Property sellers beware: 4 financial pitfalls
*Watch out for these buyer risk points before you agree to a deal.
Sellers acceptance of offers to purchase a year or so ago was usually a mere formality with few hitches, but in today's environment, sellers need to be on high alert when entertaining offers to purchase. Grant Gavin of RE/MAX Panache gives pointers on how sellers can protect their interests in the sale process:
1. Do not allow your home to be viewed unless the buyer is with an agent.
Desperate times can lead to desperate measures, and in their quest for the eternal "bargain" buyers may approach sellers directly to cut out agents' commission.
Firstly, there is a big security risk of letting somebody into your home that walks in straight off the street. Protect your family first and remember that 99% of genuine buyers will make an approach via an estate agency in order to have access to all their stock in their price range or area. Beware of the opportunistic criminal.
Secondly, be aware of the Buyer who has been introduced to the property by an agent, and then returns independently to make an offer direct with the Seller. Unfortunately the Buyer may get his/her way by purchasing the property, but as the Seller you may be faced with a commission claim from the agent.
2. Ensure the buyer has a good deposit
Unfortunately the 100% bond is yesterday's news as the banks come to terms with the lower level of risk they are prepared to take with lending.
Sellers must understand that if they sign an offer where the buyer has no deposit, the likelihood of that offer materialising is negligible. All of the four major banks now require anything from 15-30% deposits from their credit applicants and are rigid on this requirement. Insist on a deposit.
3. The buyer has been pre-qualified
As with point 2, the major factor determining sales right now is the ability of the purchaser to obtain a bond grant from a bank, this is called pre-qualification and is essential.
Insist that your agent pre-qualifies their buyers to the best of their ability before they start showing houses. Understand that some buyers will not allow this to happen at the outset, and might regard it as an intrusion; however a professional agent will successfully motivate the advantages to their buyer in the correct manner.
Furthermore, you don't want to waste your time, nor go through the stress of waiting 20-30 days to hear if the purchaser has obtained a bond, when a simple pre-qualification questionnaire at the beginning of the process could have guided the buyer towards their correct price range right from the outset.
4. Their "subject-to" is realistically priced
The "Subject-to" Sale offer is always something to watch out for as a seller. If a purchaser makes an offer on your property "subject-to" them selling their own home, you will need to question your agent on the status of that property sale. The agent should be able to give you an indication of the accuracy of the pricing, the activity that has taken place on that property, as well as how realistic the time-frame is on your agreement for selling this property.
Beware if the purchaser's property is to be sold in another town, city, or province because your agent will have very little knowledge on the market in that area and will probably need to rely on information from another party. Dealing with national real estate groups would assist in this area.
The reality of the current market is that houses are not selling quickly, therefore ensure that your "subject-to" agreement has an out-clause allowing you to consider a more favourable offer, should one come along while you wait for your first sale to materialise. Your agent will need to guide you through this process that should always allow the first purchaser the opportunity to match the second more favourable offer.
Article by: Grant Gavin - www.realestateweb.co.za