Ignorance of the “conditional clause” prevents many from selling to upgrade or downgrade
Ignorance of the conditional clause prevents many from selling to upgrade or downgrade
A surprisingly large number of people who would like to sell their homes and move on to something bigger, more prestigious, more compact, more modern or in other ways better suited to their lifestyles hesitate to take action because they do not know that they can make their offer on the new home conditional on their achieving a sale on their exis ting home.
We regularly see cases of would-be buyers deterred from putting their homes on the market because they are afraid they will end up with two properties, i.e. in a situation in which, at least temporarily, they cannot afford says Rowan Alexander, Director of Alexander Swart Property. However South African property law does allow bidders to make their offers subject to selling their own homes first and, even though sellers will almost always give preference to buyers whose offers are unconditional, a great many homes are sold via the conditional clause arrangement.
Many other potential buyers, says Alexander, are aware that they can make an offer on a new home conditional on selling their existing home but “go about things the wrong way”, waiting to find their new home before putting their existing home on the market. This, says Alexander, often leads to disappointment because homes can take time to sell and before they have found a buyer for their current home, some other buyer gets in ahead of them on the new home. This is possible because the seller, even though he has given the initial bidder a first option, can make use of the 72 hour clause which enables him to demand finalisation of the sale from the bidder within 72 hours.
In these cases potential home buyers sometimes become disheartened and withdraw their homes from the market – even though they may still desperately want a new home.
The right way to go about matters, he says, is first to place your home on the market. This has the great advantage that the offers received will quickly establish the true market value of the property which, in turn, enables the seller to bid realistically on their next home. Furthermore, having sold their homes and in all probability also established with their banks the size of the bond they are eligible for, they can make their offer unconditional. This gives it a far better chance of being accepted, even when it is lower than that of another bidder who has made a conditional offer.
Another mistake made by home sellers hoping to become buyers of a new home, says Alexander, is to skimp on their research into what homes in the area of their choice are selling for. This mistake is often compounded by taking advice from an agent who is uninformed and unrealistic about price levels.
This leads to huge disappointment because when confronted with the realities of the market, the potential buyer finds that all his calculations have been based on false premises and deluded expectations. A good agent, however, will see to it that the buyer’s and the seller’s expectations match the market and their resources
and this is frequently the most valuable service an agent can give. It puts the clients on the home owning ladder or on a higher rung than previously so that years later they find themselves the owners of an asset that appreciates steadily and often forms the basis of all their other wealth.
For further information please contact Rowan Alexander on cell phone number 082 581 3116 or by email rowan@asproperty.co.za.
19 Sep 2017
Author Independent AUTHOR