Selling House

When it comes to selling your home, one of the most common questions sellers ask themselves is: What property defects do I need to disclose when selling my home?

Although it may be tempting to pretend that a defect does not exist, or that you do not know about it, this can only lead to more problems later on and it is not recommended. Depending on the severity, non disclosure of property defects can lead to fines, termination of the sale and even potential law suits.

We take a look at the serious property defects that must be disclosed, as well as some of the less serious defects that are not usually required to be disclosed.

Serious Property Defects That Must Be Disclosed

The seller is legally obligated to disclose the following property defects to a potential buyer before the sale of the property becomes final.

1. Water Damage

Water leaks can seriously affect a home’s structure, damage personal possessions, cause health hazards and other unsightly problems, such as peeling paint, mold and mildew, lifting floorboards, ceiling damage and more. Any water damage or leaks (internal or external), including the swimming pool area must be disclosed to the buyer, before they make an offer.

2. Roof Damage

Sellers must disclose any damage or leaks to the roof structure, roof tiles, the ceiling or roof fixtures, such as gutters and down-pipes before the sale is concluded.

3. Structural Damage

Structural damage refers to any major cracks or damage caused to the property foundations, property walls, boundary walls, the roof, the driveway or the swimming pool. Faulty or defective plumbing must also be disclosed because faulty plumbing can cause major structural damage to a properties foundations, walls and ceiling.

4. Pests & Termites

The seller must disclose knowledge of any active termites and wood rot damage in need of repair, or caused by previous termites. In some states or countries, the seller is required to present a fumigation certificate or pest control certificate with the sale of a house.

5. Hazards & Zoning Issues

If the property is located in an earthquake zone or has suffered damage from an earthquake, tremor or landslide in the past, this must be disclosed to the buyer. Also, if your property is located in a flood plain, wetland or agricultural zone, you may be required to disclose this information to the buyer.

Property Defects The Seller May Not Be Obligated To Disclose

In most cases, the seller may not be obligated to disclose the following less serious issues to the buyer; however some states or countries may require certain issues to be disclosed, especially when it comes to property fixtures and emotional defects, discussed below.

1. Neighbors from Hell

We don’t always get perfect neighbors and some neighbors just don’t co-operate. This includes noisy neighbors, messy neighbors that never maintain their home or garden and those neighbors who potentially create health hazards by storing or hording junk items and other trash on their property.

2. Neighborhood Nuisances

This refers to smells, odors, traffic noise, street noise or loud music that frequently occur outside the property. This could create a problem or disturbance to the new residents, especially if it occurs at night, or if the property is located in an area with a lot of nightlife activity.

3. Property Fixtures

When selling a property, the seller may intend taking certain features or fixtures with them, when they leave, however they do not make this clear to the buyer before the purchase. When the purchaser moves in, they discover that some fixtures are missing.

This can be tricky… for example, a free-standing wardrobe in your bedroom, the outdoor furniture and barbecue on your patio is considered to be personal property, but the light fixtures, ceiling fans, central heating and air conditioning units are usually considered to be part of the property and should not be removed. If it is not entirely clear, rather disclose to the purchaser what fixtures you intend taking with you, when you leave.

4. Emotional Defects

Some states and countries require the seller to disclose if any serious or emotional trauma has ever taken place in or on the property, especially a trauma such as a murder, suicide, drowning, paranormal activity or any other violent crime.

What if the Seller Fails to Disclose a Property Defect?

If a seller purposely fails to disclose a serious property defects to the buyer and it can be proved that the seller was aware of the problem, the buyer can demand compensation, recourse from the seller or even take legal action against the seller for non disclosure.

Those who install thousands of rand’s worth of security features before putting their home up for sale may be putting some buyers off.

This is because all the barbed wire, wall top spikes and burglar bars may create the impression that there is a problem in the area. Yes, we know that considering the high levels of crime in this country this sounds a little silly, but it really does happen.

South Africans are caught in a bit of a catch 22 situation when it comes to security. Too much and it may appear that the property is regularly targeted by criminals, too little may force a buyer to reconsider, given the expense of installing the security features necessary to make them feel safe.

The amount of security one has on the property depends on a number of factors. While it may be assumed that someone whose home resembles Fort Knox has been the victim of crime or lives in a high crime area, this isn’t necessarily the case. That person may feel vulnerable, or have been spooked by the high levels of crime reported across the country. We are not suggesting that these people have become paranoid about crime, but different people react differently to threats – real or perceived – and some may be far more concerned about avoiding becoming a victim of crime than others.

We are also not suggesting that sellers remove security features before putting the home on the market. There are generally some very good reasons why one home is more secure than others on the block. Older folk who live on their own for example may pay more attention to security, as might someone who has been the victim of a violent crime. Many people who have been the victims of a hijacking wouldn’t dream of living in a home without electric gates and garages, while those who have woken to find an intruder standing next to their beds may have covered the garden with security beams…even if the break-in didn’t occur at their current address.

As with all things relating to property sales, disclosure is key and buyers who are concerned should ask the agent why the seller has gone to such great lengths to secure his home before they take a decision on whether to view the home or put in an offer.

By law, sellers have to disclose any problems associated with the property and that includes telling a potential buyer about issues associated with crime. In other words, he can’t gloss over the fact that the home has been burgled or that something more serious such as a murder has taken place in the house or flat. A buyer can’t ask too many questions about a home that they would like to buy and if they are concerned about security, they should ask detailed questions.

Source: Private Property

Research reveals that it only takes a prospective buyer a few minutes to decide whether they like a home or not, which is why it is essential that the home makes an excellent first impression.

While there are certain things that sellers can do to ensure that their home is in its best possible condition before it is listed on the market, unfortunately, there are elements which are beyond the seller’s control that will have an impact on the home’s marketability before a buyer has seen it.

Here are some valuable insights…

1. Location

Without a doubt, the number one influence on how a property is valued in buyers’ eyes is its location. The mantra of ‘location, location, location’ will continue to ring true throughout the ages. The simple truth of the matter is that location and property values are intrinsically linked,.

Where a home is situated, along with the amenities that surround it will influence the demand for that property. Homes that are in high demand will sell for a higher price. Factors such as its proximity to entertainment and shopping facilities, recreation areas, and good schools will all bear weight on how the property is viewed and valued by potential buyers.

In the same way that proximity to positive aspects will have buyers viewing the property in a positive light, proximity to negative elements also plays a role in how buyers view a home. Aspects such as noisy freeways, railway lines and airports, or anything else that could be seen by a buyer as a potential annoyance or eyesore will negatively affect their opinion of the property.

2. Condition of the neighbourhood

Although the home itself could be in pristine condition, the condition of the surrounding neighbourhood will bear influence on how the property is valued by potential buyers. The neighbourhood in which the home is situated can either push up the value of the home or bring it down. This aspect is completely out of the homeowner’s control, however, the upkeep and maintenance of an area will impact on the home’s value.

The state of an area can change over time, be it positive or negative. Many run-down inner city areas have been transformed through urban renewal projects and are now trendy sought-after neighbourhoods. Likewise, there are other areas that were once thriving but have deteriorated due to poor municipal management, high crime rates or large industrial failures.

A rundown area could result in the homeowner having to drop their price in order to sell. Where possible, homeowner’s should form or join a homeowner’s association to ensure that the community they live in is properly taken care of. This might mean paying some kind of levy or fee, but the rewards will be worth it in the long run.

3. Poor or unusual renovation

Maintaining a home and keeping it current is key, however, homeowners should carefully consider certain renovation projects. In most cases, renovations will have a positive impact on the perceived value of a property, however, unusual renovations such as a home spa or gym could eliminate it as an option for certain buyers.

It is also imperative that all renovations are completed by a professional and are not poorly executed DIY projects. Renovations should be undertaken in the correct manner, through the correct channels and be completed before the home is placed on the market. Poor workmanship or unfinished projects will only devalue the property in the buyer’s eyes.

4. Lack of parking

While this is more prevalent in densely populated areas such as Cape Town’s central business district, properties with no or limited parking are viewed as less valuable than those with a secure parking space. Goslett says in some cases, a secured parking bay can add well over R100 000 to the value of a property, where parking is at a premium.

Much of the money a homeowner makes is when they purchase their home, not when they sell it. Completing the necessary research from day one will help homeowners to look out for potentially negative aspects and avoid their property becoming a financial burden in the future.

Source: https://www.property24.com/articles

As the market transitions and more inventory becomes available to buyers, sellers will find themselves in a far more competitive environment.

An experienced agent will be able to provide vital information with regard to the current market trends and the best time to list the property.

This is according to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, who says for some time, conditions have favored sellers, with high demand and a low supply of inventory, however, the market is slowly shifting as buyers are adopting a wait-and-see approach to the market. As a result, he says sellers now have to be aware of the competition they face in their own neighborhood, before they decide to list their property.

Goslett shares a few aspects that sellers should consider about their neighbors before listing their homes…

1. Who is renovating?

If possible, it would be advantageous to tap into the neighborhood grapevine and see who is renovating their kitchen and upgrading their bathroom fixtures. These upgrades generally add value to a property and attract buyers’ attention.

Goslett says a real estate professional who specializes in the neighborhood will be able to look up the listing and sale prices of those homes to find out if the updates made a difference to the bottom line.

2. How long are homes sitting on the market?

Before listing, sellers should keep an eye on how long it takes for a home to be sold in the neighborhood. This will give them important insight about how long they can expect their home to be sitting on the market and plan accordingly.

The FNB Price Index indicates that on average, a home is on the market for around 12 weeks before it is sold. “Depending on the neighborhood, properties available and buyer demand in the area, it could take less time or in some cases a bit longer to sell. It all depends on the specific circumstances that surround that particular trading environment. Other factors can also come into play such as pricing the home correctly at what is perceived to be fair market value for the area.”

3. Take stock on the available inventory

Goslett says it can be difficult to obtain a competitive price when inventory is high and buyers are few. He says all the sellers in a particular neighborhood will be competing against one another for the same pool of buyers. If there are several homes for sale within a relatively small radius, it might be worthwhile to wait for a while before listing the property, he says.

An experienced agent will be able to provide vital information with regard to the current market trends and the best time to list the property.

4. Stay up-to-date on any area planning and zoning news

While buyers want to buy a property that is within proximity to amenities, they won’t want to stay there while major construction is underway. Sellers should keep au fait with any upcoming public projects that could impact the timing of their property listing.

If there are any potential projects, the seller can discuss a selling strategy with their agent to work around possible issues.

Goslett says a real estate agent with extensive working knowledge of the local market will be able to put all aspects into perspective when considering selling. Sellers will benefit from using an agent that has an understanding of the unique dynamics surrounding their specific neighborhood, he says.

While the importance of pricing a property correctly in order to sell it within a reasonable amount of time has been stressed countless of times, the current buyer’s market coupled with a sluggish economy has made correctly pricing a property paramount to the sale happening at all, never mind within a reasonable amount of time.

On average, properties under the R2.5 million mark that are priced right are taking between eight and 12 weeks to sell. Properties priced higher than this are sitting on the market for longer.

This is according to Debbie Justus-Ferns, divisional manager ofRenprop Residential Sales, who says overpriced properties do not sell in this market and therefore serious sellers cannot afford to overprice their home in the current conditions.

She says testing the market in order to ascertain what buyers would potentially be prepared to pay is not advisable for any seller right now. She says this strategy will often put any prospective buyers off as they have other properties to choose from.  As a result, an overpriced property will just end up promoting the purchase of a comparative or similar property that is priced correctly, she says.

While the market is suburb and even property-driven at the moment, Justus-Ferns says on average, properties under the R2.5 million mark that are priced right are taking  between eight and 12 weeks to sell. Properties priced higher than this are sitting on the market for longer.

Justus-Ferns says there are a range of influencing factors when pricing a home correctly to sell. One of the main factors that sellers need to bear in mind is that the market is price sensitive at the moment in certain parts of the country.

She says that there are five top considerations to take into account when setting the selling price of a property.

1. The location and type of property

While everyone knows location is important, in this kind of a market it becomes even more so, and properties close to amenities, schools and business hubs will more than likely experience a higher level of demand.

According to Justus-Ferns, the kind of property also makes a difference to the selling price. She says whereas freehold properties have more flexibility when it comes to pricing as the style and condition of the properties vary, sectional title units are usually but not always  ‘capped’ at a certain price.

2. The market related price

The market related price refers to what an active agent in the area believes is a market-related valuationcompared to the average price of recent sales concluded. This is often presented to the seller with DeedsOffice statistics showing what other similar properties in the same area have sold for.

3. What the seller thinks the property is worth

This is always an emotionally-driven number as sellers often attach sentimental value to their property. Added to this, sellers also compare their property price to other properties they see advertised on the internet and in newspapers.

They do not realise that those figures are what the property is advertised at, not what it will actually sell for. Therefore, a seller’s figure is almost always more than the price that an estate agent will recommend the property is marketed for.

4. The actual value

The actual value of any property is the price which a willing and able buyer is prepared to pay. Justus-Ferns says buyers determine the price in this current market, and they are also shopping around as there is more stock available from which they can choose.

Therefore, she says the actual value of a property for sale is influenced by other properties currently on the market in the area.

5. What a financial institution is willing to lend to a qualified buyer

Should the sale not be a cash offer, this is perhaps one of the most important considerations when setting a selling price. Aside from taking into account the risk of the loan, Justus-Ferns says the bank will also determine the value of the loan based on the property for which they are providing finance in addition to the buyer’s affordability requirements.

If a home is overpriced, buyers will often not be able to get a home loan close enough to the price of the property.

Justus-Ferns says in this kind of market, serious sellers need to be careful of their pricing strategy if they want to sell their homes within a reasonable time frame. She also points out that the value of a professional real estate agent in the current property climate cannot be highlighted enough. “Real estate brands do not sell houses, professional agents do. This is because they know the area that they operate in and they are able to give sellers sound information to help them make the best decision.”

Sellers would do well to thoroughly check out the credentials and track record of the agent with whom they want to work, no matter which brand they represent, she says.

Source: http://www.property24.com

Time and time again, show days have proven to be an exceptional marketing tool.

Show days create a sense of urgency and fear of loss among interested buyers, who don’t want to be outbid or lose the home because they didn’t get their offer in fast enough.

They provide a tactile experience for potential buyers, who are able to physically walk through the property and see its features in person, rather than just looking at a marketing brochure or images of the home online.

A personal visit to a property strongly influences the buyer’s decision as to whether or not they would like to purchase the home.

Added to this show days also indicate to the buying public that the seller is serious and not just testing the market.

Show days create a sense of urgency and fear of loss among interested buyers, who don’t want to be outbid or lose the home because they didn’t get their offer in fast enough.

This is particularly relevant in today’s market where many areas are experiencing limited stock availability, and are unable to keep up with demand from the buyer pool.

Key to having a successful show day also points to a good pricing strategy. Only well-priced homes will be able to achieve excellent show day attendance.

Many property buyers know that show days are generally held on a Sunday afternoon, and so often drive around areas they are interested in looking for homes on show which they can view.

Homes for sale that are not on show may miss out on opportunities to attract the right buyer.

But despite the undoubted marketing success that show days offer to the property sales process, many sellers are still wary of opening up their homes to complete strangers.

Added to this, there have been incidents where homeowner’s personal items have disappeared from show days.

Unfortunately some people have sticky fingers, and if there is a good attendance at a show day, it can be difficult for an agent to personally escort each potential buyer through the property.

But there are ways in which homeowners can protect themselves from theft when they have an open house.

The most obvious thing would be to pack away all valuables and easily lifted personal items.

While it may seem apparent, many homeowners leave valuable items lying around when their house is on show, which just acts as a temptation for some unscrupulous show day visitors.

Homeowners should lock jewellery and other loose items away in a safe if possible. Cupboards should also be kept locked where possible, and if they are not lockable, all valuables should be hidden from sight if the doors are opened by curious buyers.

Homeowners shouldn’t leave any keys lying around or hanging on key racks, and should rather pack away anything that isn’t vital to showing off the main features of the home, such as knick-knacks and ornaments.

Another important consideration for homeowners who are opening up their homes for a show day is to ensure that their household contents insurance is in place and up to date.

This way, should anything go missing the homeowner will at least be covered and can replace the item.

For safety it would also be good for the agent on duty at the show day to be given all the emergency contact details of the armed response company or estate security, as well as a panic button if the homeowner has an alarm system set up with one.

While all this safety and security talk around show days may make some sellers think again before deciding to hold one, it cannot be emphasised enough that they really are worth the effort of cleaning up and leaving the premises for the day.

In this day and age, preparation around the safety and security aspects when opening up a home to the general public is par for the course.

Source: www.property24.com

George Bernard Shaw* said it right when he said that “If all the economists were laid end to end, they’d never reach a conclusion.”

But it doesn’t take an economist to conclude that if you’re sitting with a house that won’t sell, you’re probably also sitting with a financial nightmare.

A house that won’t sell is a problem – but we believe we might have an answer.

Owners and agents will often cite three or four different reasons that appear to explain their lack of success – but that these are “almost certainly a rationalisation, a ducking out of reality, and a refusal to face the true facts.”

In our experience, these excuses include the arguments that house is incorrectly positioned on the stand; that the neighbourhood is wrong; that the property doesn’t look good; that it has security issues – “and 101 others.

But the one basic point – the wrong price – will usually be overlooked.

There’s A Buyer for Every House

The simple truth is that virtually any home will sell if it’s correctly priced.

If the price makes allowance for the negative factors which the estate agent has identified, and if the price falls in line with sale prices achieved by other homes in the area, there’s no reason why any house should stick on the market.

One challenge, is that the agent is often at least partly responsible for the problem: he or she might have suggested an unrealistic price (often in order to secure a mandate), and, once the house has been advertised, may be reluctant to admit the error.

The problem is certainly not driven by demand: the housing market in South Africa is currently strong and even improving.

Commenting on the release of the FNB Property Barometer – October 2014 – House Price Index, FNB’s Property Economist, Johan Loos, said that valuers “continue to perceive a rise in demand along with deteriorating supply,” and that this is “the perfect recipe for an improving balance between demand and supply.”

Solutions

But you can do something about a house that won’t sell – as comedian, actor, author, and artist, Jonathan Winters*, said: “If your ship doesn’t come in, swim out to meet it!”

Tony warned that some reputational damage will have occurred: “At this stage the home is almost certain to have acquired an unfortunate reputation with buyers – many of whom will have rejected it due to its unrealistic price.”

Once you’ve accepted price as a reason for your property’s failure to sell, you’ll have to start finding new buyers – which could involve lowering the price (perhaps even to below the home’s true market value), changing agents, or possibly even removing the property from the market, and then re-introducing it when a new group of buyers has emerged.

“If you withdraw the home from the market for, say, four- to six months, you can use the time to carry out a thorough cleanup so that the estate agent can sell the property in its best condition.

You might have to lay out for repainting, re-carpeting, re-plumbing or re-wiring the buildings and on cleaning up or replanting the garden. “But it’s been proved that this is usually worthwhile, and that it’ll result in better offers when you try to sell again.”

Tony recommended that the house should be re-photographed after the cleanup so that your agent can advertise it anew – and that the new ads should possibly stress the improvements you’ve made.

“It’s quite likely that the home will then achieve its quoted price – or at least come close to it – provided (once again) that the price is realistic,” he said.

*Some of the quotations in this article were found on Forbes: “Top 100 Money Quotes of All Time.” It’s a wealth of fun and insight. And, as the longest month of the year draws to a close (its length being a function of all that Christmastime shopping), you might identify with another comedian – Steve Martin* – who said, “I love money. I love everything about it. I bought some pretty good stuff. Got me a $300 pair of socks. Got a fur sink. An electric dog polisher. A gasoline powered turtleneck sweater. And, of course, I bought some dumb stuff, too.”

SOURCE: www.privateproperty.co.za

Everyone, it seems, is an expert when it comes to pricing property. This includes those mavericks among us who insist that it’s their right to market their home at whatever price they choose. They are absolutely right, no one can force a seller to part with their home for a figure that’s lower than the asking price. However, sellers who ignore the advice of a number of different estate agents who are able to back up their valuations with strong evidence may end up sitting with a property that no one is interested in buying.

Hearing that a beloved asset isn’t worth half as much as the seller thought isn’t an easy pill to swallow, but sadly, it is something that has to be faced and dealt with rationally. It’s of no consequence to a buyer what you paid for it or how much has been spent in the way of improvements – they will overlook the home if it is more expensive than other similar homes offering the same sort of features in the area.

Buyers also aren’t interested in the fact that the seller is intent on climbing the property ladder. We often hear, ‘I’m upgrading to a larger home and I need my house to sell for ‘Rx million’ otherwise I won’t be able to acquire the property I want.’

Every seller is going to want to get the best possible price for his home. However, inflating a price hoping to ‘catch’ a buyer is unrealistic given that the buyer of today is very aware of not only what is on the market, but also what  homes are selling at what price. Property portals list properties according to the suburbs in which they are situated and an overpriced home tends to stick out like a sore thumb.

Sellers also need to be very wary of over-capitalising. Putting solid gold taps, a gourmet kitchen, a sauna and a spa bath into an average middle class home could backfire if the seller tries to recoup these costs when selling – at least in the short term. Most suburbs have a ceiling price which obviously fluctuates with market conditions. If the costs of building and renovating exceed (the selling price) which can realistically be obtained in the market place, then this is over-capitalisation. However, over-capitalisation can be reduced by capital growth achieved over the time that the property is held.

Buyers aren’t guinea pigs and should not be used to ‘test’ the market. Selling a home is a serious business and should be approached as such. Sellers who try their luck by putting their homes on the market at a higher price with the intention of lowering the amount if no one takes the bait often end up selling for a price that is lower than the amount originally recommended. We all make assumptions and unfortunately in these instances buyers tend to believe that there must be something wrong and therefore shy away from making an offer.

Remember that serious sellers price their homes to sell and as such are able to move on to bigger or better things far more quickly than those who hold out for a higher, unrealistic price.

SOURCE: www.privateproperty.co.za