Sellers need to be choosy too

When it comes to accepting an offer to purchase, property sellers would do well now to be just as picky as buyers usually are when house hunting.

This advice comes from Tjaart van der Walt, CEO of the RealNet property group, who says that when the property market is under pressure many sellers are so pleased to receive any offer to purchase that they take all comers.

“But sellers should consider offers from buyers who have solid prospects of obtaining bond finance rather than buyers who offer a higher price, but whose credentials might prevent them from qualifying for a bond.”

The reason, says Van der Walt, is that sellers who accept an offer from a buyer, who cannot obtain finance, effectively take their property off the market and may miss the opportunity to sell to a qualified buyer.

“In the current market it is much more difficult to qualify for bond finance. In the first place, the National Credit Act puts the onus on lending institutions to make sure that consumers can indeed afford to repay the loan – and they have therefore become much more circumspect with regard to whom they are prepared to lend money.

“In the second place, the local market has not escaped the ripple effect of the worldwide credit crunch that started in the US when easy credit resulted in a property bubble that led to numerous property consumers defaulting on their bonds, which effectively limited available credit in the markets.

“Thirdly, new banking regulations implemented at the beginning of the year stipulate the level of reserve capital banks have to maintain when issuing credit to their clients. All these factors combine to make banks more cautious about extending credit and they are consequently cherry-picking the best customers.”

Van der Walt makes the point that it may be difficult for sellers to establish the creditworthiness of buyers making an offer to purchase. “In this regard it becomes more valuable than ever for consumers to enlist the help of experienced estate agents who can perform the necessary financial checks.”

Article by: www.realnet.co.za