SHOULD one buy a property that's been on the market for a year?
At the height of South Africa's property boom, houses were selling within weeks, if not days, of being listed.
That's according to a national real estate firm that says the boom period of 2004 to 2008 embodied the rule of thumb that, in an ideal market, a property should take about eight weeks to sell.
"However, on the back of the financial downturn, the current market is far from balanced, as evidenced by the findings of FNB's Estate Agent Survey for the second quarter of 2012 that houses are spending an average of almost 18 weeks on the market," said Richard Gray, chief executive of Harcourts Real Estate.
There are properties that, despite repeat on-line and newspaper advertising, have been on the market for a year or more.
There are three specific problem areas that might stand in the way of a sale: price, location and the condition of the property.
"Of these, the most critical and yet easily remedied is price. If a property isn't priced in accordance with prevailing market conditions, it won't sell."
But if the price is right, then regardless of any other problems the property has, there will be a buyer for it.
The second problem is area. "Location, location, location is the age-old watchword of real estate," he emphasises.
"Properties in areas characterised by high crime or encroaching industrialisation are likely candidates for long stays on the market, unless, of course, they are priced accordingly."
Third on his list are defects, a defective property is going to chase buyers away. "Most buyers want to buy a place that's fit for them to move into and start living. While some are prepared to do cosmetic improvements, most people don't want to have to undertake major repairs, nor do they have to in this market, where supply far outweighs demand. That means the buying pool for these properties is extremely small."
Properties that, despite being advertised week in and week out, fail to sell, become stigmatised. Days on the market matter – it's one of the first questions a buyer will ask an agent. They feel there must be something wrong with a house that's been on the market for a long time, even if in reality it's a quality home that was just over-priced when it was listed.
Once appointments to view dry up and buyer interest hits zero, sellers will invariably, depending on their personal and financial circumstances, either withdraw their homes from the market or re-evaluate their pricing.
It's at this point that old listings have the potential to become today's best buys, provided purchasers keep three basic tenets in mind.
"Buy it if the price has been brought in line with current selling prices. Buy only if you've done your homework on the area so there are no nasty surprises with regard to crime or other negatives.
"Buy it once you've done a thorough inspection of the roof, foundations, wiring and plumbing, and make sure all structural changes are on plan."
Finally, find out about all recently sold comparable listings in the neighbourhood and then work out an offer based on the average selling price, less the cost of any renovations.