“How can a property investor be sure he is not over-paying?”
A question which he is regularly asked, says Bill Rawson, Chairman of the Rawson Property Group, is, “How can a property investor be sure he is not over-paying?” “In the Western Cape,” said Rawson, “it is quite easy to check whether a price is market-related because the local Institute of Estate Agents’ property data service, Propstats, publishes figures of all sales in all areas and these can be related to the size of the home and of the plot.
However, only estate agents registered with the institute have access to this information online.” The person to be contacted in this regard, said Rawson, is Annette Evans on 021 531 3180 or on 082 254 7229. It is also acceptable, and indeed a wise move, said Rawson, for potential buyers to phone other agents in the area in which they are interested in and ask them to provide a list of their latest sales in certain price categories. “Admittedly in these cases, one is never quite comparing apples with apples, nor can any two homes, except possibly those in gated estates or sectional title schemes, ever be completely the same.”
The potential buyer who continues to have doubts about price, said Rawson, can pay a professional valuer, or ask his bank’s valuer to inspect the property prior to him making an offer. Without falling into the trap that led to so many American speculators being caught short, i.e. believing that almost any price is all right because values are set to increase, the plain fact in South Africa, says Rawson, is that the trend is once again moving slowly and cautiously upwards. “As a result of this trend, what may appear to be a high price now, in three or four years’ time will probably seem a very reasonable one.”
It is, he said, always advisable to be prepared to accept a high price if you are buying for yourself and if the home really appeals to you more than any other you have seen. “I have seen many cases,” said Rawson, “where another R250,000 or R300,000 would have secured the home but made the buyer walk away – only to spend the next few months regretting his decision and end up buying a home which did not suit him and his family nearly so well.
Potential buyers who fall in love with a home – or simply find it highly convenient because of its position in relation to schools and their work place – should be prepared to pay an extra premium, knowing that in a few years’ time they will be grateful they did let their emotions, for once, override their business instincts.” This advice, said Rawson, of course, does not apply to potential buyers with a buy to let plan, where the decision should be made purely rationally on the figures available.
Issued by Rawson