In December 2007 the asking price for a 2 bed/2 bath apartment in The Edge was R1 395 000. Two years later and the asking price for a similar apartment is R1 475 000. That works out to an appreciation of about R40 000/year, about 2.86%/year.If we bought an apartment for R1 395 000 and then decided two years later to sell at R1 475 000 how much money did we make (or lose)?
If an owner had a 100% bond the bond payments over the last two years were about 17300/month (when interest rates were at 14%) to about R14000 today, so let's make it R15000 as an average just to be conservative. Over two years the total bond payments would have been R360 000 with transfer duty another R75 000. Insurance and maintenance is about 1% of purcahse price per year so another R28 000. So we're looking at total input costs of approximately R460 000.
Despite paying in R360 000 in bond payments, you would only have paid off R40 000 on the loan capital (the balance of R320 000 covering the interest so in actual fact you've been renting from the bank for R13 000/month). Take away the estate agency's 6% commission on selling and you'll walk away with R1 386 500. The balance of the bond is R1 355 000, leaving you with a profit of R30 000.
So that's R30 000 in profit from the sale minus R460 00 in bond payments and purchasing costs leaving you with a net loss of R430 000. What an investment. Put my name down for two.
5 comments:
just went to the Estate agents website who is selling the edge apartment
got this from it
"Bornman & Hayward
Hint : If you suspect the funds coming from the sale of your property aren`t enough to cover all the liabilities relating to the sale, you need to give your conveyancer the following : Cancellation figures on your bond, cancellation attorney`s invoice; rates clearance figures; copy of the purchaser`s bond grant and a copy of the sale agreement. You`ll also need to sign an acknowledgement of debt for the shortfall, guaranteeing settlement of the balance with the bank."
Kind of says it all.
TO THE COMMENT ABOVE...
Bornman and Hayward is a firm of attorneys that have this hint to people who sell below their boind value...it has nothing to do with the estate agent.
SO BLOW YOUR LIES OUT OF YOUR CHUTNEY CHUTE...POES!!
All that assumes that you get your asking price :)
Also I think that bbflames is referring to the fact that it is on the estate agent's website and not that it is from them. It's indicative that the agents are covering themselves with that legal statement from the lawyers.
to the first anonymous
I know Bornman and Hayward are attorneys. hence I credited them with the quote. However when an estate agent has a hint like this on their website it indicates a rather sad state of affairs to me. Clearly they are experiencing more than just the odd case of a sale being below the value of the bond.
What is really quite an awfull situation is the fact that the seller will need to sign an acknowledgement guaranteeing settlement to the bank. Seems to me you are almost better off just abandoning it. Although I am sure all the lawyers and bankers who visit this site would disagree.
@ Anon #1, the only thing being blown out of chutney chutes is the finances of anyone who built or bought at The Edge.
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