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May 2016

300 209 Prevance - Bridging Finance South Africa

There is Light at the end of the Tunnel

REPORT

Sellers-AdvanceSelling a home because you are in financial trouble is not something most like to think about but as the economy continues to take a knock, it’s a decision that more and more cash strapped South Africans are going to have to make. Locking a front door and walking away from a home that has formed part of your life is never easy, not even when you are moving on to better things. Moving home is stressful, so stressful in fact that a poll conducted in Great Britain in 2014 indicated that 61% of respondents felt that only death and divorce rated higher. Add financial difficulty to the equation and stress levels are going to soar.

Owning an asset such as property is always going to be a bonus, because if financial doom strikes, the property can be sold. People sell homes for a variety of reasons. Estate agents however refer to the ‘three Ds’ – death, debt and divorce – as the main reasons most people are compelled to sell. The fact that debt is one of the primary reasons for putting a home on the market makes things more than a little complicated. This is mainly because often people will try and sell the property at a sum high enough to enable them to pay off all of their outstanding debt. The problem with this approach is that over-priced homes generally don’t sell quickly and while the property languishes on the market for months or even years, the seller’s debts continue to increase. Bond repayments still have to be made and other expenses such as rates and taxes still have to be covered.

Those willing to buy overpriced homes are few and far between. This is because buyers have a far better understanding of property values than ever before and desperate sellers can’t pull the wool over their eyes simply because they need to make a bigger profit.  Canny buyers will in all probability disregard these properties completely and put in an offer on something they know offers better value for money.

So what should you do if you have to sell your property? Here are some pointers:

  • Call on at least three local registered estate agents to conduct a valuation. Don’t be fooled by an agent who maintains that your property is worth far more than the other agents’ estimates. Ask to see a comparative marketing analysis in order to determine how the higher valuation was arrived at before agreeing to market the home at the higher value.
  • Make the property as appealing as possible. Tidy up the garden and scrub the outside walls. Declutter living spaces, packing away excess furniture in order to make the property look bigger. Keep the interior of the house as clean and tidy as possible at all times – buyers tend to want to view at the most inconvenient times.
  • Take a close look at all offers. Cash sales for example usually go through far quicker than do those which require a bond. Likewise, an offer that is based on the buyer selling another property can cause delays. Do the maths and figure out how much the lower offer could bring in at the end of the day, taking into account the on-going costs of owning the home.
  • Once the property has been sold, consider taking out bridging finance.

The time between selling and the actual transfer can be incredibly frustrating for a cash strapped seller. They can see the money, but they can’t touch one red cent until all the necessary hoops have been jumped through. Many are caught in a catch-22 situation because a property can’t be transferred until outstanding rates have been paid in full.

Lot of people in this situation are unaware that a solution is available in the form of bridging finance, and yet sellers can receive as much as 75% of the nett proceeds of the sale (after the outstanding bond and rates have been deducted) before the sale is finalised.

“Prevance has been giving peace of mind to sellers since 1992,,” says Lewis Freidus, CEO Prevance. “Our team understands the pressures associated with being a cash strapped seller and the systems we have in place allow for us to offer the best service in the shortest possible time. In our case, advances are typically paid out within 12 hours of the application being approved.

“The cost of the advance is determined by a number of factors which will be taken into account when the credit assessment is completed. These factors could include the amount of the advance and the credit profile of the customer. There are however no hidden costs and our customers are fully briefed on how much the advance will cost before the money is transferred into their account.”

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