Demanding property sellers still refusing to recognise the market conditions
The recession is still biting severely - but some property sellers persist in not accepting this reality.
Every major estate agency at the Cape has in the last few months warned against over-pricing, said Anton du Plessis, CEO of Vineyard Estates, recently, but we still come across clients who rigidly refuse to accept a valid valuation. In some cases they have even suspected us of bringing down the price in order to get a fast sale. No matter how much accurate market information we produce to substantiate our valuations, they just will not accept reality.
Serious buyers, said du Plessis, have to accept reductions of 10 to 15 or even 20% on the 2006/2007 prices - or waste their own and their agents time.
When faced with the realistic market price some sellers immediately go into denial, said du Plessis. We had a case recently where the seller was advised by ourselves that the value of his home in todays market is around R4,5 million to R5 million. He insisted however that we listed it at R6 million.
In another case, a Southern Suburbs seller with a home priced at just under R4 million was unable to get any offers within R600,000 of his price, despite keeping the house on the market for a whole year.
Instead of accepting a reduction to get a sale, he then contacted another agent, who agreed to list the property at R700 000 more than the original price.
I really do have a problem with any agent who behaves in this totally irrational way. Presumably they hope that an ignorant or reckless buyer will turn up - but in my experience that almost never happens. What can they therefore be hoping to achieve? In this case, they advertised the house as a new release which was a complete deception.
Three times recently, said du Plessis, he has had to refuse a mandate because owners insisted on an unrealistic pricing.
Owners with financial reserves, du Plessis added, now often opt to rent their homes rather than sell. In some cases the sellers have gone so far as to rent out their large homes (at R15 000 to R30 000 per month) and have then purchased at greatly discounted prices.
They expect to sell their homes at market related prices in late 2010, or if the tenants take the property for a further year, in 2011 when the market should be fully recovered.
This is obviously a logical move in todays conditions, he said.
Asked when he foresees the current difficult conditions being over and the market returning in favour of sellers, du Plessis said that the lower interest rates will have an effect before the end of this year and 2010 should see steady sales growth. By 2011, he predicts, ongoing consistently good sales will be seen throughout the residential property sector.
Article by: www.vineyardestates.co.za