There are many factors to consider when it comes to deciding whether to sell your house or hold onto it.
These include current real estate market conditions, the costs associated with selling a property, personal financial circumstances, and the physical appeal of the property to prospective buyers, says Paul Stevens, CEO of Just Property.
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Unpacking Market Trends
According to the FNB House Price Index, elevated living costs and higher borrowing and debt-servicing costs continue to decrease affordability, particularly among the lower-income groups. The annual growth of the Index fell in May, averaging 1.9% year-on-year, down from 2.1% in April. This stagnation suggests a gradual decrease in the market's buoyancy, with property valuers also noting an increased supply of properties for sale.
This trend arises from homeowners seeking less expensive alternatives due to the rising strain on affordability. This is shown in FNB’s Reasons for Selling, where 24.1% of sellers are downscaling due to financial pressure, down from 17% of sales volumes in 1Q23, higher than the historical average of 18% since 4Q07. Lower-income groups are feeling the strain even further, with 32% of sales being due to financial pressure. Other reasons include downscaling with lifestage (21.1%) and relocating ( 11.6%).
Additional to the increased supply of properties for sale, their time-on-market has extended to 12 weeks and one day (85 days), compared to 75 days in 1Q23.
According to FNB, the rate of mortgage extensions is “moderating steadily”, showing growth of 6.6% year-on-year in March, down from 6.9% in February. This rate still outpaces the post-Global Financial Crisis (GFC) average growth of 3.9%.
Considering Personal Factors
While understanding the market's temperature is crucial, personal circumstances are an equally significant consideration. Stevens recommends asking some key questions: Do you need a larger house? Will holding onto the property cause financial strain? Have you received an offer above the market value of your house? Or, have you found a “bargain” property that necessitates selling your current home to seize the opportunity?
Stevens further suggests assessing the financial implications of selling, such as agent commissions and costs associated with securing finance for any subsequent property purchase. It's important to realise that changes in income or financial standing may influence whether you qualify for the same bond amount as when you purchased the property.
Preparing the Property for Sale
If your decision sways towards selling, certain steps can be taken to maximise the appeal of your property without significantly inflating your asking price. A seemingly minor aesthetic update, like a fresh coat of paint or a well-maintained garden, can dramatically enhance a property’s appeal.
Fixing minor issues such as broken door handles and dripping taps or replacing worn and dated fittings can also go a long way in increasing the property's desirability. Even seemingly minor aspects, such as sparkling kitchens and bathrooms and a lack of clutter in living rooms and bedrooms, can significantly shape a potential buyer's perception.
One way to amplify these aspects is by investing in professional property photography. High-quality, attractive photos can significantly enhance a property's online presence, casting it in the best possible light to potential buyers. Home staging, the art of making a house look as appealing as possible without undergoing significant renovations, is another option to consider.
Balancing Upgrades and Cost
While making upgrades can increase a property's value, it's important to strike a balance. Additions like built-in cupboards, solar panels or enhanced security measures can substantially add to the value of a property, but they should be aligned with the ceiling value of the property and the character of the neighbourhood. For example, installing expensive countertops and appliances may add little value to a studio apartment in a student-oriented building.
The decision to sell your house or hold onto it in anticipation of a better price should be based on a thorough understanding of market trends, personal circumstances, and the potential value that can be derived from the property, says Stevens.
“It's highly advisable to consult an area expert in order to fully understand your property's current value, and to prepare for the possibility that your property might not sell as quickly as you hope. Remember, today's buyers are well-informed, and overpricing is usually the prime reason a property doesn't sell,” says Stevens.
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Additional Information: There are up to 5 compliance certificates to be obtained when selling a home:
Agreements of sale may provide for up to five different types of compliance certificates to be obtained by the seller (unless otherwise agreed upon). These certificates must be provided to the conveyancer before the property transfer is registered.
Conveyancing and Property Law attorneys at Abrahams & Gross has put together a list of some important aspects in respect of each compliance certificate.
Electrical compliance certifies that the electrical installation on the property complies with the required safety standards (governed by the occupational health and safety Act)
Often remedial work is required which may take some time (best to attend as soon as possible)
The certificate is valid for two years unless alterations are made prior to the expiration date
Parties cannot contract out of/agree to waive
Beetle certificates certifies that the accessible wood of permanent structures, on the property, does not contain any wood destroying beetles
Usually valid for 3 to 6 months
Not governed by any specific law, but has become practise upon change of ownership of property
If parties agree that no certificate is necessary and the bank requires it for the purchaser’s bond, then this is for the purchaser’s expenses
Gas certificates certifies that the gas installation on the property complies with the Occupational Health and Safety Act and requires safety standards
A certificate must be obtained on installation
If any change or amendment is made, a new certificate must be obtained
Cannot contract out of or agree to waive
Plumbing certificates certifies that the water installation at the property is in line with the City of Cape Town Water By-laws
*Only applicable to transfers within the municipal jurisdiction of the City of Cape Town
A new certificate must be obtained upon every change of ownership
Parties cannot contract out of this or agree to waive
NB! Does not confirm all plumbing works in perfect condition!
What does the plumbing certificate confirm?
The water installation conforms to the national building regulations; the property’s water meter is in working order; there are no defects that can cause water to run to waste; and no rainwater leaks into the sewerage system
Electric fence certifies that the electric fence installation complies with the required safety standards in terms of the Occupational Health and Safety Act
An existing certificate may be transferred by the seller to the purchaser
A seller need only provide a new certificate to the purchaser if a change was made to the installation after the current certificate was issued
If sectional title, obtain from the body corporate
Parties cannot contract out of/agree to waive
Get expert property advice
It is always recommended that sellers do their inspections at the listing stage and then they will know what they are in for in terms of repairs. In addition, although it is usually required that the seller should provide the purchaser with the certificate by no later than the date of transfer, it is best that the inspection and remedial work is at least done before occupation by the purchaser and better still even earlier, as most banks now request a copy for purposes of clearance of the bond for lodgement.
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