Putting a value on the stand

Business Day - Home Front - - HOMEFRONT -

CON­SIDER RE­SALE What per­cent­age of the pur­chase price can be at­trib­uted to the land com­po­nent? “In quite a num­ber of cases these days, buy­ers are putting very lit­tle value on the bricks and mor­tar of an ex­ist­ing home and are pur­chas­ing prop­er­ties to gain ac­cess to land in a prime lo­ca­tion. This is es­pe­cially ev­i­dent in ar­eas such as Con­stan­tia and Clifton in Cape Town and Sand­hurst and Rose­bank in Jo­han­nes­burg, where older homes are be­ing de­mol­ished to make way for new houses and town­houses on choice parcels of land,” says Richard Gray, Har­courts Africa CEO.

How­ever, it does not y fol­low that the big­ger the stand the more the buyer will pay for it. “Depend­ing on buyer re­quire­ments, the us­abil­ity of a stand fre­quently out­weighs the im­por­tance of its size when it comes to cal­cu­lat­ing its value. Mar­ket con­di­tions also en­ter into the equa­tion. When the num­ber of homes for sale is high and buyer de­mand is low, buy­ers are usu­ally un­will­ing to make con­ces­sions on stand size, shape and char­ac­ter. It is wise to con­sider the way the stand will af­fect the re­sale po­ten­tial of a prop­erty be­fore you buy it. You should bear in mind that buyer pref­er­ences can change and a home on a sub­stan­dard stand could be dif­fi­cult to sell in the fu­ture.”

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