The unexpected offer to purchase
A good chance that demand could soon outweigh the current market's supply of homes, says Dennis Williams, owner / principal of Dennis Williams Realtors.
"If homes that are currently on the market do not meet buyers' criteria, we could soon follow the trend in the US, where frustrated house hunters are making offers on homes that are not on the market. Although this is usually in the top-end sector of the market, unexpected offers on lower-priced properties have become more popular as supply wanes," says Williams. "The trend has come about as a result of the inventory of property on the market shrinking, while consumer confidence and the desire to take advantage of favourable buying conditions increases. Some regions in South Africa have already reported seeing a shortage of certain type of properties."
If the trend does grow here in South Africa, it is likely that there could be property owners getting an unexpected offer to purchase even though they have not considered selling their home. Given the nature of this kind of offer, says Williams, it is more than likely going to be a price that may exceed the current market value and could be worthwhile considering.
He notes that homeowners who find themselves in this situation should consider a few elements before making their decision:
GET PROFESSIONAL HELP
If a homeowner receives an unexpected offer to purchase it is best for them to consult with either an attorney with real estate experience or a reputable real estate agent working within their area. Consulting with a professional will offer the homeowner guidance with regard to the correct procedure and process to follow.
OBTAIN A COMPARATIVE MARKET ANALYSIS
Another reason to consult with a real estate agent is that it is important to obtain information and analyze current trends and values in your particular area. An estate agent can be helpful in this regard as they will be able to provide sales figures and a Comparative Market Analysis of the area. This will provide an estimate of what the home is worth in the current market and give the homeowner an indication of how fair and attractive the offer is.
ASSESS THE FINANCIAL IMPLICATIONS
The homeowner will need to review their finances, which will give them a clear indication of the feasibility of the deal benefiting them. They will need to ask the questions, will the offer cover the existing bond and will there be enough for other expenses? There may be early cancellation fees on the bond or Capital Gains Tax to consider. Other aspects would include looking at the affordability of buying another property and new bond repayments on perhaps a higher amount. The renegotiation of any contracts where the current property serves as a surety will also have to be considered.
IF THE OFFER MADE SUBJECT TO A CONDITION
If the buyer has made the offer subject to any certain conditions, these conditions will obviously have to be met before the deal can proceed to conclusion. A buyer’s intention for the property will provide the homeowner with an indication of what conditions will need to be met. For example, if the buyer intends to use the residence for business purposes, the offer will more than likely be subject to the application for business rights being granted. Knowing the conditions the offer is subject to will also provide the homeowner with an estimate time frame as to how long they have to make their decision.
WHAT ARE THE HOMEOWNER’S FUTURE PLANS?
The homeowner’s life-stage and futures plans will need to be considered. For a young couple wanting to start a family, an offer to purchase on their current home may give them the opportunity to buy a property that better suits their requirements for a family. For a family that is settled in a house that meets their needs and enjoys the area in which they live, the decision may be a lot harder to make. "When a homeowner receives an unexpected offer, the decision to sell or not is entirely theirs. Only they can ultimately decide whether the offer is worth their consideration or not and they will need to make the correct decision for them and their future aspirations," Williams concludes.