Fatal 5 sins, when selling your property.
- SIN 1: Not being a serious seller.
- SIN 2: Instruct unqualified people to value your property
- SIN 3: APPROVED BUILDING PLANS AND APPROVED SECTIONAL TITLE PLANS.
- SIN 4: Allow unqualified entities or acquaintances assist in selling your property.
- SIN 5: Choice of transfer attorney.
Luckily, within the selling process, there are always more than one option. First, let us look at the two groups of sellers. Successful sellers belong to group B.
Not a serious seller. (I do not have to sell. I am just testing the market).
Although some of the information may seem a bit harsh, it is important to be direct and understand the facts to these scenarios, that contributes to a toxic industry. In such an industry, the seller has an unrealistic expectation in terms of the value of the property. It should be emphasized that no individual determines the market value, but the current market itself. To be more specific, it can be defined as the probable price that a well-informed purchaser will pay a willing and informed seller in a normal market transaction at the date of valuation, when neither party is under any anxiety or compulsion to sell or purchase, other than the normal desire to transact.
It should be emphasized that there will always be transactions outside the parameters of above, but this is not the main stream and it is not realistic to take one such a transaction and the expectation that yours should be the same.
Example: There were 6 sales in the direct vicinity of your full title dwelling. One of the houses sold for two million rand, and you just happen to know the lay out, type of fittings and quality of workmanship. You compare this property to yours and you know your house compares direct, but in fact has a slightly better or more practical lay-out. You ignore all the other sales in the area and only zoom in on this sale to determine a value on your property. The conclusion is your house is worth R2 200 000. You are not open for negotiations, or open to valuation report of other direct comparable sales in the area. The estate agent is uncomfortable to share another opinion, if you as the seller may decide to get another estate agent who agrees with your opinion.
To be realistic, no valuation can be based on one single sale. The latest sales that directly compare to the subject property and to make adjustments if there are not direct comparable sales, for inferior or superior finishes, workmanship, layout and many other facts that should be part of the research done by a professional valuer. Note that I said, “should be”, as not all valuers do the required proper research within the valuation report. This was already covered within a previous article specifically desktop or computer assistant valuation that are not accurate.
One of the characteristics of a good valuer is to do the required research, to determine the reasons why a specific sale is either too high or too low in comparison with other sales. One of the many reasons, may be that a premium was paid by the purchaser, as the grandparents may stay in the next-door house or close proximity and the purchasers paid a premium for a support system from parents or grand parents in terms of the school children.
Result: An unrealistic view of the owner in terms of the value, or a poor research done to determine the market value, will only lead to frustrations for you as the seller, wasted time and a sale that will either not take place, or a delay to a successful registration, until such time the asking price is adjusted to the market value, or even slightly below the market value if the property was in the open market for an unrealistic period of time.
Although above is crucial to know, this article will focus on the serious seller and how to prevent financial losses and a “sold sign” in front of your house, to the end result that is a successful registration.
The serious and informed seller.
You will only be well informed if a motivated valuation report is available to you by a professional valuer, and the content is discussed in detail to satisfy all your questions and concerns. An estate agent may assist in price counselling, but can not claim a valuation, unless the estate agent is a qualified valuer with a 3-year diploma of a degree in property valuations, experience and a member of the South African Council for Valuers and registered in terms of section 20(2)(a) under the Property Valuers Profession Act 47 of 2000. This is crucial information, although not mainstream knowledge.
The sin for not being 100% sure of the market value, may have the result that your property is in the market, at either an unrealistic price (and will not sell), or worst even, advertised below the market trend. The latter will have the result that you will suffer financial losses. Totally unacceptable. Once the property is sold, signed and within the process to be registered, when guarantees are delivered by the purchaser, you are tied up in the process, and cannot reverse the process or cancel the deal when you realised at this stage, your property sold below market value, without financial penalties.
It just makes sense to proceed with step 1, from a heathy foundation, which is a motivated valuation report by a professional valuer with experience.
Do not be tempted to fall in the trap to advertise your property and know your building plans, or sectional title plans are not approved, in terms of all structures on site. This is a long process, especially with certain municipalities. At Tshwane or Pretoria municipality, it may take up to 12 months and even longer to be approved.
You will most probably lose the potential purchaser, especially where larger and more valuable structures are not approved. A potential purchaser will most likely not agree to take the risk and let the registration go through, even if the condition indicates that you as the seller must obtain the approved the building plans, even if you as the seller cover the costs involved. The simple reason is that it is not a guarantee that all the illegal structures will be approved. One example is when a structure is built over a servitude, the local municipality may force the owner to demolish the structure or the part encroaching the servitude. It is a massive risk and if the potential purchaser would be my client, I will advice not to let registration take place, prior all structures on site being approved. If a minor structure such as a carport is not on approved building plans for a property with a value of R2 000 000, obviously this is still your call to take the chance, but it is not recommended for any structure with a foundation. Most probably the purchaser will walk away from this transaction at this stage and you will have to go through the process to approve your building plans.
Rather tackle the process correctly, to avoid any future suffering. There are examples where estate agents deliberately refrain from informing about the unapproved building plans. A seller and an estate agent may even work together to not share that information and are then both guilty. This is unethical and future claims and uncomfortable court cases may follow. Be aware of this. The difference between a good name and a bad name is definitely worth more than considering such behaviour.
Who is marketing your property:
Always good to be loyal with friends, but to sell your property should be a business deal. Get a professional with proven credentials and a track record, to assist, especially in the higher end price category or when selling a specialised property such as guest house, or even student accommodation with consent use. The goal is to sell your property at the best possible price, in the shortest possible time frame with continuous professional assistance and knowledge to protect your interest at all time. There will most probably be challenges and a hick-up or two, and during these stages, you will be thankful for experience and knowledge within the property industry to prevent the transaction to de derailed. There are many areas where the transaction may become void, due to ignorance or a lack of concertation and negligence from various role-players during the process towards registration. Important to be aware of above as there are terrible cases, with data available to proof this. The last thing you need is a marketer, that is only focussed on the end result of registration to receive commission, and then during the process, short cuts are taken that will bite you, prior registration. The golden rule is, good communication throughout the process.
Transfer attorney:
You as the seller choose the transfer attorney. Do the required research to determine how communication will be established once the Offer to Purchase is with the transfer attorneys. Make sure you will have a weekly e-mail communication from the attorneys, to be updated each week, where the transaction is at present within the process and what is outstanding for example electrical compliance certificate, and the action taken to ensure the process is flowing. This will give you the peace of mind that your interests are taken care of and what exactly is done to push the transaction towards registration. Few things provoke emotions when the communication system is below par or even unacceptable throughout the process. We are all human and a small miss communication or human error, may occur but if all parties involved in the process have direct communication, it should be picked up within a short period of time and can be resolved. Whoever is assisting you with the selling process, and above expertise is part of who this person is, is worth much more than most people will ever realize as the foundation of the entire process is timing and good communication, once the Offer to Purchase is with the transfer attorneys. At this stage, if building plans still have to be approved, I can ensure you, this will be a nightmare experience. The financial institution may also flag this transaction with conditions to be approved prior registration. Many sellers at this point, blame other parties when the transaction derail at this point, but in fact the seller should take responsibility here for the mess. It is not a transfer attorney’s responsibility to assist with building plans.
A final note make sure the transfer is done by a transfer attorney. Some attorneys may even tell you they will assist, but contract the work out. Recipe for a mess. One example is again: communication. Most people prefer direct communication and not through one person or group, to another. This open gaps for not taking responsibility, when a challenge appears to be resolved.
Reference also to the video under “sellers” for added information as well as options on the marketing process. There is also free zoom session to consider where questions will be answered. Remember to register and sign up for the event, if you wish to be informed and prevent possible financial losses and frustrations.