Why is my property taking so long to sell?
Steve van Wyk, Seeff’s MD at Seeff Centurion, says those that do sell, sell at 9% lower than the original asking price according to a recent FNB property survey.
But what are the main reasons for this? Van Wyk lists the following:
- The number one reason why property does not sell is because it is overpriced relative to similar properties or relative to the current market conditions. This is probably true for 90% to 95% or more of properties that do not sell.
Owners often believe their properties are worth more than what it actually is because either they personally feel so, or because an uninformed or dishonest agent has advised the owner of a higher selling price simply to obtain a sole mandate. Encouraging an unrealistic selling price may be music to the owner’s ears even though the property will never achieve this unrealistic price.
1. If there are many competing properties offered for sale buyers are enabled to select the best-priced property. In any suburb or estate, there will always be many properties for buyers to choose from at any given time of the year. The more Properties FOR SALE, the more competition and the less the chance that the property will sell. With the advent of property portals on the Internet such as Property 24, Private Property, IOL etc., buyers can now also easily compare properties.
2. The location (position) of a property can both influence the value as well as whether or not it will sell quickly. Examples of generally understood poor locations are properties on a busy road, property next to a bus or taxi stop, properties near to a train station, properties near a bottle store and properties near a busy shopping centre etc.
3. The condition of a property can also play a big role in the final selling price. If the property is being sold as a fixer-upper and the price has been decreased to allow for the money that needs to be spent to fix it up, then it should not be a problem. However, when a rundown property competes at the same price with similar properties that are in good condition, it will not sell.
4. Over capitalisation due to building an additional room or two, or merely upgrading the kitchen and bathrooms will not always lead to the owner being able to recoup the additional expenses that were outlaid when the property is sold.
5. An Economic downswing means that fewer properties will sell as banks are not that keen to lend money and buyers have less disposable income to purchase a new property with. Buyers may also not have the deposit as required by the banks and may well opt to rather modernising their existing home than have all the additional costs such as transfer duty, attorney fees, moving costs etc. associated with buying a new property.
6. Certain areas suffer much higher crime rates than other areas, and the crime statistics may well be a reason for certain properties either not selling or taking an extremely long time to sell. The general trend has been to move to secure estates or secure sectional title complexes where crime is a lot less.
7. Suspensive conditions in an agreement of sale are another reason for a sale not to materialise. For example, either the buyer did not get the required finance from the bank or the sale of the buyer’s current property fell through.
8. High monthly levies or once-off buy-in levies (which is popular at many Estates), as well as high monthly rates and taxes, could be an additional reason why certain properties do not sell. In addition, a number of sectional title properties have many owners in arrears with monthly levies, and this affects the financial status of the complex.
9. Stringent Body Corporate or HOA Rules are another reason why certain properties do not sell. Quite often the restrictions placed on pets etc. are a problem to buyers.
10. Servitudes and any other property restrictions may limit a buyer from utilising the full extent of the property, for example, municipal electricity or sewerage servitudes.
11. Finally, minimal marketing effort, poor photos, poor descriptions and a slow-moving agent could lead to no interest in the property.
Van Wyk concludes that price remains the most important factor in his opinion.
“The price of a property can be adjusted to take care of most of the other issues raised in the points above such as location, condition, crime, levies and servitudes etc.
In fact, provided the price has been adjusted, then there is no reason for the property not to sell - a correctly priced property should sell within 30 to 40 days given the current market conditions”.
To find out more, feel free to contact Seeff Napier today!