The Port Elizabeth property market, like many others in South Africa, is currently experiencing subdued conditions, with properties remaining on the market for extended periods. For those looking to move to a new home, the question often arises: should I sell my current home before or after finding a new one? In this comprehensive guide, we’ll explore the pros and cons of both approaches, considering the market conditions in Port Elizabeth, and we’ll also discuss alternative options for homeowners who might not need to sell their existing property right away.
Market Conditions in Port Elizabeth
Before delving into the “sell first” or “buy first” dilemma, it’s crucial to understand the current market conditions in Port Elizabeth. According to real estate experts, the average time a property spends on the market can vary from several weeks to several months. These timelines depend on the property type and location, creating a challenging environment for homeowners planning to make a move.
Sellers’ Markets: Selling First
In a seller’s market, finding a buyer for your existing property is relatively quick and straightforward. However, it may take some time to make a successful offer on a new home due to high demand and limited supply. In these circumstances, experts often recommend starting with the purchase of your new home before selling your current one.
The key is to have a signed purchase agreement for your new home in place before proceeding with the sale of your existing property. Such an approach might involve including specific clauses in the purchase agreement, such as making the purchase subject to the successful sale of your current property within a specific timeframe.
Additionally, you might specify a minimum sale price, finance approvals, occupational rent, and occupation dates, taking into account that the two property transfers might not align perfectly.
Buyers’ Markets: Buying First
In a buyers’ market, conditions are reversed, making it faster and easier for individuals to buy a new home compared to selling their old one. In such scenarios, it might be advisable to list your existing property concurrently with, or even before, beginning your search for a new home.
However, this approach can be stressful since you may need to make a successful offer to purchase within a specific timeframe, adding a suspensive clause to your sales agreement. This can deter potential buyers and potentially backfire in the long run. It’s essential for homeowners to have a plan for temporary accommodations if finding their dream home takes longer than expected.
The advantage of buying first is that you have equity from your existing property immediately available for your new purchase. This can eliminate the need to save up for a deposit and put you in a strong negotiating position with sellers and lenders.
Alternative Options
Selling your existing home might not be the only path to consider. For homeowners who don’t need immediate cash, converting their current property into a rental investment can be a smart choice. This option allows homeowners to use rental income to finance bond repayments on their old property, turning it into an income-generating asset.
Rental yields play a crucial role in determining whether this is a viable option. If rental yields exceed operating costs, homeowners can ride out less favorable sales conditions while building a profitable property portfolio. It’s advisable to consult with experienced rental agents to evaluate the feasibility of this approach.
Setting the Right Rental Price
If you decide to convert your property into a rental investment, setting the right rental price is essential. You can conduct research on your own or seek assistance from a rental agent. Here are some factors to consider:
- Competitive Market Analysis: Compare rental rates for properties similar in size, location, and amenities to yours. This will help establish a competitive rate for your property.
- Vacancy Rates: If there’s a high number of available rental properties in your area, you may need to adjust your rental price to attract tenants consistently.
- Local Economic Factors: Consider local economic conditions, such as interest rates, inflation, and unemployment levels, as they can influence rental prices.
- Internal and External Drawcards: Highlight unique features that set your property apart from others, like nearby employment opportunities, infrastructure, access to amenities, and safety levels. These factors can justify higher rental prices in your area.
The decision of whether to sell your Port Elizabeth home before or after finding a new one depends on market conditions and your individual circumstances. Weigh the pros and cons of each approach carefully. If neither option suits your situation, converting your existing property into a rental investment could be a viable alternative. Remember, seeking advice from real estate experts and rental agents can help you make an informed decision and set the right rental price, ensuring your property’s success in the market.
