|A slowdown in house price growth, coupled with an increase in stock availability in most areas, has increased the likelihood of buyers submitting lower-than-asking-price offers, says Mike Bester, CEO of Realty 1 International Property Group. |
Commenting on the current state of the market, which is characterised by a high level of frequent extreme pricing, Bester says buyers are no longer rushing into purchasing as has been the case in recent years. Rather, they are spending more time researching the market and viewing as many properties as possible before committing themselves in writing.
Aware of the fact that stock levels are more abundant than in previous years, and constrained by reduced levels of affordability, buyers are increasingly chancing their luck by submitting offers below asking price. In turn, those who are not desperate to sell, are often countersigning their offers in an effort to narrow the gap between their asking prices and what buyers have offered.
A common practice throughout the world, countersigning provides a point at which to begin negotiations between buyer and seller, says Bester. But, he warns, both parties need to be aware that an offer that has been countersigned by a seller will be rendered invalid, only becoming valid again when the buyer has signed the amendments.
"An offer to purchase is an obvious sign that a buyer wants the property, which can encourage a seller to countersign in the hope of upping his price," says Bester. He adds that if the seller's price is in line with local market values, the buyer needs to be wary of submitting an offer so low that it could cause offence. "Base your offer on your analysis of the property and how it compares with others similar to it in terms of accommodation and condition, location, price and the period of time that it has been on the market."
Advising both buyers and sellers to try and keep their emotions on hold during negotiations, Bester says the process of dealing with a counteroffer should be treated as a business transaction. In order to find common ground, he suggests that both parties familiarise themselves with the local market in order to ascertain a fair price for the property.
To reduce the chances of a seller countersigning an offer that offers less than asking price, Bester advises buyers to make the rest of the offer as favourable as possible. "This could mean making the date of occupation appealing to the seller, or offering cash and bond terms rather than linking the purchase to the sale of an existing property."
Finally, before submitting an offer likely to result in a counteroffer, he suggests that the buyer take a few minutes to consider how badly he wants the property. "Ask yourself whether you're prepared to risk losing it for the sake of R10 000 or R20 000, which in monthly bond repayments, would translate to a hundred or two hundred rand."