How to beat your neighbour’s sectional title sale
‘For Sale’, ‘For Sale’, ‘For Sale’. We’ve all driven past sectional title complexes where the entrance gate’s garden has been overtaken by a litter of For Sale boards. We wonder what on earth has residents so spooked that it seems everyone is selling en-masse. Drawing our own conclusions – crime must be really bad, levies are probably through the roof, noisy tenants are chasing out homeowners – leaves us with a negative perception of the complex and will make us less likely to consider moving there when we’re ready to buy.
“When there are several units for sale in a complex, it brings into question the value of the investment in the complex as a whole,” says Carol Reynolds, Pam Golding Properties area principal for Durban Coastal. “Buyers begin to question why people are selling in the complex. For this reason, it is always best to put your property on the market when there is less competition.”
Reynolds’ upcountry compatriot, Nelson Ferreira, area principal for Pam Golding Properties in Johannesburg East, agrees, saying if your unit is relatively similar to what is on the market, then the best advice, considering that we are in a buyers’ market, is to hold off.
“When there are too many properties on the market at any given time, it reduces the desirability of the properties and opens up for buyers to make lower offers,” he says, noting that if you desperately have to sell, then your choice in agent is going to make all the difference. “The attitude and excitement of the agent in relation to your home is a determining factor to achieving your price.
“Make sure the agent places the unit on show. Some agents believe that show houses are not effective in sectional titles, predominantly because it’s difficult to locate the unit and due to some security regulations that certain bodies corporate have in place.”
In situations where more than 5% of units are on sale at any one time, it may be better for agencies and sellers forego the boards in front of the complex in favour of online portals.
“In an oversupply of stock situation this may apply; however it need not be an either or choice,” says Laurie Wener, senior executive for developments in the Cape region for Pam Golding Properties. “Online listing is essential and boards are optional. Many sectional title complexes do not allow boards.”
As much as general market sentiment applies, sellers need to keep in mind that it can benefit them to sell at the same time as their neighbours if there is a big buyer demand for their complex.
“If there is a demand for properties in that area or complex it will not be detrimental to still sell and will rather assist in selling the property,” says Joe van Rooyen, licencee for Seeff Durbanville, who notes that the sectional title market in Durbanville has achieved an average capital gain of 8.69% over the past. The only way to make your property stand out is to ensure that it is priced correctly. “A lot of sectional title buyers are investors and look at the rand/m² of the selling price or the capital growth of the area, or the return on investment.
“With these three these factors in mind, a well-priced property is much more interesting to investors than an overpriced property.”
Van Rooyen doesn’t believe a lot of “for sale” boards in front of a complex has much of an influence on potential buyers.
“Usually, sectional title properties tend to sell quicker than full title and therefore it is not uncommon that a lot of properties in a complex are on the market at the same time. A lot of boards will not scare off potential buyers,” he says.
Sellers need to bear in mind that if their complex is not in high demand, and if their body corporate allows ‘for sale’ boards in the gate entrance, then it would be better for their sale to be given to one agent instead of two or three.
“The high number of boards may be as a result of sellers not understanding the value of marketing their properties on exclusive mandates,” says Gerhard van der Linde, MD of Seeff Pretoria East. “Our advice to sellers is to interview a number of agents, and then appoint the agent who you feel most comfortable with to market the property on an exclusive mandate. More agents does not mean more buyers.”
Buyers shop by comparison and this fact is never more true than when buyers have several units to view in the same sectional title scheme and under the same roof, according to Sean Guy, manager of the sectional title division at Seeff Southern Suburbs in Cape Town. “In such cases and where a seller is not pressed to sell it is preferable to wait until your unit can be the only unit for sale at the property,” he says. “It is not ideal to have the same agent working two or more similar units for sale at a scheme at any one time as there is the risk that one unit could be used to promote the sale of a competing unit. In such a situation it is better to confer a sole mandate on a particular agent making him or her exclusively accountable for the sale of your unit at the best possible price.”
If you are selling a sectional title unit list during a perfect storm – massive competition for buyers in a very average, cookie-cutter complex – and you don’t have the option to wait or rent it out, get creative.
“The seller could incentivise buyers by including appliances in the sale,” says Guy. “The seller could offer to pay the levies on the flat for a few months after transfer, affording the buyer an opportunity to recover from his transfer costs and moving expenses. In short, a seller and his appointed agent need to be creative and establish appealing points of difference that will draw buyers to favour his unit above the competition.”
Seeff chairman, Samuel Seeff, says the sectional title sector of the market is one of the fastest growing and especially in the Cape City Bowl and Atlantic Seaboard.
“Demand tends to be so high that you are not sitting with an oversupply of units in complexes,” he says, noting that it is unlikely right now sellers would be facing massive competition and an overload of ‘for sale’ sign boards. “In terms of marketing in complexes, there are generally very strict rules in terms of displaying for sale signs, so you seldom find a complex that is overloaded with these signs – certainly not in the high demand areas. The position may well turn as the economy deteriorates further.
“Online listings are now the order of the day for properties and tends to be the first port of call for house hunters. To propel your property to the top of the wanted list, the usual measures would apply: ensure your unit is well maintained, security is top class, and the property is neat on show day. Follow your agent’s advice when it comes to the asking price and you could even end up with an offer that tops your asking price if you pitch it at the right level.”