How to reduce the cost of selling your home
Some 87% of home sellers drop their price by 9% in an attempt to speed up the sale and reduce the cost of keeping the home while applying for a new bond. This is according to FNB’s Property Barometer’s third quarter survey, which is 9% higher than the 78% recorded in the second quarter of 2014.
“That’s the first cost (the 9% reduction) sellers should anticipate when selling a home. The next cost comes in relation to how long the house is on the market,” says Lucy le Roux of Illuminate Home Staging. “In South Africa the average time on the market has settled at around three months over the past year, between a five-month peak of 2008/9 and the 2004/5 lows of less than two months. This 11-week average is for houses with an average selling price of R1,46m that spend just 9.1 weeks on the market and houses in the high-net-worth segment, with an average price of R4,62m, which list for 18.9 weeks before selling.”
“Our most successful project was in 2012. The property, which was valued at R410,000, sold in less than a week. Another project in a good area of Little falls was staged successfully and sold above asking price.” Andiswa Ncedani, founder of DANI Home Staging
Sellers in all price categories need to be aware of the costs accumulated while their house is still on the market: bond payments with hiking interest rates, levies and rates per month multiplied by the number of months unsold, estate agent fees (anywhere between 5% and 7.5% traditionally, or through Steeple’s 1.5% (or a minimum of R22,000) and HomeBid’s 1.95%), and compliance certificates.
* Calculation based on zero deposit at 9.5% interest
(excludes rates and taxes, levies, estate agent commission)
So how do you reduce the cost of selling? Simple, you reduce the time on market.
Le Roux says to do this, it is critical that significant time and effort is put into the preparation of your property prior to listing to speed up the time it takes to sell and to reduce the percentage price reduction.
“Research from the US shows that home buyers form an opinion of a property within the first 15 seconds of entering and that only about 10% of buyers have the ability to see past unattractive features,” she says. “This could be anything from unfinished renovations, a home furnished with outdated and mismatched furniture or an empty property.”
“We took on a property that spent over six months on the market with no offers. After staging, the house received two competing offers in six weeks. Another home that was on the market for nine months had a huge uptake in interest with people viewing the home on show days and was rented out as a corporate lease. We recently sold another home that was potentially going to be a loss maker, but after just three show days she sold.” – Lucy le Roux, Illuminate Home Staging
Further to doing this themselves, sellers can enlist the services of professional home stagers who are able to see past the clutter of the home and either spruce up spaces, rearrange furniture or bring in entirely new couches and fittings and fixtures.
“There have been studies in the US where they have tested home staging in developments with identical houses and found that the staged homes sold 50% faster than un-staged homes,” says Le Roux. “In South Africa that would mean a house that would usually take an average of 11 weeks would now sell in 5.5 weeks.”
And this service is not just reserved for the high-end market. DANI Home Staging, which operates in Johannesburg, caters to the lower-middle market.
“In this price bracket, staging is critically needed but perceived as a luxury by a lot of homeowners as they are not well informed of what staging is,” says Andiswa Ncedani, founder of DANI Home Staging. “We currently do not charge for an assessment of the home’s readiness to sell.”
The cost to stage varies significantly, with DANI charging a minimum fee of 10% of the total staging budget which is a maximum of 2% of the sale price (R1m home staged for R20,000).
Illuminate, which plays in the high end, provides its own furniture, art and accessory hire to homes with an asking price of R2,5m and up. “For a full house of furniture, art and accessories for four weeks (this covers the lounge, family room, dining room, patio, kitchen, main bathroom, main bedroom and study) we charge R25,000 with a fee of R5,000 for every week thereafter,” says Le Roux. “For our styling services for sellers of furnished homes (or clients who need some help getting their homes picture perfect) we charge R3,000 per day on site. We also offer a property consulting service where we advise clients of how to improve the marketability of their properties. This service costs R1,500.”
The cost of the stager is for the seller’s account – not the estate agent’s – but both Le Roux and Ncedani say it is worth every rand.
“Home staging is the only property marketing technique that recoups selling costs,” says Le Roux. “The costs saved by home staging relate to three areas: reducing the occurrence of low-ball offers, reducing selling costs (bond, rates, levies that the sellers are paying while living in their new home) and reducing the likelihood of price reductions due to limited interest.”