GREATER FLEXIBILITY AND INNOVATION NOW REQUIRED TO PUT THROUGH DEALS

The current more difficult and more competitive conditions in the residential estate agency sector have made it essential for agents to think out of the box and to be both flexible and innovative, says Lanice Steward, MD of Anne Porter Knight Frank, the Claremont headquartered estate agency.

 “Recently,” said Steward, “we had a case where a buyer who had made an offer on a new home subject to the sale of his own home found that the only offers he received were well below what he had expected.  He therefore could not raise the agreed sum.  

 “In the old days that would almost certainly have resulted in the deal falling flat.  On this occasion, however, the agent was able to persuade the seller of the home to drop his price by 15% - and this kept the deal intact.”

 In the current market conditions, said Steward, this was definitely the right course to follow because genuine buyers are now not thick on the ground and because, too, the home seller, in moving on to a new home, would himself now benefit from the more competitive conditions in the market. 

 “The current conditions in the property market should be kept in mind by sellers,” said Steward.  “They should remember, too, that a drop of 5% to 10% on their asking price is not significant in relation to the 100% plus increases that they have in almost every instance seen in the last five years.”

 Steward warned that, while encouraged to be “innovative”, agents have always to keep in mind the basic ethics of the profession.   

 “Taking the same situation that I have just described,” she said, “it would have been possible for an unscrupulous agent (knowing in advance the buyer’s position, as ours’ did not) to persuade the buyer to make a very high offer subject to the sale of his home even though knew he would not achieve the required price to make the deal possible.  Once the subject-to offer deal was accepted, he would be in a stronger position to renegotiate his offers at a later stage.  

 In the current difficult conditions, said Steward, agents should look more closely at alternative financing mechanisms.

 Where a seller has ample resources, a good option is for him to himself grant a bond to the buyer.  Parents, too, can sometimes be persuaded to grant a bond to their children.

 In those cases, said Steward, the bondholder’s risk is not great if the bond is legally registered because the property remains the bondholder’s surety.

 “Even when dealing with one’s own family or a close friend, it is wise in these cases always to work through the recognised legal channels and to draw up the agreement subject to the usual legal conditions,” said Steward.

For further information contact Lanice Steward on 021 671 9120 or email lanice@anneporter.co.za.