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Selling a property in a recession

It’s official South Africa’s economy is in recession for the first time since 2009. Statistics South Africa said today that two successive quarters of contraction define recession and the rate of contraction is increasing. This is a very worrying trend, but I think we have all been feeling it and trying in our own ways to deal with the consequences.

One of the most important decisions to make as a business or an individual during difficult economic times is to reduce debt levels and free up your cash flow. To survive a down turn you need to have reserves to keep a positive cash flow and this is where property becomes key. Property holds both debt and equity depending on the life cycle of ownership. Selling a property to reduce your debt levels will simultaneously improve your cash flow. Selling a property that is paid for will free up equity that can be utilised for reinvestment or used to augment your cash flow.

Selling a property during difficult economic times does not mean you have to sell it cheaply. However, the most important key to ensuring that value is maximised is to use an experienced property professional and listen to their advice. In the commercial, retail or industrial sectors, property is always sort after if it is well located and versatile. If you have a dog of a property, it will always be a dog no matter what happens to the economy. Trying to sell a dog in difficult times will be as difficult as in good times.

An experienced property professional will provide you with guidance, but most importantly they will know who to quietly offer the property to without even putting it in the open market. There is nothing wrong with the open market, but it does not necessarily attract buyers. A buyer for a specific type of property that has been looking over time will jump at the opportunity and may be put off if it is hocked around in the market in a bid to achieve an unrealistic price.

Greedy sellers beware, this is not a sellers’ market. In my experience if the price is not right no amount of negotiating will impress a potential buyer. Buyers make offers and if they are rejected they will walk away. Trust your chosen property professional to guide you.

One last pearl of wisdom for hard times, a signed Sale Agreement or Offer to Purchase is not an indication of the sale price. The only time you have a sale price is when the money is transferred into your bank account.  

06 Jun 2017
Author Ryan Berry
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