Expect to sell quickly, stay put longer
Home sellers in the luxury sector of the market should now make sure their sale agreements allow at least six months for them to find and buy their next home.
That’s the advice of Lew Geffen, chairman of Sotheby’s International Realty in SA, who says they may find it difficult to do so because there is now a distinct shortage of stock in many upmarket areas. “The average sale price in our group has jumped 30% in the past five months – not because home prices have risen but because so many buyers in this period shifted their sights upward to the R3m to R8m bracket, where sales were few and far between during the recession.
“These purchases have mostly been driven by ‘upgrade’ buyers seeking to take advantage of low interest rates and discounted prices ahead of the market upturn, and they have rapidly absorbed most of the stock that was available in this price range.
“Meanwhile, many would-be sellers are now hanging back, no doubt in the hope that prices will rise before they put their homes on the market, and this is exacerbating the current shortage of homes for sale in the high-end areas along the Atlantic Seaboard, in the southern suburbs of Cape Town and in the northern suburbs of Johannesburg .”
The result, he says, is that it can now take much longer for those who do sell to find suitable replacement or upgrade properties, and they need to make sure that this is provided for in any offer to purchase that they accept.“Our suggestion is that they build in an occupational rental period of at least six months from the date of sale now, instead of the more customary three to four months.
“In addition, they should be prepared for their properties to sell much more quickly than has generally been the case since the 2009 recession. Certainly in our group, the average listing time for luxury properties has now dropped from six months a year ago to as little as 40 days, with anxious buyers pouncing on any new stock coming on to the market.”
For this reason, says Geffen, high-end home sellers who do find a replacement home that they like should not hesitate to make an offer, and should also be prepared to be involved in a multiple offer scenario, where they may have to better their original offer in order to secure the property.
“This is happening with increasing frequency in this sector of the market, and buyers should note that having cash readily available to conclude the deal, or genuine pre-approval for a home loan, can often turn the tide in their favour.”
Issued by Sotheby’s International Realty