If you are struggling to pay your bond and have reluctantly come to accept that you will have to sell your property to survive, now is very definitely not a good time to being holding out for a price that the market is unlikely to accept, warns Gary Wentzel, Head of Business Development at Rawson Properties.
'Although it can be painful,' says Wentzel, 'we have in recent weeks had to advise certain sellers that the best course they can follow is to sell their property for what the market will now pay and then see their banks about paying off the shortfall on their bond'
This course, says Wentzel, is far preferable to hanging in there until the bank sequestrates the home. Repossessed homes, he says, are usually auctioned and go for 40% to 60% of their market value - leaving the bondholder responsible to the bank for far more than if he had sold by the usual method.
'Many people think that once their homes have been sequestrated their responsibilities are over, but this is not the case. They will be hammered by the bank until they meet their debts and this could even result in their eventually being declared bankrupt'
When a home is sold voluntarily by the bondholder below the bond value, says Wentzel, in his experience the banks will usually take a long-term view and be prepared to do a deal with the bondholder that he will be able to afford.
'It has to be realised that banks have no desire to see a client go under - it is simply not in their best interest'
The current depressed market, says Wentzel, will, in his view, see an upturn by the end of this year. In the meantime, he says, it is benefitting landlords who have experienced a rise of approximately 20% in monthly rentals this year. Buy-to-rent investors, he says, are now consequently returning to the market and he sees this trend increasing towards the year-end.
Asked whether agents should not be helping sellers by reducing their commissions, Wentzel says that is happening and many commissions today are being 'negotiated'.
However, he warns, it can be just as shortsighted to push a hard-pressed agent into a commission reduction, as it is to demand too high a sales price.
'Every agent starts each day effectively unemployed. To survive, he will probably concentrate first on sole mandates, secondly on correctly priced properties (i.e. those that have the best chance of selling) and thirdly on those with the best commissions. Sellers must accept that the agent, for all his skill, cannot dictate to the market what it should pay for a property'
