Distressed properties still a market reality
While there have been many positive indicators that trading conditions within the South African property market are continuing to improve, distressed properties are still a market reality.
This is according to Peter Gilmour, Chairman of RE/MAX of Southern Africa, who also heads up the group’s specialised distressed property department.
Gilmour notes that in January and February this year, RE/MAX of Southern Africa received over 300 new sole mandate distressed property leads from the various financial institutions for which the group is one of the preferred partners for handling distressed property sales. To date over 100 of these properties have already been successfully sold by RE/MAX agents.
Last year RE/MAX of Southern Africa reported that distressed properties spent an average of 48 days on the market and fell predominantly into the R250 000 to R2 million price range. Majority of the distressed properties listed last year by RE/MAX of Southern Africa were situated in Gauteng, which accounted for 70% of the total number of distressed properties compared to the Western Cape’s 10% and KwaZulu-Natal’s 20%.
Gilmour reports that to date in 2012 distressed properties that have come onto the market have an average selling price of R900 000. He also reports that close on 80% of these properties have been situated in Gauteng. Added to this, the average time they have spent on the market has reduced to 42 days.
“The RE/MAX of Southern Africa agents who have been marketing these distressed properties have managed to achieve, on average, 91% of the asking price. In addition, the number of offers that have been accepted by the banks have increased considerably. We attribute this to the fact that our agents are selling these properties for the best possible price,” says Gilmour.
“While the number of distressed properties listed in the first two months this year is a slight decrease from the same period last year, it is by no means an indication that the numbers of distressed properties entering the market are slowing down,” he says.
Gilmour concludes by saying that while distressed properties will continue to make up a reasonable portion of available market stock in the year ahead, the sales process still requires specialised knowledge in order to ensure a successful solution for both the seller and the financial institution involved. “In light of this, RE/MAX of Southern Africa will continue delivering dedicated distressed property training to its agents nationwide through its internationally acclaimed Certified Distressed Property Expert Professional Designation (CDPE) course, which was launched exclusively to its agents in January last year. To date more than 500 RE/MAX agents have completed this course and are Certified Distressed Property Experts, equipped with the specific knowledge required to effectively handle the intricacies of distressed property sales.”