There are bargains – and there are lemons

BY BONNY FOURIE bronwyn.fourie@inl.co.za

You could do very well when bidding for a ‘distressed’ property but do your homework, agents advise

Q: WHERE would I find distressed properties for sale? And what should I look out for or be aware of when purchasing such a property?

A: Bank mandated or distressed sales aren’t always advertised on the normal property portals. The easiest way to find distressed listings is to get in touch with an estate agent from an agency affiliated with all the major banks.

Bank mandated sales can be bargains but it is a mistake to assume this is true without doing further investigation. Research recent sales of similar properties in the area to understand where the distressed home fits into the market and chat to a local estate agent to get the inside scoop.

It’s also important to find out as much as possible about the property itself. Is it empty or tenanted? Are there any outstanding sectional title levies or municipal rates? Are there any restrictions on usage or building? All of these things can affect the viability of a purchase.

It’s always advisable to do a proper inspection on the property before any purchase. Ensure you obtain a copy of the seller’s disclosure document – a document in which the seller lists all the defects he/she is aware of – so that there are no unexpected discoveries when taking occupation of the property later.

There is plenty of competition among buyers to get the best distressed-property bargains, so get prequalified financially, meaning you will know exactly how much you can afford to offer. Be ready to act quickly or risk losing out. Know what you can afford, know the property’s value, and set firm limits. A bargain is only a bargain if you get your price right. – Tony Clarke, managing director of Rawson Property Group

Q: Which is the better investment, a new build or existing home? And what are the pros and cons?

A: There are pros and cons to buying both an older home in an established neighbourhood and a new build in an up-and-coming area but the most important thing is that you are clear about your motivation for buying and how that property will suit your lifestyle.

New-build properties appeal for several reasons. First, there is no transfer duty to pay, which is a huge saving on the overall cost of purchasing a home.

Buyers often have input to the final look and feel of their home by choosing finishes they prefer.

New-build properties are often more practical in design, with a focus on space and energy efficiencies, reducing consumption costs. Being new, there will be little maintenance required at first.

Older properties are generally located in established areas, so it gives buyers an opportunity to live in popular built-up areas in a central location. Such areas are sought after because of their access to schools, shops and natural drawcards such as beaches and mountain reserves.

Erf sizes are usually much bigger and afford buyers the ability to add additional value through improvements. – Hugo la Grange, principal at Jawitz Properties Western Seaboard

Q: We were considering moving to KwaZulu-Natal but, with the recent riots, we are a little concerned over future such occurrences. Should we still buy there? Are many KZN residents selling their homes to semigrate elsewhere?

A: While many may have considered relocating following the recent unrest in KZN, only a few have gone through with the decision. As the emotion generated by the traumatic events settles down, many homeowners are reassessing their decisions.

Cape Town has always been the premier semigration destination for people leaving KZN and, yes, we have seen an increase in KZN homeowners requesting market price assessments of their homes since the unrest. Interestingly, though, not all homeowners end up selling.

The KZN North Coast has actually become a semigration area in its own right since the end of lockdown. While recent events will slow this trend initially, South Africa does have a way of pulling us all back in with her natural beauty and amazing quality of life.

The future growth of the KZN North Coast remains positive. – Grant Gavin, broker/owner of RE/MAX Panache

Q: I want to sell a couple of my rental properties but I have tenants already living in them. How do I navigate this?

A: Selling with your tenants in place can be difficult, so you may have to do some additional preparation before your property goes on show. Unfair as it may be, tenants generally have a reputation for not keeping homes in the best condition and many potential buyers seeking a home for themselves will thus be reluctant to look at a property where a tenant is still resident.

In many cases, other buy-to-let investors who might be interested in adding your property to their portfolio would prefer to find their own tenants. And incumbent tenants who really don’t want to move can deliberately put obstacles in the way of a sale.

The best course is to first find out whether these tenants might want to buy the property themselves. If that is not possible, it is generally better to give them reasonable notice and then prepare an empty property for sale, with the incentive for prospective buyers being that it would be ready for immediate occupation once the suspensive conditions of the offer to purchase have been met. – Gerhard Kotzé, managing director of the RealNet estate agency group

If you want to sell your rental property, but have tenants in it, consider asking if they would like to buy it. PICTURE: AVI NAIM/ UNSPLASH