Reaping profit on home sales
Category Blog
Calculating a seller's profit on a home sale can be both an absorbing and astonishing exercise.
Say, for instance, you bought a home for R4-million - with the help of a R3-million bond - and residential property prices increased by 10% in the first year of your ownership.
The property would then have been worth R4,4-million - R400 000 more than the price at which you purchased and took transfer.
Moreover, imagine that the uptrend had held its line and the original value of the property subsequently grew by a further R400 000 in the second year.
Then, you, as the purchaser, will have reaped a profit of R800 000 on the R1-million you originally invested in the 75 per cent-bonded home bought at the original price of R4-million. That's a profit of 80% !
Granted, you would still have had to continue paying the bond. But the bond is not yourmoney to grow - it belongs to the bank. It is not unlike paying rent to a landlord.
A new wave of buying
Looking ahead, I believe that a new wave of home buying will start to roll out once the dust has settled on the national election.
When it does, the fact will remain that the best way for buyers - and sellers - to be front-of-mind is to engage face-to-face with (preferably sole-mandated) residential estate agents.
This beats buying by portal - a process in which you are simply a name and number and not a recognisable face.
Instead, buyers need to be out there visiting the show days and interacting, eyeball to eyeball, with the selling agents in the suburbs of focus. By doing so, they will almost certainly receive a better service.
The reality remains that a structured marketing campaign, built on a sole mandate foundation - with show days as the core - is the best route to securing maximum price.
Why a show day?
There is a multitude of good reasons for sellers to have a show day. For instance:
- On a Sunday, the show house can be "stage set" to look at its best
- Potential buyers view the house over a period of hours rather than weeks (as in the case of view-be-appointment selling) thus immediately creating a platform of dynamic competition between interested parties
- If the house is not on show, the target market is almost halved , because many buyers will visit homes only on show days
- Prospective buyers view the property in a much shorter time - and are able to make comparisons more quickly by viewing other show houses on the same day
- There is the freedom for buyers to discuss the property in an uninhibited way (as the seller is normally not present)
- The seller avoids the inconvenience (particularly on weekdays) of constantly preparing the home for viewing by appointment.
Author: Ronald Ennik
