-Natal’s 20%.
Gilmour says to date in 2012 distressed properties have an average selling price of R900 000 and close on 80% of these properties were in Gauteng.
The average time spent on the market has reduced to 42 days, he says.
The agents marketing these distressed properties have managed to achieve, on average, 91% of the asking price, says Gilmour. “In addition, the number of offers that have been accepted by the banks have increased considerably.”
He says they attribute this to the fact that agents are selling these properties for the best possible price.
“While the number of distressed properties listed in the first two months this year is a slight decrease from the same period last year, it is by no means an indication that the numbers of distressed properties entering the market are slowing down.”
Gilmour says while distressed properties will continue to make up a reasonable portion of available market stock in the year ahead, the sales process still requires specialised knowledge in order to ensure a successful solution for both the seller and the financial institution involved.
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