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Don’t overpay when you buy

Every property has its price and it depends on a lot of factors, some of which are difficult to put into practice, but every buyer should be careful not to over pay for a property.

But that is not to say you must not pay more than has been paid before, it is just that the extra price must be justified.

Things that increase or decrease the value of a property could include any of the following:

Position: Often thought as vital when buying a property. There is an old adage – position, position, position.

Think about it.

The actual cost of building a new property is just about the same wherever you build it.

So, in Bloemfontein’s context, building an identical property in Pentagon Park and Mangaung is likely to result in a property that has a different value.

But what about a property built one behind the other where the one property is on a very busy main road while the other is on a quiet street immediately behind it?

These identical properties would have quite different selling prices.

With sectional title units, being on the top floor, ground floor or next to the swimming pool can have an effect on the likely selling price.

Condition: Let’s be fair – a neat, well-maintained property with modern furniture and fittings will always sell quicker and for a better price than a dirty, untidy one. 

The furniture is not part of the sale – it just sets a better scene.

Would you buy that dirty, untidy, poorly maintained unit?

Well, yes, if the price was right, and especially if you have the foresight and skills to refurbish and upgrade the unit at a reasonable cost.

Market: The market means what is going on generally with property sales in your area.

Is there a lot of inflation resulting in rising prices (there is less room to negotiate?

Is there a shortage in properties for sale in the area?

Sometimes there might be an oversupply of properties that keep prices down.

What is happening in the area?: While this might take longer to have an influence it can be a very big reason why people want or don’t want to buy properties in that particular area.

Prices are likely to drop in a high-crime area compared to a peaceful suburb.

Where commercial properties are creeping into a residential area there will be less demand for people to buy homes there.

Knowing what is going to happen in an area makes a huge difference to the future value of a property (up or down).

Many years ago when I bought my offices, Zastron Street was a dirt road.

But I knew that it was going to be tarred and made into the main entrance for Bloemfontein.

Management: In sectional title schemes good management is vital.

You need to see copies of the current and annual financials and feel comfortable that things are being well run.

Where a body corporate owes money for water or electricity, you will not even be able to get transfer of your individual unit unless somebody settles the arrears owed by the body corporate.

But apart from that, a well-managed building is a happy one.

Things work, the buildings are well-looked after and clean. 

Why would you pay a good price for a unit in a badly run scheme?

  • Mike Spencer is the founder and owner of Platinum Global. He is also a professional associated property valuer and consultant with work across the country as well as Eastern Europe and Australia.

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