Homeowners under pressure to sell
DOWNSCALING due to life age has traditionally been the most prominent reason for property sales, and even though it continues to lead the selling market, the latest FNB Property Barometer shows that it accounted for 22% of sales in Q1 – only 2% more than those in the “downscaling due to financial pressure” category.
By comparison, in February this year, 18% of sellers were giving up their homes due to financial stress.
The pressure is most evident among homeowners with property values less than R750 000, with 34% of sales being due to downscaling as a result of financial pressure. This reason accounts for 18% of sales in the R750 000 to R2.6 million category; 8% in the R2.6m to R2.6m category; and 14% in the above-r3.6m segment.
As interest rates continue to rise, more property owners might seek to sell their homes. Even homeowners with fully paid-up homes are finding themselves needing to sell, particularly if they are elderly.
A Durban couple in their 70s, who have owned their property for 32 years, recently made the heartbreaking decision to let it go, simply because they could not keep up with the maintenance costs.
As a large family home with extensive garden space, the property became expensive to maintain. As they had fallen behind on maintenance due to affordability struggles, they decided the best thing to do was to sell it and buy a life rights property.
“Our home was in a good area
and its land space was vast, but due to the condition of the property – which was not bad but did need work – we had to sell it for far less than what we would have got had it been in good condition.
“We could no longer afford to pay for the upkeep, so we knew the longer we held on to it, the more the house would deteriorate,” the husband says.
“Everything has just become so expensive. We have to pay for medical aid, our insurance, food and other living costs, and our pension is not covering all of that. It has been a growing struggle for years and we feel terrible that we could not maintain our home like we wanted to.”
As more homeowners find themselves in this position, particularly with the rising costs of living, buyers should be sure to properly inspect any home they are considering purchasing, says Alan Rubin, the head of ooba Home Loans.
He advises homebuyers to clearly understand the risks of purchasing a home that has latent defects – those that cannot be seen after reasonable inspection and can also be unknown to the seller – and protect themselves accordingly.
“It’s so easy to get swept up in the excitement of making an offer to purchase (OTP) that you fail to observe pertinent issues around the home. Examples of latent defects can include leaking roofs, faulty geysers, and damp issues where you can’t see the issue on inspection.” Rubin adds that taking transfer of a home that has latent defects happens often among homebuyers who haven’t thoroughly inspected the home before purchase.
“Some potential buyers might feel too uncomfortable to conduct a thorough investigation before signing an OTP or haven’t been warned about looking into latent defects prior to purchasing a home… An offer to purchase is legally binding and a home is sold ‘voetstoots’.”
“Voetstoots” means that any problems with the home’s structure, visible (patent) or not (latent) defects are the buyer’s problem – not the seller’s, unless the seller covered them up.
“’Voetstoots’ protects the seller, except in cases where the seller hides or chooses not to disclose defects in a disclosure form before the sale.”
Fortunately, Rubin says, Section 67 of the new Property Practitioner Act 22 states that an estate agent can accept the mandate of a sale only if the seller or lessor of the property has completed and signed a mandatory disclosure form.”
The form gives the seller the opportunity to disclose any defects or issues with the property that they know about.
However, it is important to remember that this is focused on what the seller knows and not what the facts are.
“The two can be different.”