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6 Unbeatable reasons to sell your property through an Instalment Sale

Sadly many property owners are not aware of the fantastic benefits that they can realise by selling their property on an instalment sale. Most people are very familiar with the concept of an instalment sale. We buy cars on instalments and enter agreements with retailers to buy things like furniture or washing machines. However, not many people know anything about purchasing a fixed asset such as a residential property in this way, let alone understand it, especially in South Africa.

Many sellers are therefore missing out on a possibly life changing opportunity. There are six unbeatable reasons why you should sell your house using this tried and tested method...

Benefit #1 - Sell Fast - You can sell your home exceptionally fast via instalment sale - often within a few days. If you've been battling to pay your monthly bond repayments or make ends meet, this option may be the answer. You can quickly turn a potentially troublesome situation into a positive one and be in a situation where your bond payments are suddenly being taken care of by a buyer within a week or two. No defaults, no repossession, no destroyed credit profile!

Why is this the case? There are many buyers out there who are wanting to buy in this manner, e.g. business owners with significant earnings but who can't get bonds, and foreign nationals who can only get 50% bonds regardless of their monthly payment capacity. This means there is large pool of buyers desperate to buy using an instalment sale approach.

Benefit #2 - Higher Sale Price - You can typically achieve a higher sale price for your property than with a conventional sale. Sound a little too good? Well because you are selling more than just a house you can command a premium - remember you're selling an opportunity, not just a property. People will pay more if they can get more favorable terms, especially if they cannot get a bond at all and therefore cannot own a house in any other way.

Benefit #3 - Better Return - You can earn higher effective interest on your money that is tied up in the house, than what you would earn if you sold the house for cash and put it into the bank, money market or many other annuity products. We've already explained that you are selling more than a house and therefore buyers will be willing to pay a premium in terms of the interest rate charged to get access to your property.

This presents an excellent opportunity for retirees who may have a paid up property portfolio or need to sell their home to get access to cash for monthly income. An instalment sale can provide you with this monthly income while at the same time achieving a great return.

In addition if your property is not paid off you'll be able to earn greater interest than you would be paying on your bond - in other words you would make money off your existing bond!

Benefit #4 - Deferred Capital Gains Tax - If you sell your property conventionally Capital Gains Tax has to be paid to the Receiver of Revenue in the same financial year as the sale occurred. However, with an instalment sale this tax is calculated at the time the agreement is entered into, but only becomes payable on final transfer of the property which could be in many years' time. This can result in a huge tax saving especially for investors.

Benefit #5 - Lower Fees or Commission - You will end up paying significantly lower commission than a normal sale through an Estate Agent. In fact some sellers cannot actually afford to sell using an Estate Agent as there is insufficient equity in the property to cover the transaction costs and pay commission.

Benefit #6 - 'Low' Risk - A sale on an instalment basis is rigorously controlled under the Alienation of Land Act 68 of 1981, with the instalment sale being recorded against the title deed in the deeds office by attorneys, giving both parties to the deal maximum protection. As the seller, you remain on the title deed as the owner until such time as the final instalment has been paid. It is only at that point that final transfer takes place. Buyers almost never default because they then stand to forfeit the deposit they put down at the outset. Also, the “buyer” is just that and not a tenant. They therefore have a vested interest to look after the property and they do not enjoy the protections afforded a tenant in terms of current legislation. If a buyer should default then taking back possession of the property again is a relatively easy and quick process…... and you then have the property back in your possession at a higher value as the market typically would have moved upwards over time.

So with all these great benefits it’s no surprise that an increasing number of sellers are selling their properties in this manner across South Africa. Propsolve has developed a safe and seamless end-to-end process to assist these sellers. We have assisted many delighted home owners with the sale of their properties using this proven method. We work closely with our attorneys, who are arguably the most experienced instalment sales attorneys in the country to provide our clients with a one-stop shop solution.

Visit our website at www.propsolve.co.za to find out how we can help you sell fast and effectively!

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