Timing a property sale

Anyone who’s ever bought or sold a property knows it takes time – at the moment correctly priced properties in South Africa spend an average of 3 to 5 months on the market (according to a recent Lightstone Property Residential Mortgage Market Overview), and once sold it takes about another three months for the transfer to go through.

So, should a seller sell their property before buying another, or buy the next one first, before selling the current one? “It’s the eternal question”, says Bruce Swain, MD of Leapfrog Property Group, “both options have their own advantages and risks, but all things considered I’d generally advise selling before purchasing another home”.

The risks of selling before you buy

Swain believes that the risks of selling before buying another property are more manageable while the advantages are more beneficial; “Essentially there are two risks when selling your property first: you might find that you’re not able to find and buy the right property as quickly as you’d hoped and while you wait you may need to rent (which is an added cost). Secondly you might find that prices have gone up in the interim and that you’re now not able to buy into a higher or even similar price bracket as before”. 

These risks can be avoided by carefully managing the sale of a current property – it’s possible to extend the settlement date of a property in order to have enough of a time buffer to select and purchase a new property. 

The advantages of selling first

Swain lists a number of reasons why it’s in a seller’s best interest to sell, and then to buy which include:

·         Putting the seller in a stronger position when buying as he or she will have the funds available to purchase a new home – something that’s increasingly attractive to both buyers and mortgage lenders (as the uncertainty around the local economy increases more and more banks are asking for larger deposits).

·         Because the seller doesn’t need to make a quick sale (in order not to pay two mortgages for example) they won’t be pressurised into selling cheaply. 

·         Having time also puts the seller into the stronger negotiation position.

·         Sellers will know exactly how much they can spend on a new property and won’t be dependent on getting the right sales price (to fund the property they’re already in the process of buying).

·         If prices are falling, then houses get more affordable as you wait

While no strategy is fool proof there are a number of things sellers can do to ensure that they don’t end up having to rent while the transfer of the new property goes through, or lose out as the property prices start going up and they can’t afford a similar property anymore. Swain believes that the most important moves are to:

·         Do proper research – it’s imperative to know what the current property is worth and, based on where the seller wants to move to, what’s available in the chosen area within that price bracket.

·         Get pre-approval for a new home loan – this can save valuable time

·         Slow down the selling process by agreeing to a longer period between agreeing to an offer and completing the transfer process as this allows valuable time to find a property and for that transfer to be completed.

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 18 May 2018
      Home improvements are a great way to add value to your property, but not all of us have bottomless pockets for a full-on renovation. Lucky for us, there are plenty of affordable DIYs that can spruce things up over a free weekend.
    • 18 May 2018
      The need for large office spaces is slowly eroding as more and more employers choose to allow their staff to work remotely. As a result, the home business model has grown in popularity, with many new entrepreneurs choosing to start their business from home rather than in a business district. But, what are the legal implications of operating a business in a residential area?
    • 18 May 2018
      Proxi Smart Services Pty Ltd, a company that deals with the day to day administration of property transfers while the conveyancer attorneys perform the legal side of transfers, lost its bid for the court to allow them to do business in this regard.
    • 17 May 2018
      If you’re a first time buyer, then you are probably only just beginning to realize how expensive furniture can be. That three-piece lounge suite you’ve had on your “Dream Home” inspiration board probably seems like nothing but an unrealistic fantasy to you now. But, a little bit of financial discipline mixed with a dash of smart shopping can go a long way towards helping you furnish your fantasy.
    • 17 May 2018
      In recent years the demand for sectional title apartments – both for rent and to purchase - in Rivonia, which is considered to be one of the most affluent residential and suburbs in Johannesburg, has been incredibly strong.
    • 16 May 2018
      Nestled in the Cape winelands, Franschhoek boasts sumptuous offerings from local food artisans and manufacturers, with a recent addition – craft beer! Visitors to this famed gourmet region can now enjoy Franschhoek Beer Co’s premium craft beer in the middle of wine country, thanks to the brewery’s new restaurant, Tap | Eat.
    • 16 May 2018
      You have found your dream home, your offer was accepted and your bond approved, but now what?
    • 16 May 2018
      Solar energy has exploded over the last decade with the cost of solar panels decreasing, making solar more affordable than ever. Many homeowners have already invested in this to make their homes more environmentally friendly and sustainable, but if you are still investigating the options available to you, this article could assist you in taking that final step towards sustainable living.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us