14
www.thevillagenews.co.za
4 November 2020
MY HOME
Buying and selling – but which one comes first? By Stephen de Stadler Managing Director Fine & Country Hermanus, Arabella and Kleinmond
H
ome is the place where most of us start, and usually end, an ordinary day. Home is the base for our family network, a place where we simply live life. Home is the place where we entertain our friends, where we relax and recharge the proverbial batteries.
But when Covid-19 struck, our homes suddenly became our lockdown location. For many, their most prized possession became their work domicile. Even as the lockdown regulations were eased, many homeowners realised that their home no longer met their needs the way it had in the past. For those who had to clean their homes without assistance, perhaps the extra guest bedroom became an unnecessary requirement. Financial pressure could also have led to the decision to downscale, while for others who now spend most of their workday at home, the lack of a study or home office in their current home became an issue. Even considerations like the availability of fibre
have become important in this so-called new normal. Having thus decided to find a new home, the prospective client now has to reach a decision as to whether they become a seller or a buyer first. In the absence of the required resources allowing you to become a buyer without first having to sell your existing home, most clients need to become sellers before they can commit to buying a new home. In a buyer’s market (which we are currently experiencing) the most powerful buyer is always going to be a cash buyer. A buyer requiring a bond in order to finalise the sale is in an equally strong position, as long as the estate agent has satisfied him or herself that the buyer has the financial wherewithal to raise a bond. The existence of mortgage originators such as BetterBond has also helped this process tremendously, because it gives the buyer access to a one-stop shop in order to secure the best possible mortgage finance. The buyer who creates a sales chain which requires the sale of their existing home before the transfer of their new home can be affected, is the weakest buyer in the market. The seller holding a ‘subject to sale’ offer is
able to continue marketing their home in the interim period, and the fact that they have an offer (albeit conditional) allows them to use this offer to place negotiation pressure on any other prospective buyer in their market. This is not a bad situation for the seller, but a rather less than perfect situation for the ‘subject to’ buyer. Therefore, if you want to first find a new home to move to before selling your existing home, you should realise that your ‘subject to’ offer is far from being a secure sale and has in actual fact given the seller more power and future negotiation ability. In a buyer’s market, this creates an unnecessary power shift. With a ‘subject to’ offer, estate agents will always refer to the 48- or 72-hour clause. This they say is the buyer’s protection because it means that the buyer has the right to remove their condition (the sale of their existing home) or match the price of a new competing offer. Most buyers who have made a decision to buy before they sell are not able to remove the condition until they have actually sold their home, and if they can, they would probably have been advised better to enter into an unconditional offer right at the start of the process.
A word of warning to both buyers and sellers – read the 48- or 72-hour clause carefully. They do not all say the same thing. Some allow for price increases, while some only allow for the removal of conditions. It is far better to be a clean buyer than a conditional buyer. There can be no disputing this fact. My suggestion to any client is thus to always, to the extent possible, sell your home before committing to the buying of another. You will be in a stronger position to negotiate and, in addition, you will then know exactly how much you are able to invest in your future home. If you do not get exactly what you expected for your previous home, you will also be able to look at the correct pricing category for your new acquisition. Always remember, however, that if you buy and sell in the same market conditions, a deemed loss on one side is more than made up by a deemed gain on the other side. If you ‘sell low’ but are able at the same time to ‘buy low’ you have effectively lost nothing. The views expressed above are those of the writer in his personal capacity and may not necessarily reflect the views of Fine & Country as a national and international brand.
