Simon’s Town Real Estate News

Over Priced Simon’s Town Properties: What Are The Consequences?

You may ask, “Why are some Simon’s Town properties not selling?”

There are many reasons why some Simon’s Town properties do not sell. But the most important reason is that the Simon’s Town house is overpriced. I know this is a short and sweet answer.The consequences however are dear. Let’s assume we are looking at somebody with a second or holiday home in Simon’s Town. To illustrate we also assume we have two similar properties. One is on the market for R2 million and the other for R1.8 million. Both properties will sell for R1.8 million.The one, correctly priced at R1.8 million , will sell quickly. This clever owner can invests the R1.8 million for 12 months, at 11%, and will receive R198 000 in interest. This will give the owner nearly R2 million in the bank. Great stuff.

But what about the Simon’s Town home seller who hangs on to the R2 million asking price? This home is locked in at R2 million, but we know it will only sell at R1.8 million.

The buyers quickly identify the home as stale. The home will eventually sell for a market related price or maybe even less. And on top of that the owner will not receive the potential interest of R198 000 (less taxes).

You may argue that you will not bank your money. Instead you want to buy another home. I believe the following can happen:

Because homes-for-sale don’t escalate in price your home is locked in at R2 million. The market is not waiting for you and may escalate by 6% or more. You are again at a disadvantage.

My advice to you is to price your home to sell . Do not wait for it to become a property wall flower.

Regards

Johan Horak
P.S. As a quick and rough estimate: For a R2 million over-priced-home the owner, potentially, throwing R18 000 monthly down the drain.

Tags: Before You Sell, over price property, Simonstown Property