The decision of when to hold onto a property and when to part ways with it is far more nuanced than many might except. The ability to discern the optimal moment can significantly impact not only a homeowner’s bottom line, but also the owners’ lifestyle.
According to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, “the decision to hold onto a property or to sell it involves a delicate balance of financial analysis, market trends, personal circumstances, and risk assessment.”
Just like with any other financial investment, the adage of "buy low, sell high" applies. However, timing the market is no easy feat. “Ideally, homeowners will want to sell in a seller’s market where there is an abundance of qualified buyers – like in 2020-2021 when interest rates were at record lows. When demand outstrips supply, property prices increase which means that a seller has a better chance of selling the home at a higher price,” he explains.
But, Goslett also warns that even if you do manage to time the market correctly, “you need to keep in mind that if it is your primary residence you’re selling, then you will also have to purchase a new home within the same market, which will possibly offset any financial gains of selling in a seller’s market,” he clarifies.
Not only is it incredibly tricky to time the property market, but it can also be inconvenient and even imprudent depending on a homeowner's personal circumstances. Goslett uses the example of a homeowner who is no longer able to keep up with the repayments on their home loan. “The longer you hold onto a property you can no longer afford, the worse the ramifications will be. The earlier you sell, the better your chances are to recover financially and to avoid blacklisting and tarnishing your credit score,” he notes.
According to Arnold Maritz, Co-Principal of Lew Geffen Sotheby’s international Realty, last year, shared 10 proactive steps you can take as a home seller (read full article here) and explained there are essentially two primary types of delays when selling a home; the first relating to the confirmation of the sale and those that occur once the sale has been confirmed and hold up the transfer.
“Once the potential minefield of multiple complex steps, reams of documentation along with suspensive conditions and contractual obligations has been successfully navigated and the deal is finally done, many people breathe a sigh of relief.
“But the deal isn’t quite done yet and the expected downhill cruise to transfer can still become an uphill battle if one isn’t careful.”
He says that many of these delays can quite easily be avoided or resolved through good communication and prompt co-operation with the transferring attorney and agent but if sellers have addressed the following points, they can offset many problems before they occur:
1.
Have Approved House Plans Ready:
If you've made structural changes to your home, such as adding a room or renovating the kitchen, ensure that you have all the necessary permits and approved house plans ready for potential buyers.
Buyers often want to see these documents to verify that the work was done correctly and legally and getting plans approved with the Council can take many months which is probably a lot longer than most buyers would be willing to wait.
2. Get Your Certificates of Compliance Done:
If you are even thinking about selling your home at some point in the near future, it’s a good idea to get a head start on your compliance certificates.
Property owners are required by law to ensure that the property is legally fit for sale and before the transfer can take place, the transfer attorney must be in possession of the relevant COCs and, although the process is quick and simple, if there are any major issues to be addressed, it could delay or even scupper the sale.
When weighing up the decision on whether to hold or to sell, Goslett adds that any property purchase needs to be viewed as a long-term investment. “Profit on a property purchase does not happen overnight unless you are planning on flipping the home. To allow the property enough opportunity to appreciate in value, homeowners should plan to hold onto the home for roughly around five to ten years.”
“While some properties may benefit from long-term ownership, accruing value over time, others may demand a more timely exit strategy to mitigate potential losses. In either scenario, the ability to discern the optimal moment to hold or sell can significantly impact an investor's bottom line,” says Goslett.
“My advice to those who are uncertain is to reach out to a local agent to get some free guidance. They can inform you on current market trends in your given suburb and can inform you of your home’s current market value – both of which will allow you to make a more informed decision either way,” he says.
Excerpt from Property24 