Budgeting tips to help save for a depositTue 10 Nov 2015
Whether it is because you are retiring and buying a smaller home, moving in with roommates or have just purchased your first start-up home, it can be a big advantage to find ways to maximise the space you have and make the most of what is available, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
He provides a few tips for when one moves into a smaller space:
Declutter
Ideally when it comes to downsizing or maximising small spaces, it is best to reduce clutter as much as possible and only keep the items that are essential. Holding onto unnecessary items will only make it harder to find space for the necessary ones. “Confront drawers that have been classified as the ‘everything drawer’ and see what is useful and what is just taking up space. Often the reason an item lands up sitting in a drawer for months is because there is no longer any use for it,” says Goslett.
Sort stuff into yes, no and maybe piles
If possible it is best not to have a maybe pile as this means dealing with items more than once. Homeowners should try to deal with each item once and make a decision as to whether they are keeping it or getting rid of it. While this may seem like a difficult task, especially for those who struggle to let go, ask whether the item could be replaced if it lost and how often it really gets used.
Donate
While packing it is possible that you’ll find a number of hidden treasures that might not make sense to take to your new home. There are several charitable foundations that do amazing community work which would benefit from a donation of household items. “A great deal of charity organisations can only do the work that they do due to donations made by the public. Making a donation is a great way to reduce clutter and provide assistance to members of the community who are less fortunate,” says Goslett. Remember to only donate items that will be useful and which are still in good working order.
Make some money
Goslett points out that selling off items is another excellent way to get rid of unwanted items while making some money to put towards the move or towards buying more suitable items to fit the new space.
Be seasonal
Although it might not always be practical, only have the current seasons clothing in the cupboard. Large winter coats and winter boots take up a lot of space, so if possible these items should be left in storage or stored in sealable containers and packed away until needed.
Get organised
Although the object is to get rid of items, going and buying an organisation system or containers that can help to reduce the amount of space needed for items can make sense. “Organisation goes a long way to decluttering an area without having to throw any items away,” says Goslett.
Follow the trend
Getting rid of clothing and unwanted items will mean that you may no longer need a large set of drawers. Large pieces of furniture can be sold or donated to make space for more suitably sized furniture.
Be strategic
Instead of aimlessly shoving items away, have a plan when packing them into cupboards and drawers. If an item is not used very often but is an item that is going to be kept, pack it into a box and label it. Boxes and containers are easily stacked to make more space and will help to protect the items inside.
“Having a plan and ensuring that only the necessary items are moved across to the new home will ensure that the most is made of a small space. Maximising the space available will make the home a more comfortable space to live in,” Goslett concludes.
One of the most important aspects that potential landlords should consider before deciding to let out a property is a tenant’s rights and what implications they have if the contract turns bad at any stage during the period that the tenant occupies the property, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
“Times have changed over the years and removing a tenant from a property is far more difficult than it used to be, even if that tenant is defaulting on their monthly payment. Landlords who overlook a tenant’s rights and use illegal or unfair methods to remove the delinquent tenant from the property will be dealt with severely by the courts. This emphasises the importance of researching tenant’s legal rights, along with thoroughly vetting all potential tenants before they take occupation of a property,” says Goslett.
He notes that anyone considering letting out a residential property should familiarise themselves with the Prevention of Illegal Evictions Act (PIE) Act. “While the Act has been in effect for some time, with access to so much more information, tenants are becoming far more aware of their rights and landlords need to know what they can and cannot do. Although the systems were put in place to protect both parties, the Act weighs in the tenant’s favour,” says Goslett. “A landlord cannot under any circumstances resort to eviction tactics such as changing the locks, cutting off water and electricity or forcibly removing a tenant that hasn’t paid rent without receiving authority from the courts to do so.”
“As much has tenants have rights and those rights should be protected, it is also the responsibility of the tenant to ensure that they keep to their end of the agreement and look after the property as if it were their own,” says Goslett.
According to Goslett, the relationship between the tenant and landlord should be based on mutual respect with both parties benefiting from the arrangement. A tenant should ensure that the rent is paid timeously on a monthly basis and the landlord needs to ensure that the property is maintained and kept in a satisfactory condition.
He notes that the Rental Housing Tribunal administers the Rental Housing Act 50 of 1999, facilitating relations between tenants and landlords. The responsibilities of the Tribunal include advising tenants and landlords of their rights and obligations as well as resolving issues. The Housing Tribunal has mediating facilities and if the issue cannot be resolved over the table, then a hearing will be called. It is worth noting that a ruling of the Tribunal is deemed to be an order of a magistrate ‘s court in terms of the Magistrate ‘s Court Act,1944 (Act No 32 of 1944).
The most common issues raised with the Tribunal include:
Once sellers have placed their home on the market and have made the necessary preparations, what can they expect from their first show day? Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, says that are several things that sellers can expect when they open their home to the public.
Don’t be home
According to Goslett, the first thing that sellers should expect is to make arrangements to be out of the home during show days. “Potential buyers will feel far more comfortable to explore the home if the current owner of the home is not present. It is best to leave the showing of the house to the agent, so that buyers can envision themselves living in the home,” says Goslett.
Expect neighbours to drop in
Among the potential buyers there are likely to be a number of curious neighbours that drop by to see the home. This is partly because they would like to compare the property to theirs and see the potential price they could sell their home for and partly just to snoop. The upside is that they will be able to talk to potential buyers about the area.
Remain contactable
Goslett says that while homeowners should not be home during show days, they should be available via phone at all times in case the agent or a potential buyer has a question.
Find an alternative place to park your vehicle
Ensure that there is as much free parking space available for buyers as possible. If the homeowners only has one car then this isn’t a problem as they won’t be there during the show days, however all other vehicles should be parked at a friend’s or neighbour’s home to make space for potential buyers and the real estate agent.
Feedback from the agent
Goslett says that the real estate agent will solicit comments from the potential buyers who view the home and will be able to provide feedback to the seller. This information will be helpful to gauge the interest in the property and make adjustments regarding the asking price or home updates that need to be done.
Be patient
While the shortages of property available to buyers has pushed the market in seller’s favour, some homes may still take some time to sell. “An agent’s objective is to sell a home for the best possible price in the shortest period of time, but this may not be overnight. It could take one or two days before the show day foot traffic translates into calls from buyers who are serious about purchasing the home,” says Goslett.
He concludes by saying that if the seller has chosen to work with a reputable, experienced real estate professional, show days can be a highly effective marketing tool.
Buying a property with a spouse or partner can be an exciting time, however choosing a home that meets both parties’ needs is not always easy. “One person’s vision of the ideal home may not be the same as the others’. Everyone has their own unique idea of their dream home, which often makes finding the perfect home for both individuals a difficult task,” says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
He notes that while difficult, it is not impossible, provided that both parties are willing to work through it together to find a home that makes everyone happy. Goslett provides a few tips that can make the process a little bit easier:
Write a list
Putting pen to paper is an ideal way to organize one’s thoughts and have a clear vision of what each person wants. Both partners need to sit down and make a list of the top ten features they would like in their next home. They might be surprised to learn that their wants are not as different as they seem at first.
Determining wants from needs
Once each person has made their list, they should then categorise each of the items into wants and needs. Goslett says that a want is something that the buyer would like, but could live without if necessary while a need is something that they cannot live without. An example of a want is a view from the home, while a need could be office space or an extra bedroom for a growing family.
Put the items in order of priority
Arrange the features on the lists in order from the most important to the least important.
Put the items in order of priority
Communication is a key element for a successful relationship between two people. This means that sitting down and discussing the motivation behind each of the items on the lists, which will give the other person some insight into why those aspects are important.
Be open to making compromises
Although both parties may not agree on certain items, it does not mean that homes with these features should be completely discarded from the search. Goslett says that buyers may be more inclined to change their mind about a feature once they have seen it in person and have heard the other person’s motivation behind why that element is important to them. Keep an open mind and be prepared to make some compromises.
Be open to making compromises
A real estate agent can provide an objective point of view that can help both parties find neutral ground. Goslett points out that an experienced real estate professional will be able to give unbiased advice regarding which features will be able to fit into their budget and which won’t work as well.
Run the numbers
Calculate the cost of adding the features to the home at a later stage. Just because the home does not currently have all the features at the moment, it does not mean that it cannot be changed. Part of the compromise might be waiting a while before the home is upgraded, but not necessarily completely letting go of those wants.
Take a break
Searching for a home can be an emotional experience, so if discussions become too heated, take a time out from the search and focus on something else for a while. Sometimes stepping away from a situation can give a new perspective and renewed energy to deal with it.
Keep an eye on the big picture
Buying a home together is about embarking on a new adventure. It should be more about moving forward together than pulling in opposite directions. Compromising is worthwhile if it means that the relationship is strengthened.
“Buying a property with someone may mean letting go of the dream home vision to find the right home that fits both partners,” Goslett concludes.
Often when disputes arise between buyers and sellers, it is regarding an item of the home that was seen as a fixture, but was during the home sale process. According to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, it is for this reason that sale agreement between the two parties, otherwise referred to as the offer to purchase, needs to be clear regarding all aspects relating to the sale of the home.
“It is not uncommon for a homeowner to have installed certain items in their home that they intend to take with them when they move. Even if the item is regarded as fixture, a seller is within their rights to take the item, provided the buyer is aware of the fact and is in agreement,” says Goslett. “Alternatively, if the agreement of sale excludes any specific item, the seller is entitled to remove it, which again points to the importance of ensuring that the sale agreement that covers all aspects clearly.”
He notes that disagreements occur when the sale agreement is vague and does not list the specific fixtures that will remain in the property. According to Goslett, the seller should prepare a list itemising exactly what is to be sold with the house prior to listing the property with an estate agent. “The list should be incorporated into the mandate to sell so that the agent can point out to potential buyers any items that will be removed by the seller at a later stage,” he says.
When it comes to fixtures and fittings, the general rule is that when a buyer purchases a property, they receive the land, the permanent physical improvements such as any buildings erected on the land, along with all items that are permanently attached to the improvements or buildings that are erected on the land. This includes all upgrades, fixtures and fittings of a permanent nature. This is why it is to define what is regarded as permanent nature.
According to Goslett, there are three aspects to consider when defining whether a fixture or fitting is of permanent nature:
During July this year many homeowners would have submitted a tax return and possibly received a lump sum of money back from the South African Revenue Service. Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, says that getting a tax refund is an ideal opportunity for homeowners to invest in their home and make some changes that could add value to their property.
“There are several ways in which homeowners can use their tax refunds to make home improvements, regardless of the amount of money that they receive. They don’t have to undertake large expensive renovations to see the benefits as there are relatively inexpensive home upgrades that can boost both the look and value of the property,” says Goslett.
He provides homeowners with a few ideas to improve their home with their tax refund:
Update kitchen fixtures
They say that the heart of a home is the kitchen as it is normally a room in the home where the homeowner will spend a lot of their time. Goslett says that in order to upgrade the kitchen there is no need to redo the entire space to give it a fresh new look. Simple changes such as new cabinet handles and knobs or new taps will go a long way to a whole new look and feel.
Freshen up the bathroom
Again, there is no need for the bathroom to be given a complete overhaul to have it looking fresh. “One or two key changes can make a big difference,” says Goslett. “Try replacing old shower doors or the tiles in the shower, re-finishing the bathtub or replacing the toilet and basin. All of these changes will freshen up the bathroom’s look and add to its aesthetic appeal.
Replace the garage door
Very often the garage door is the first feature of the home that is seen as soon as a person arrives. Replacing the garage door can upgrade or modernise the entire look of the home, as well as being an excellent investment. Goslett says according to a property cost versus value analysis around 80% of the costs of replacing a garage door are recouped when the home is sold.
Garage shelving
Another fairly inexpensive addition to the garage is shelving. Aside from being an excellent selling point, the additional storage space will make it far easier to keep the garage neat and tidy.
Replace the front door
Much like the garage door, the front door to the home is one of the first features that people see when approaching the home. “The front door is what welcomes the homeowner, guests and potential buyers to the home, so it is an important element in the overall first impression,” says Goslett. He notes that the homeowner can expect to recoup more than 90% of the cost of the front door when the property is sold. Along with the front door, the homeowner can also look at upgrading the doorbell and the lighting.
Plant a tree
A beautiful tree in the garden will enhance the look of the property and the best part is that it is good for the environment. Homeowners who wish to restrict their water usage could opt for other landscaping enhancements instead, such as some stepping stones or water-wise plants for the garden. As a general rule, only indigenous plants and trees should be used as they consume very little water and require minimal maintenance.
“For homeowners who are not looking to make home improvements, they can still make use of their tax refund by paying it into their bond. Paying lump sums into the bond will reduce interest charges and will help to cut time off the period on the loan,” Goslett concludes.
Buying a home that is in need of attention can be a highly beneficial investment, however, this is dependent on whether the purchaser takes the necessary precautions and follows the right procedures, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
“Regardless of the kind of property that the buyer is choosing to invest in, it is important that they do the required research and lay down the groundwork before committing themselves to the purchase. This is especially important when looking for homes that would be considered as a fixer-upper as the buyer will need to pay additional money onto the property to renovate it. Knowing what is a good buy and what should be steered clear of is a key aspect to success when purchasing a fixer-upper property,” advises Goslett.
He adds that there are several advantages to purchasing a home that needs renovation. “For many investors who have the capital to spend on renovating, purchasing a home in need of attention is a way to secure a higher profit margin when they sell the property at a later stage, provided of course that they are savvy with how much they spend fixing the property,” says Goslett.
He notes that another advantage is that there is often less competition in the market for these kinds of homes, which means that they generally sell for lower prices than most of the homes in the area. This greatly increases their potential for return on investment - especially if they were bought at a good price.
According to Goslett, a property’s investment potential is largely based on the decisions that are made by the investor at the beginning of the transaction. “Making the right decisions from the outset will give the purchaser the best chance seeing a healthy return. While the perfect home may be hidden under the guise of various unsightly essentials that would normally repel potential buyers, fixer-upper investors will need to see past the property’s outward appearance and envision the home’s true potential,” says Goslett, who provides some tips for those looking for the ideal fixer-upper.
Location is always vital
No other aspect will have a greater impact on the property’s potential for appreciation in value than its location. “All property professionals agree that location is the first thing that any property buyer should focus on. This is because a property’s location determines so much of its current value and growth in value in the future,” says Goslett.
He points out that from an investment perspective, homes that are in proximity to a range of amenities such as shopping centres, entertainment areas and good schools generally see a higher percentage of capital growth over the long term than those that aren’t.
How the home is designed
Renovating a home is one thing, but completely changing the design of the property can be very costly. Goslett says that this is why it is important that the shell of the home is designed well and laid out correctly. In some cases where rooms have been added at a later stage there can be a disconnection in the home’s layout if it has not been properly thought out. Sometimes it is better for buyers to walk away than to try to correct a bad design.
The overall condition of the home
While certain renovations are manageable, if there are too many defects or possible structural damages, the home may not be worth the money or the effort. A good fixer-upper is a home that is at least in a liveable condition. “Cosmetic issues can easily be fixed, but major changes to the home’s structure or foundation take a lot more money and expertise. Homes with these of issues will be a money-trap rather than a good investment,” says Goslett.
He points out that as with any investment, it is always better to gather as much information as possible in order to make an informed decision that will pay off in the long run. Buyers who are unsure of anything should seek the advice of a reputable contractor to ensure that the home is structurally sound. “It better to go into an investment with both eyes open, than blindly hoping for the best,” Goslett concludes.
Beginning the journey to find the right home is an exciting time for buyers, although in today’s competitive market with a limited number of homes available for purchase, it might take buyers some time to find exactly what they are looking for. However, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, while the house hunt can take time, it is an important part of the process that can be much smoother if handled in the right manner.
Goslett provides potential buyers with some tips for surviving their house hunt:
Prioritise
Before starting to look for home, it is important to sit down and set priorities. “The buyer needs to decide which aspects of a home are most important and which aren’t. If the buyer is purchasing a home with their partner or has a family, each party involved should have a say in the discussion to determine which features are musts and which are simply wants. This will make it much easier to narrow down the search to a list of favourites and make compromises that fit into the budget,” says Goslett.
Wear the appropriate clothing
When spending the day looking at homes it is best to wear comfortable shoes, preferably ones that are easy to take off and put back on. “Certain homeowners may want buyers to remove their shoes before entering the home, so having shoes that are easy to slip on and off are advisable,” says Goslett.
Remember to bring the right tools
A tape measure is an excellent tool for taking the guess work out of house hunting. “Rather than trying to figure out whether or not a piece of furniture fits in a particular space, just take a tape measure and find out. A smartphone or tablet are also great items to have along to take photos of the home to refer back to later. When the buyer has viewed several properties, photos will help to compare and distinguish between them,” says Goslett.
Don’t let the home’s aesthetics cloud judgement
While everyone wants a home that is aesthetically pleasing, it is important to look beyond the home’s outward appearance and focus on other aspects such as its location and structure. Goslett says that the look of a home can be changed, but it is vital that the home has the right bones and can accommodate the buyer’s needs.
Brace yourself for the unexpected
When purchasing a property there might be some things that the buyer cannot prepare for. It might be a matter of the buyer discovering a defect in the home or issues that they are not prepared to take on and decide to walk away from the deal. Whatever the reasoning, a buyer needs to be prepared for the fact that things won’t always go smoothly. This is why buyers should be as prepared as possible before making an offer to purchase, which is legally binding, and make sure all checks have been undertaken beforehand.
Stick to your criteria
In a market with limited homes available for sale it may be tempting for a buyer to settle if they can’t find exactly what they are looking for, but it is important to remember that purchasing a property is a long term decision. “Most people will stay in their home for at least seven to ten years, so settling will mean living with the compromises for an extended period of time. Even if it takes a while longer to find the right home, it is better to stick to your guns and not compromise on those must-haves,” advises Goslett.
Enjoy the process and treat yourself
If the buyer is looking for a property in an area that they have never stayed in before, they should make a point of trying out one of the local restaurants, bakeries, spas or coffee shops. “This is a great way of getting to know the area better and what it has to offer, it is also a great way to make the weekend house-hunting excursion a lot nicer,” Goslett concludes.
Although a worthwhile endeavour, deciding to take the step away from renting and towards owning a property comes with its own set of challenges. For this reason, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, it is best to consider all the pros and cons before signing on the bottom line. He provides some pros and cons to think about: PRO: The home is yours to customize Goslett says that one of the best things about owning a property is there is more freedom around what can be done. “Whether it’s changing the colours of the walls or removing the carpets, the owner has the ability to do just about whatever they want within the boundaries of their property. In most cases, owning a home means not having to consult with another party or agent before making changes or upgrades,” says Goslett. CON: All upgrades and changes are at the owner’s expense Along with the freedom of choice around changes that can be made to a home, comes the financial responsibility. If anything breaks or needs to be upgraded in a rental property, the tenant can simply request that the management agent or landlord sort it out. “When one owns a property, bear in mind that the onus will fall on the property owner to find a contractor that they trust to undertake the work, and to cover the cost of the repairs or replacement,” says Goslett. PRO: You can finally settle in one place Owning a home means no more worrying about the rent going up or the landlord deciding to sell. As a homeowner, there is security in the fact that you will probably be in that home for the next five to ten years. “Buying a home means that the owner can establish their roots, build long-term relationships with neighbours and settle,” adds Goslett. CON: No longer as mobile Renting a property gives the tenant the flexibility to move once the lease is up or their circumstances change. For owners however, the monthly bond repayment will remain their responsibility until the property has been sold. PRO: Build home equity The money that is paid towards rent is going to someone’s bond and it is money that the tenant will never see again. For homeowners, money paid towards their own bond is paying off an asset and building equity. Ideally the equity that has been built up in the home will be realised once it is sold and the owner will be able to walk away with money for a deposit on another home. CON: The market plays a part When one owns a property, they are affected by the phase of the market when it comes time to sell. “The market will have a major impact on how long a property stays on the market, as well as the price at which it sells. While it is ideal for a homeowner to sell their property for more than what they paid for it, this is largely dependent on the conditions surrounding the market, when they bought the property and when they decide to sell it,” says Goslett. “At the end of the day, there are several benefits to buying and owning a home, provided that the buyer is ready for all that homeownership entails. It is important that the decision is not made lightly and that all aspects are carefully considered beforehand,” Goslett concludes.
While it is useful to learn from your mistakes, it is far more ideal to learn from other people’s mistakes and thereby avoid making them altogether. According to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, this is particularly important when selling a home. He provides a few common mistakes that sellers have made in the past, in the hope that future sellers avoid repeating them: Selling the home privately There are certain things that should be left to the professionals. Selling a property can be a complex, intricate process. While going it alone might be a tempting option to avoid paying an estate agent’s commission, working with a reputable real estate professional will ensure that the home is sold for the best possible price within the shortest possible time. A professional agent from a reputable company will provide the seller with a valuation, advice and all the additional data they need in order to ensure the property is correctly priced to sell. They will also market the property to the correct type of buyer from their database of potential purchasers. Selecting the wrong real estate agent While not using an estate agent can be a mistake, using the wrong agent can be just as detrimental to the success of the sale. The simple fact is that all agents are not equal, so it is vital to select the right one for the job. It is important to work with an agent who has working experience in the area that the property is situated. The agent must have a depth of knowledge on the property market, specifically the micro-market in the seller’s neighbourhood. Overpricing the property While it is good to have high expectations, sellers should rather be smart when pricing their home. Although many sellers will be tempted to over-price their property to counteract buyer negotiations, overpricing could chase buyers away altogether, leaving the home sitting on the market for longer than it has to. Listing the home at a price above fair market value and then letting it drop several times can also lead to a lower selling price than the seller was originally hoping for. A savvy agent can help the seller set the best, most competitive price for their home based on other recent sales and local market trends. Worrying about the little things When selling a property it is important to keep things in perspective. The seller needs to bear in mind that they are in the process of one of the biggest financial transactions they are likely to ever make. While it might be easy to get distracted by the costs of the pre-listing repairs and upgrades, once the home is sold, the seller can focus on the rewarding outcome and forget about the small frustrations along the way. Becoming overly emotional It is easy to get wrapped up in the fact that many memories have been built up in the home, however while these are heartfelt stories, they will not win over buyers. Although sellers will have an emotional attachment to the home, potential buyers will only be looking at the home itself. The seller’s personal history with the home can sometimes cloud a buyer’s judgment, which is where an objective estate agent can be a valuable asset.
“Avoiding these mistakes will help to ensure that the process of selling a home is less stressful and a far easier procedure to handle,” Goslett concludes.