RE/MAX of Southern Africa

Plan to succeedFri 17 Feb 2017

Consumers who aspire to purchase a property during 2017 will need to take of their financial position into account and make adjustments where necessary to achieve their goal, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.

“The majority of the population is reliant on banks to purchase a home, and it is no secret that financial institutions have stringent lending criteria when it comes to bond approval. Prospective buyers have to keep their financial affairs in order and show the required affordability levels before they can be approved for finance. The same applies to consumers who are already homeowners and might require additional finances to undertake renovation projects or upgrades to their property,” says Goslett.

He adds that taking a step back to assess their financial standing will provide consumers with the opportunity to measure the progress they are making towards attaining their financial objectives and see what needs to be changed if necessary.

“When reviewing finances, consumers should revisit the foundation of their financial plan by looking at their resources, goals and priorities. During this time they can re-evaluate their situation and include any major life changes that may have happened in the last 12 months, such as a marriage, birth of a child, death or starting a new business feature. All of these factors will play an important part in how the financial plan is adjusted to meet the end goal,” advises Goslett.

A major life change will change the perspective homebuyer’s needs and possibly their projected time frame to meet their financial goals. “A growing family who is living in a home that no longer meets their needs will want to make a change sooner rather than later. This would mean that more money would need to be set aside for the 10% -20% deposit and other costs associated with a property transaction. For time-sensitive goals, a professional financial planner would be a valuable asset who can provide strategies to meet the objective,” says Goslett.

He adds that consumers who got married over the last year should also consult with a tax professional to determine how this may have impacted their tax status. SARS requires consumers to inform them of their marital status as the disposal of assets has capital gains tax implications in the joint estate of spouses married in community of property. “Reviewing finances and having everything in order will make it easier for consumers to submit their annual tax return. It will also provide the consumer with valuable information about their spending habits. A financial review will assist consumers to determine whether they are getting value for money on expenses such as insurance, flexible spending accounts, cell phone plans and even investment fees,” says Goslett.

If the goal is to show the necessary affordability ratios to be approved for finance, then no financial review is complete without a plan to pay off existing debt as quickly as possible. “Eradicating or at least reducing debt levels are a vital part of any financial plan. Even a small additional payment of R100 a month can make a big difference in reducing debt levels and showing steady progress. Having an emergency savings fund can also help consumers to stay out of debt while preparing for a rainy day. A set amount should automatically be transferred to savings each month,” advises Goslett.

To remain motivated and stay on the right track, consumers should monitor and benchmark their financial plan and investments. There are several ways to measure an investment portfolio, but perhaps the most important is whether it is working towards the consumer’s personal goals. If the consumer requires their investment to grow by a specific percentage annually, the performance of the portfolio should be measured against this benchmark and be adjusted to meet this requirement where possible.

The sooner a consumer assesses their financial position and makes the required changes to met their goals, the better. Putting it off will just mean that it will take longer to achieve. “Aspiring homeowners need to be aware of how they spend their money as well as what changes need to be made to reach their goal. They will need to review the changes that been made and anticipate further changes that may occur in the future. With the correct planning, nothing is impossible,” Goslett concludes.

Is it possible to terminate a lease agreement without recourse?

There are a number of possible reasons that could arise that lead to a tenant wanting to terminate their lease agreement before it has run it course, however, it is possible for them to get out of a lease agreement without being in breach of the contract?

According to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, the answer to the question will depend on the cancellation clause within the lease agreement. “Unless there are grounds for cancellation of the agreement, which are stipulated in the cancellation clause, it can be rather difficult to get out of a lease agreement without any recourse. Even if the lease agreement doesn’t contain a cancellation clause, the tenant can still be considered to be in breach of the agreement if they decide to terminate the contract prematurely,” advises Goslett. “If the tenant has breached the contract, the landlord is within their rights to demand that the tenant pays the rental amount due to them for the remainder of the agreed upon tenancy period.”

Goslett says that if a landlord has met all the conditions of the lease, the tenant cannot simply terminate the lease agreement. They will have to discuss the matter with the landlord and possibly come to a mutual agreement, such as another tenant taking over the current lease agreement or subletting the property for the remainder of the lease period. It is imperative that any agreement made between the two parties is put in writing to avoid any confusion or backlash further down the line.

The Consumer Protection Act (CPA) allows tenants to provide the landlord with 20 days’ notice if they choose to cancel their lease before it expires, however, this does not completely absolve the tenant of any responsibility. While a tenant has the right to move, if the landlord has met the requirements of the lease, they are within their rights to recoup reasonable costs that they may incur during the search for a replacement tenant. In certain cases, the tenant might be required to pay for the loss of rental income, advertising the property and letting agents commission. While the CPA does not stipulate what would be considered a reasonable figure, the landlord cannot make up exorbitant figures and charge the tenant what they feel like. It is also illegal for the landlord to withhold paying the tenant their deposit unless there are substantial damages to the property which were caused by the tenant.

“In the instance where the landlord has not met their end of the bargain and is therefore in material breach of the lease agreement, the tenant will be able to cancel the lease agreement early without them breaching the contract agreement and paying the penalties. Examples of this are if the property has become inhabitable or the landlord has failed to maintain aspects of the property that they have stipulated in the lease agreement that they would - the tenant is within their right to cancel the agreement,” Goslett explains. “However, in this situation, the onus is on the tenant to prove that the landlord is in breach of the contract and has failed to uphold their side of the deal.”

Goslett says that tenants who have reached the end of their lease agreement and are planning to move should check their contract to see whether it contains a renewal clause, which will stipulate the amount of notice time the landlord requires. “If the lease agreement has expired and the tenant is still living in the property, through their actions they have effectively already entered into a new lease agreement and will need to follow the right procedures to cancel the contract. If the original lease agreement does not include either a cancellation clause or a renewal clause, the tenant must give the landlord one month’s written notice before its expiration,” he concludes.

Look out for restrictions on your property

Owning a property does not mean that the owner is entitled to do whatever they want to the property. Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, says that every property in South Africa that is privately owned is subject to certain control measures, which may restrict the owner from making the changes they desire.

“Before purchasing a home it is in the buyer’s best interest to check the title deed to see whether there are any restrictive conditions that exist on the property, especially if they plan on building on or changing the property in any way,” advises Goslett. “The aim of restrictive conditions in a title deed is to create a property or neighbourhood with specific characteristics that appeal to a certain demographic of resident. Some examples of restrictions include that the property may not be sub-divided, the buildings may not be higher than two storeys, no business use of the property, only 50% of the stand may be covered or built on, all exterior wall must be a certain colour and all structures must have a particular style roof, etc.”

According to Goslett, there might also be restrictions regarding the sale of the home and not just on the property itself. “In some instances, parents will stipulate in their will that the property that they left to their children cannot be sold until they reach a particular age. This stipulation will be registered against the title deed of the property,” he says.

Goslett notes that control measures and restrictions are governed by several laws and regulatory bodies. If a statutory law or written law of the country does not deal with a particular situation, then common law will apply. “Each town will have a general plan or guideline as to how it has been set out with regards to residential, commercial and industrial areas. The local authority plans will set certain rules in place where particular types of building can be built, such as shopping malls and residential developments. A property may not be used for purposes that contravene that of its initial intended purpose,” he explains.

A town planning scheme is created to ensure the general welfare of a community, as well as the overall appeal of the area. The town planning scheme will consist of a map showing the zoning of the land and scheme clauses, which should be read in conjunction with the map. Each municipality will have its own town scheme, which is available to the public for viewing.

The development controls within the town plan include the use of zones, which controls what is built on a property and what that property is used for. It will also deal with density zones, which will dictate the minimum size requirement of a stand and the number of dwellings that may be erected on the stand. Other aspects include the number of storeys a building may be built, the total floor space that may be used for building, the percentage of the stand that is allowed to be covered, the minimum distance between the boundaries of the property and buildings and parking.

“It is possible to have a restriction lifted on a property, however, this will entail applying to the High Court for an order authorising the restriction to be lifted. This is provided of course that there is a good enough reason for the High Court to grant the request. The buyer can stipulate that the are putting in an Offer to Purchase on the property subject to the restriction being lifted. Alternatively, they can accept the conditions and purchase the home with its subsequent restrictions,” Goslett concludes.

Putting your home on the market for the first time can be an overwhelming experience, as often it is a person’s most valuable asset. Having the right real estate professional by your side will make the process far easier; however, with so many agents out there, it can be difficult to know which one to choose.

Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, says that all sellers have the common goal of selling their property for the best possible price, within the shortest amount of time. He notes that to do this successfully, the seller needs to work with a skilled real estate professional who is passionate and knowledgeable about the area in which in the home is situated. “It is best to work with an agent who specialises in the area as they will understand the local market and know what buyers in that area want. Working knowledge of the area and target audience will help the agent to tailor their market approach,” says Goslett. “How the agent markets the property will have an impact on how many buyers want to view the property and how long it stays on the market. The longer a property is on the market, the less likely the seller will get their asking price.”

According to Goslett sellers should take into consideration whether or not the agent or the brand they work for lists properties for sale on national websites or just smaller localised ones, as the more exposure the property has, the more chance there is of finding a suitable buyer in the shortest possible time. Selecting an agent from a brand with a national network will also increase the odds of finding the right buyer for the home in minimum time.

“Once the search for an agent has been narrowed down, sellers should meet with each of the prospective agents to get a feel for who they are and how they intend to market the property. During this time the agent will also be able to have a look at the property to provide an evaluation. Although everyone wants a premium price for their home, it is important that the agent is realistic in their evaluation, which should be based on the location of the property, current market conditions and what similar houses have recently sold for in the area,” says Goslett. “An overpriced home will sit on the market for longer than it needs to and in some cases may not sell at all. Sometimes agents will give a high evaluation to secure a sole mandate on the property. However, if the listing price is not market-related, it will hurt the selling process and reduce the chances of the home selling for a good price,” he warns.

Goslett advises that to ensure a reasonable guarantee of service, sellers should ask these five questions:

1. What sales have you concluded in the area in the past six months?

2. What tools does your estate agency provide to assist you in effectively meeting your obligations to buyers and sellers?

3. How effective have your marketing campaigns been for other homes in the area?

4. What is your sphere of influence and how well known are you the area?

5. What buyer qualification process do you follow regarding getting finance approved for sale?

He advises that the commission percentage should be discussed and agreed upon upfront. Commission rates will vary from one agent to the next depending on the agency they work, as well as the agent’s experience and services they offer. “Often an agent that offers their services at the lowest commission will also give the lowest level of service. It is also important to remember that agents from larger, reputable agencies offer the backing, experience, considerable marketing benefits and access to a bigger database of potential buyers that only a large company can offer,” says Goslett.

To achieve the best possible price for a home, it needs to be in its best possible condition. A good agent will be able to provide sellers with advice on what should be done to the property to make it more appealing to prospective buyers.

“An essential element to the agent and seller relationship is effective communication, as well as trust. The agent should work with the seller’s best interest in mind at all times. For that to happen, the seller must be able to feel comfortable with the agent and be able to discuss matters openly and freely,” says Goslett.

Once the seller has chosen the agent they would like to work with; they will need to discuss the type of mandate they will give them. The agreement should work for both parties. “The agent should provide the seller with a marketing plan that they believe will help them fulfil the obligations of the mandate and get the home sold in the shortest time and at the best market-related price,” Goslett concludes

The Consumer Protection Act (CPA) was introduced to protect consumers engaged in commercial transactions with businesses to avoid the consumer being treated unfairly. Unless a property buyer is purchasing a home from a developer or speculator whose ordinary course of business is to sell properties, the CPA does not come into play and buyer will not fall under its protection. An ordinary property sale is seen as a transaction between two consumers, the seller and the buyer.

Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, says that the CPA will not have an effect on the voetstoots clause used in agreements of sale in an ordinary property transaction. “This is why is so important for buyers to have property thoroughly inspected before they submit their offer to purchase. There are instances where the buyer is protected if severe defects are found after the transfer has taken place. However, it is difficult to determine whether the seller deliberately concealed the defect or genuinely wasn’t aware of it,” says Goslett.

He explained that there are two kinds of defects. A patent defect is clearly visible on inspection of the property, such as broken window or cracks in the wall. All patent defects should be listed in the offer to purchase, along with who is responsible for fixing them. “Because patent defects are visible or obvious without professional inspection, the buyer has no recourse against these types of defects. It is up to the buyer to spot patent defects and then decide whether they would still like to proceed with purchasing the property,” says Goslett.

The other type of defect is a latent defect, which is not easily picked up by a superficial inspection. Examples of latent defects include a leaking roof or faulty geyser. Common law states that the seller is responsible for all latent defects in the property for three years from the date of discovery of the defect. “Most sellers are aware that they are responsible for latent defects which is why they include the voetstoots clause in the sale agreement. The clause protects the seller against all defects – including latent defects that are unknown to him. However, if the seller was aware of a latent defect and deliberately concealed it from the buyer, the buyer has recourse against the seller. It is important to bear in mind that the onus will be on the buyer to prove that the seller was aware of the defect but deliberately hid it,” Goslett explains.

It will be dependent on the circumstances, but if a latent defect is found the buyer will be able to cancel the contract or claim a portion of the purchase price. The law prescribes that the buyer will not be allowed to simply obtain a quote for the repair and then deduct it from the purchase price, paying a lesser amount. The buyer can also not refuse to pay occupational rent or a portion therefore unless the defect seriously impairs the use and occupation of the property.

Goslett says that any defects that are dicovered after the sale of the property but before the property is transferred into buyer’s name will be for the seller’s account, unless those defects are caused by the buyer during their occupation of the property.

“For buyers to ensure that they are fulled protected against any latent defects , they should enlist the services of a professional home inspection company to check the home thoroughly. The price of paying a professional to do the job properly will be far less than the time and hassle caused by dealing with hidden defects,” Goslett concludes.

Things to consider before building a home

Instead of purchasing an existing property some buyers like the idea of buying a stand and building a home to their specifications. While this can be a very fulfilling experience with many benefits, there are a few things that need consideration before undertaking a project like this, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.

The stand

“A major factor to consider when wanting to build is the stand itself. Ideally, the stand should be easily accessible, as well as being the right size and shape to fulfil your needs. It is best to select a stand that will be easy to build on to avoid the cost of excavating and levelling the ground. Also look at the type of soil on the stand, as clay soil might require the services of an engineering design specialist to ensure that the structures will be stable – this will be a large additional expense,” says Goslett.

He notes that before purchasing a stand, buyers should check the title deed to ensure that there are no building or zoning restrictions, as this would impact the type of home they would be able to build. It is also vital that the stand is within a proclaimed township so that the home will have all the essential services, such as electricity, sanitation and water. According to Goslett, transfer of the stand into the buyer’s name will only happen if the stand is on proclaimed land, which means it has been given suburb status.

The cost of building

The cost of the build will be determined by a few elements such as the finishes that the buyer decides to use and the shape of the home. A structure that is square in shape will cost less to build than a home with an intricate and complicated design. “Buyers should meet with several builders to establish an average building rate per square metre. This will help the buyer decide on the type of home they want and how big the can afford to build it,” says Goslett.

Look at existing homes and take measurements

Whether it is their current home or that of a friend or family member, buyers interested in building should measure the size of rooms in the home to get an idea of the square meterage they want. “Take the length and breadth of a room and multiply these measurements by each other to get the size of the area in square metres. Do this throughout the home and then add the areas together to get the total size of the floor space. This will be an excellent way to picture the size of home required to meet your needs,” says Goslett.

He adds that the thickness of the walls should be taken into account as square metre calculations are generally taken from the outside of the exterior walls of the home.

Budgeting

Even with the cost per square metre and size of the home, budgeting can be a bit difficult due to possible unforeseen circumstances that may have an impact on the project cost such as delays in the schedule. Buyers should make provision for an additional 20% more than the original estimated cost of building the home. There are also other features that are not directly linked to the house to consider in the budget, such as the boundary walls, landscaping, a swimming pool and other such features.

Homeowners association rules and regulations

If the stand is in an estate or development, there will normally be a prescribed set of building guidelines that the buyer will have to follow. These guidelines will deal with the style of home, the permissible size of the structures and the materials used, to name a few elements. Often a buyer will have to submit their building plans to the homeowner’s association for approval before they can commence with the project.

Selecting a contractor

Whether it is building the home from the ground up or adding to an existing structure, selecting the right contractor for the job is imperative to the outcome. Be sure to investigate their artistry and contact references or previous clients to see if they were completely happy with the service they received.

“Thorough research may take some time, but going into a building project fully prepared will save both time and money in the long run,” Goslett concludes.

It is the general practice in today’s rental market for landlords to request a deposit from their tenants before they move into the property, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa. In fact, according to Section 5 of the Rental Housing Act, No. 50 of 1999 a landlord is legally entitled to request a deposit from their tenants.

He adds that the amount that the tenant will be required to pay as a deposit is stipulated in the lease agreement, which the tenant will need to agree to and sign before they gain access to the rental property. “Conventionally the rental deposit amount was equal to one month’s rent; however, in more recent years landlords have started asking for two months’ rent as a deposit. The increase has come about due to defaulting tenants and the lengthy, expensive process involved evicting them,” says Goslett. “Tenants are protected by the Prevention of Illegal Eviction from Unlawful Occupation of Land Act, No. 19 of 1998, also known as the PIE Act. If the correct procedures are followed, it can take at least eight to ten weeks for an eviction order to be granted during which time the landlord is out of pocket.”

Besides the fact that the landlord is not getting a rental income from the defaulting tenant during that period, they will also have to pay legal costs. The cost may vary depending on the sheriff’s fees and whether the matter is opposed or not. An unopposed eviction could cost between R12 000 and R20 000 in legal costs plus disbursements, while the cost of an opposed matter will be substantially more.

Goslett says that when a tenant pays the deposit, the landlord is required by the Rental Housing Act to place the money in an interest-bearing account, held with a financial institution. The tenant is within their rights to request a statement of the interest earned on the money at any time during their tenancy. “Even though the deposit is paid to the landlord, it remains the tenant’s money. The landlord is merely holding the money as a security measure, should the tenant default or breach the rental agreement. If the tenancy runs its normal course, the deposit along with all interest earned on the money must be paid over to the tenant at the end of the lease agreement period,” says Goslett.

The landlord is entitled to deduct from the rental deposit any expenses incurred repairing any damage to the property which occurred during the tenancy. The remainder of the money must then be refunded to the tenant no later than 14 days after the restoration of the property as dictated by the Act. “If repairs are completed on the home, the tenant can request to see all repair receipts to confirm that the money was spent to repair the damage they did to the property. The landlord cannot use the deposit for general maintenance or upkeep of the property,” Goslett explains. “If there is no damage to the property, the full deposit and interest must be paid to the tenant within seven days of the lease's expiration date.”

Goslett says that should any disputes arise between the landlord and the tenant regarding the rental deposit they can turn to the Rental Housing Tribunal. He notes the tribunal informs landlords and tenants of their rights and obligations, as well as assists to mediate and resolve disputes between the parties. “Before entering into a rental agreement, tenants should familiarise themselves with their legal rights regarding a tenancy and their rental deposit. Knowledge of the relevant procedures can help prevent unpleasant and costly disputes down the line,” he concludes.

The definition of a usufruct is a legal right given by an owner to someone who is not the owner, to use the owner’s property for a certain period, usually for the remainder of that person’s life. The person who holds the usufruct, also known as the usufructuary, has the right to make use of the property and enjoy its profits and benefits provided the property is not damaged or altered in any way. At the end of the stipulated period, the usufructuary must hand the property back over to the rightful owner or heirs.

Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, says that a usufruct would come into play, where a husband passes away leaving his home to his children but stipulates that his wife has use of the property and contents in it for the rest of her life or until she remarries. While the property is transferred into the name of the children, the usufruct is registered against the new title deed in favour of the surviving spouse. He adds that a usufruct is often created because it reduces the amount of estate duty payable. However, it is important to be aware of the possible tax implications for the parties involved.

“During the prescribed period, the usufructuary has the right to enjoy the property and all the benefits that come with it, but they are not obliged to live in the house. They are within their rights to let the property out to someone else and gain a rental income from it, provided the rental term doesn’t exceed that of the usufruct. While the usufructuary can rent the property out, they are not allowed to sell or leave the home to another party,” Goslett explains.

Although the children are ultimately the heirs to the property, Goslett says that while the usufruct is in effect, they will have no right or authority with regard to how the property is used or enjoyed. The children must refrain from interfering with the use of the property. However, they do have the right to protect their interests should they feel that the usufructuary is using the property inappropriately.

He adds that while the usufructuary’s rights to the use of the home are protected, there are certain obligations that need to be fulfilled. For example, the usufruct must be used for its intended purposes, and the usufructuary is legally bound to act as a diligent owner that may not misuse the property. The usufructuary is also responsible for paying the assessment rates and general day-to-day costs of maintaining the home. He or she is not obliged to do any large-scale repairs that result from normal wear and tear or daily use. While there is no obligation for the usufructuary to insure the home against storm, fire or other such damage, it is advisable.

“The heirs to the property are responsible for keeping it in a habitable state at all times, as well as paying for the repairs. Depending on the age of the children or their financial status, this could be a massive burden to carry,” says Goslett. “Ideally, provision should be made for the husband to leave enough money to their surviving spouse and children to ensure that the usufruct property is maintained and the monthly expenses such as rates and taxes are paid. A life policy could provide the financial means to ensure that this is done.”

If the heirs pass away before the infructuary, their portion of the usufruct assets is transferred to their heirs - however, the conditions remain subject to the existing usufruct which is in place.

“A usufruct is a way to ensure a surviving spouse has a roof over their head and is looked after for the remainder of their life. That said, those who are looking at adding a usufruct to their will should consult with a professional tax consultant or financial adviser to fully understand its implications and how it can impact those involved,” Goslett concludes.

Considering purchasing a property? First-time homebuyers should have a clear idea of what they can comfortably afford on their home repayment each month, before taking the initial steps towards ownership, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.

“It is important to remember that while it seems like the current interest rate hiking cycle is coming to an end, it does not mean that the homebuyer won’t have to deal with rate hikes in the future. It is for this reason that an allowance has to be made to buffer any future rate increases of at least 1% or R100 for every R100 000 that the homebuyer has borrowed from their respective lender,” says Goslett. “A homeowner extended to the financial limit is in a vulnerable position, especially if they don’t have a contingency plan in place.”

He adds that buyers can use an affordability calculator online or for a more in-depth accurate measure they can consult with a bond originator who will be able to assist them to determine what amount they can afford. “Because banks place a heavy reliance on creditworthiness, an originator can also pre-empt corrective measures for the purchaser to take before they submit a live loan application to the banks. This will ensure that the buyer has the best possible chance of obtaining the finance when they apply,” says Goslett.

According to Goslett, before submitting their bond application, prospective buyers should focus on reducing or entirely doing away debt and store credit accounts, reconsidering insurance policies with little or no value and ensuring that their credit record is favourable. “Ideally, there should be no late payments reflected on any accounts and the buyer should have some cash in the bank at the end of each month. Financial institutions will check buyers’ credit records as far back as six months, so buyers will need to ensure that their record is clean for at least this length of time – preferably much longer,” Goslett advises.

Buyers who have checked what they can afford and are ready to move onto the next phase and look for a property need to consider and prioritise location. “Location directly impacts the home’s potentially growth in value, so buyers should look at the property’s proximity to amenities such as shopping malls, medical facilities, good schools and access to major transport routes. The orientation of the property should also be considered, with a north-facing property the better option. Orientation has an impact on certain elements such as the swimming pool, as it is better for a pool located on the western side of the property. Other aspects for buyers to look at are whether there is room for improvement, extensions or renovations” says Goslett.

He notes that additional elements to look out for are pre-paid electricity meters which are good to have, as well as any solar installations which will reduce the energy costs associated with running a home.

“Before making a final decision or signing any offer to purchase, buyers should have the property thoroughly inspected to ensure there are no major defects. Aspects they should pay close attention to include the roof, load-bearing walls for structural cracks, sagging floors or ceilings and damp walls. Once the overall condition of the home has been assessed the buyer will be able to determine whether the required repairs are manageable and within their budget. If too many things need to be done to make the house liveable, the buyer knows it’s time to walk away from the deal,” says Goslett.

When the right home is found, and all the necessary paperwork has been signed, there will be some additional costs buyers need to consider during the transfer process. According to Goslett, buyers will need to be prepared for the bond costs and the transfer fees. “It is dependent on the purchase price of the property and type of property, but normally the transfer duty is the largest portion of the costs involved in the transaction. These costs are required to be paid fairly soon into the transfer process, so buyers will need to have it beforehand. Other costs include the attorneys’ fees, which are negotiable in some instances. The seller appoints the transfer attorney, while the bank appoints the bond attorney,” he says. “When the buyer transitions from tenant to homeowner, they will have the additional monthly cost of rates, water and electricity. Buyers should request that a reading of their water and electricity meters is taken on occupation. They should also take into account services costs, insurance, maintenance and furniture removals to name a few other expenses.”

Goslett concludes by saying that buyers should take their time and only buy a property when they are truly ready. He notes that buying a property is a long term investment with many advantages, but only if done in the right way.

The interest rate and how it impacts the market

South African Reserve Bank Governor, Lesetja Kganyago, announced today at the first Monetary Policy Committee meeting of 2017 that the repo rate will remain unchanged at 7% with the prime lending rate staying at its current figure of 10.5%. Good news for consumers as the country heads into another year of predicted slow economic growth.

According to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, the majority of current and prospective homeowners are dependent on home loan finance to purchase a property. Because of this, any fluctuation in the interest rate will have an impact on consumers in one way or another. “Stability in the interest rate will build consumer confidence and give them more time to sort out their financial situation and prepare for the year ahead,” says Goslett.

He adds that the prime lending rate has a substantial influence on the property market and potential homebuyers’ ability to get their foot on the property ladder. “An increase in the prime lending rate widens the gap for prospective homebuyers to meet the criteria set out by financial institutions to obtain a bond. A higher rate means higher bond repayments for buyers or having to opt for a lower bond amount. In certain instances, this could potentially push lower-income earners out of the market completely,” says Goslett. “The interest rate directly affects the affordability levels of buyers wanting to purchase property. In turn, affordability ratios will have an influence on the amount that the bank is willing to give the buyer, which could impact on the kind of property the buyer will be able to purchase.”

Goslett says that the prime lending rate will be a driving factor behind the bank’s decision process when assessing what a buyer can or cannot afford. An increasing interest rate places more pressure on buyers to reduce debt levels. According to Goslett, lower debt levels will increase an applicant’s chance of bond approval and will make affording a home much easier.

“Current homeowners are also impacted by rate fluctuations. However, this can be lessened to some degree if they have chosen to fix their rate. Homeowners with bond accounts linked to the interest rate will have to face either higher or lower bond repayments if the rate increases or decreases respectively. Where the rate remains stable and the homeowner’s income increases, it will give them the opportunity to pay additional funds into their bond account and reduce the term of their loan by several years.”

Goslett says that an additional R1000 payment a month on a bond of R1 million at the current prime lending rate of 10.5% will reduce the term of the loan by almost five years. That is a 25% reduction in the term of the loan for a monthly repayment that is 10% higher. “By paying extra into the bond and reducing the term of the loan, homeowners will be able to decrease the overall interest amount that they pay on their bond. The money saved on interest can be put towards retirement or perhaps a child’s education,” he concludes.

Should equity in the bond be used for debt?

Often car loans and credit cards accrue interest at a much higher rate than a home loan, which is why many people decide to take equity out of their home loan to pay off their other debts. Focusing on paying off debt with the highest interest rate is a very good financial strategy to implement, but is using a home loan to do it the best idea?

Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, says that the answer to that question largely depends on the term left on the home loan. “If the individual decides to pay off a big ticket such as a car by using the access facility on their home loan, they need to consider the fact that although the interest on a bond is generally the lower, the term of the loan in much longer. Essentially this could result in them paying more interest over the term of the loan,” says Goslett.

He adds that while the interest on a car loan is usually higher than a bond, the term of the loan is much shorter. Typically, vehicles are financed over a 54 month period, sometimes 60 months depending on the agreement. On the other hand, most bonds will be financed over a 20 year period or in some cases a 30 year period. “It takes time to build up equity in a bond, so it is likely that a homeowner will only be able to use their bond account to pay off their car debt after a few years. Even so, unless the bond is only five years or less away from being fully paid off, the consumer has extended the term of their car loan, which could increase the total amount of interest paid. If the objective is to save on the overall interest paid, a lower interest rate over a much longer term is not the answer,” advises Goslett.

In the instance where the consumer has a 20-year home loan with an interest rate at prime being 10.5%, and they have ten years left to go, an additional R100 000 with cost them R1349 extra a month and accrue an interest amount of R61 922 over the term of the loan. However, if the consumer takes out vehicle finance for the same amount over 54 months at an interest rate of 12.5%, they will pay R2431 a month, but pay R31 254 in interest over the term of the loan. Using their bond account will cost them an extra R30 668 in interest. “While the monthly repayment is reduced, the overall interest paid on the debt is twice as much. If the consumer has longer to pay on their home loan, the overall interest amount is even higher,” says Goslett.

He notes that for a consumer to benefit from the lower interest rate of the bond, they would need to add the total monthly amount they were paying on their vehicle finance to the bond repayment. The additional monthly payments would reduce the outstanding bond amount far quicker, along with the total interest paid over the term of the loan. “The consumer would in effect be paying off their car in the same amount of time, but then they would see the positive impact of the lower interest rate. In fact, if the consumer keeps up with the additional payments for the remainder of their bond, they will reduce the term of their home loan and pay off their house faster,” says Goslett.

Before using home equity for any debt, it is best to go through the numbers and work out whether it will put you in a better financial position or a worse one. “Consumers should look at the long-term impact of their financial choices and do the necessary research and calculations before making any final decisions,” Goslett concludes.

Every first-time homebuyer wants to add their personal touch to their property and turn their new house into a home. Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, says that a great way to do this at a reasonably low cost is by giving the property a fresh coat of paint. “A new coat of paint will give the home an updated, refreshed look and it is a fun way for the new homeowner to put their personal stamp on the home. A new coat of paint will make the home seem cleaner, more welcoming and more yours,” he says.

Goslett notes that according to home décor experts, the best time to paint the interior of a home is before moving in for a few reasons:

It’s easier

It is far less physically challenging to paint the interior of a home if there is no furniture in it. According to Goslett, if the room is empty, it will be easier to move around in and place the step ladder for those hard to reach sections. He adds that if furniture and boxes have already been moved in, it makes the entire process far more cumbersome, involving heavy manoeuvring to get to certain places in the home.

Time saving

There is far less prep time involved if there is no furniture in the home. “Moving furniture around or covering it takes the time that could be spent on the actual painting,” says Goslett. “A lot of time will also be saved by not having to take down any art or pictures from the walls.”

Saves on costs

If the homeowner decides to paint the home themselves, there won’t be much cost saving, however, if they decide to make use of professional painting contractors or some workers to do the job it can save them in costs. “With no furniture in the home, the painters will be able to move from one room to the next much faster, which will cut down on time spent on the job. Less time spent on the job will mean fewer labour costs,” says Goslett.

It protects the furniture

If there is no furniture in the home, it can’t get ruined. “Even if the new homeowner or a painting contractor is meticulous about ensuring that all furniture is covered – there is still the chance that paint could spill or paint flecks could find their way onto the furniture or into electrical appliances. Depending on where the paint lands, it could be a rather expensive fix,” says Goslett.

Provides the homeowner with a colour palette

“If the homeowner has not yet bought any of their décor items for their new home, painting the home will give them a specific colour palette to work from, which could make the process of decorating far easier,” says Goslett.

He advises that homeowners who are undecided when selecting their colour palette should test several shades of the colour selections on a wall in the room they are going to be painting. Goslett notes that the painted area should be allowed to dry for 24 hours before viewing it. “View the colour swatches in the morning, noon and evening, as the colours will appear to be different tones depending on the time of day. This will give you the chance to compare the shades to see which one is best for you,” says Goslett.

“Painting a home is an excellent way to transform it and reflect the new owner’s individual style. It is a way for the homeowner to express their individuality and inject a piece of themselves into their new home,” he concludes.

Safety tips that every child should know

Home should be a haven and sanctuary where children can grow up enjoying their informative years. However, there are dangers and elements that children should be aware of to ensure their safety. Teaching children about home safety is imperative and could potentially be life-saving, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa. He adds that educating children about home safety principles at an early age will ensure that they stay safe and carry those lessons with them for the rest of their lives.

According to home safety experts, there are a number of safety tips that parents should teach their children:

How to lock a deadbolt – A deadbolt is an ideal additional security measure on an external door. Children should know how to lock and unlock a deadbolt and that doors should be locked at all times to keep them safe. It is good for them to get into the habit of locking the door, even when people are home. It is important for them to understand how the lock works so that they can unlock the door in the case of an emergency and they need to get out of the house.

Operate the security system – If the home does not have a security system, installing one will help keep the family safe and will increase the home’s resale value. Homebuyers will pay a higher premium for a property if it has a state-of-the-art alarm system. The children in the home should be taught how to arm and disarm the security system, as well as what to do should the alarm go off when they are home.

Know the escape plan – Children will be taught to follow an escape plan at their school in case of an emergency such as a fire – it is important to have an escape plan for home as well. An area of the home should be designated as the central meeting point, and each child should be walked through the safest route out of the home if an emergency should occur.

Find the emergency contact list – A list of all emergency contact details should be put on an easy-to-access location such as the fridge door. At a minimum, the list ought to include the number of the local police station, fire department, paramedics, the family doctor, each parent’s contact details and a trusted friend or family member. Ideally, all children in the home, regardless of age, should know how to use a telephone and ask for help.

Don’t answer the front door – If the doorbell rings, children should alert an adult rather than answering it themselves.

Bathtub safety – Children under the age of six years old should constantly be supervised while in the bath. To avoid burns children should be taught to test the temperature of the bath water using their hand before the fully submerge their bodies.

Understand their food allergies – If any children in the home are allergic to any food group, it is important for them to understand the dangers of that type of food and how it can affect them. The child needs to know the difference between foods that are safe for them to eat, and those that are not. If the child is too young to read labels, “unsafe” food can be marked with a certain sticker to alert the child to steer clear. Also, they should know to accept food from a parent, nanny or teacher only.

Avoid climbing on furniture - It is possible for heavy furniture to tip if a child climbs on it, which could result in a severe injury. Furniture such as bookcases and TV units can be secured to the wall to lower the risk of it tipping over. However, it is still important to teach children that climbing on furniture can be potentially harmful.

No playing with window coverings – Cords from blinds or other types of window coverings can be a strangulation hazard for young children. Always purchase cordless window coverings if possible and never place cribs or playpens near to windows with corded coverings.

Locked medicine cabinet – It is best to store all medication in a lockable cabinet that is not within reach of the children. However, if any medicine is left out of the cabinet, then the children need to know never to take anything that has not been given to them by their parent or a trusted adult.

“Often young children copy what they see their parents and older siblings doing, so practising safe household habits as a parent will help to ensure that children learn how to be safe around the home,” Goslett concludes.

A buyer's guide to keeping track of properties

While it may sound like a reasonably easy thing to do, finding the ideal home may take a little more time and effort than most expect, especially if the potential buyer doesn’t follow any specific process. Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, says that much of the stress related to finding the perfect property can be reduced with the right methods in place.

He notes that one of the biggest challenges that most buyers face when starting out on their property buying journey is knowing where to start when sifting through the vast volumes and ample variety of properties available to them. “While not unheard of, it is very rare that buyers purchase the first home that they go and view, and looking at multiple properties with no real plan only adds to the confusion and makes the decision harder. Simply looking at as many show houses as possible can make it difficult for buyers to keep tabs on what they have seen, what they liked about each property and fo what price they were selling. Buyers who have a clear plan set out will be able to simplify the process and ultimately make the buying decision easier,” says Goslett.

Even if a buyer needs to find a property reasonably urgently, it is best for them to have a plan and not rush the decision, Goslett advises. “Buyers who make a rushed decision could pay for it in the long run. It is best rather to work through the process systematically, viewing only a small number of properties at a time. Viewing a manageable number of properties will help buyers to retain as much information about each property as possible,” says Goslett. “To shorten the process buyers may be tempted to utilise a lot of different estate agents and see as many listing as they can in a day. However, while this will provide them with a general overview of the homes available on the market, it will also make it impossible for them to track each of the home’s standout attributes. The logistics of dealing with many different agents could also become an issue.”

According to Goslett, buyers should ideally use one estate agent that they feel comfortable with and view no more than four properties on any given day. A reputable, real estate professional who specialises in the area will be able to narrow down the search and viewings based on the information and criteria that the buyer has provided. Doing this will save buyers a lot of time potentially spent on viewing properties that don’t fit into their criteria.

Goslett says that there are some ways buyers can keep tabs on the various properties that have been viewed to compare them:

• Make notes on each and every property viewed. Records can be made using an iPad, smartphone or the traditional pen and notebook. The pros and cons of each property should be logged, listing likes and dislikes and standout features.

• Take photos - most cell phones will have a camera, so it is reasonably easy to document the homes. Takes photos of the interior and exterior of the property, paying attention to aspects of a home that are especially appealing.

• Only keep records of properties that you like.

• If uncertain of anything, talk to the agent who showed the property. They will have a record of the homes that they have shown and will have a list of each property’s features. Agents will know their listings and will be able to provide guidance through the often complex process of finding the right house.

“Purchasing a new home is both exciting and stressful for buyers. However, handling the process in a calm and logical manner will mitigate much of the stress, allowing buyers to enjoy the process of finding their ideal home,” Goslett concludes.

Property is a long-term investment, in fact, on average it takes a minimum of approximately five years to see real returns on a property sale, provided there are no other unusual circumstances. Given the fact that most buyers will end up staying in the home they purchase for some time, it is essential that they choose the right property that meets their lifestyles requirements both now and in the future, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.

“Buyers should always consider a property purchase as an investment and look at all of the factors that could influence the home’s potential for long-term appreciation in value. However, most buyers are not purchasing a home solely for its investment potential – they need to live in it and ensure it fits in with their lifestyle as well,” says Goslett. “Often buyers may look at the checklist of features that the home has on offer, but don’t necessarily consider the experience of living in the home and how it may impact their daily lives. Investors who are purchasing a property as part of their portfolio will focus all their attention on the home’s possible resale potential. However, the motivation for buying a property will be different for the average homebuyer. In fact, sometimes focusing solely on appreciation potential can be a mistake.”

According to Goslett, an aspect that buyers should consider when looking at a property is how they intend to use and live in the space. Once buyers know this, they will have a good idea as to whether a home will be the right fit for them and suit their needs for the period they intend to stay in it. “Regardless of the size of a home, the property can be a good fit for the buyer if they utilise it in the right way. Buyer should ask themselves questions such as what are the things they like doing on weekends or during the evenings. Where do they like to eat, or is entertaining an important element of their lifestyle? The answers to these questions will assist them to evaluate whether or not a home or the area it's situated in is the right fit. It’s about learning to read the house and knowing what you are looking for,” says Goslett.

He advises that when considering these things it is important that the buyers try to think long term and see how their plans could develop and change their lifestyle requirements in the future. “While no-one has a crystal ball that will tell them exactly what the future holds, it is important for buyers to consider their future aspirations and how things could change over time. A small home could suit the buyer in the current life stage, but if their plans include growing their family or having their parents come live with them in the next five to ten years, maybe a home with an extra bedroom or the space to expand is a better option in the long run. It is important to be prepared and plan for what is likely to happen and perhaps for a few things that aren’t,” says Goslett.

He adds that buyers need to consider three main elements when looking at each property they view – functionality, cost and enjoyment. If a home meets all the requirements such as the number of bedrooms and proximity to their place of work or schools - that is function. Cost is the purchase price of the property along with all the other costs involved in the property sales transaction and day-to-day costs of owning the home. Enjoyment would be lifestyle offering and what the buyer would get out of living in the home. Adding this into the equation will help balance out function and cost, assisting the buyer in making the right decision for them.

“Depending on their unique preferences, the enjoyment factor will differ from one buyer to the next. For one it might be that the home is close their favourite hangout, for someone else, it could be the view or back garden. The possibilities are endless, and each buyer will have different aspects that appeal specifically to them. If buyers love the house they buy, they are purchasing more than just bricks and mortar - they are buying a home,” Goslett concludes

Purchasing a fixer-upper can be an extremely beneficial financial endeavour. However, only if the buyer has taken the time to do their research and followed the right procedures to ensure they are making a sound investment decision, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.

He notes that irrespective of the kind of property the purchaser is interested in buying, it is imperative that certain principles are adhered to, to ensure they are protecting themselves against purchasing a potential money trap. “Doing to groundwork is even more important when the purchaser is considering a home that would be regarded as a fixer-upper because there will be far more expense than just the purchase price,” says Goslett. “A lot of additional money will be spent on fixing up and renovating the home, so a fixer-upper investor needs to be savvy and know when the purchase is worthwhile and when they should walk away. Discerning between a home with potential and what to steer clear of is a key element to investing in fixer-upper property,” he advises.

Goslett says that while most buyers prefer to purchase property that is well-maintained, there are numerous reasons that draw investors to fixer-upper homes. “A big draw-card is that fixer-upper homes often sell for far less than other homes in the same neighbourhood, which means that if they have the capital to spend on renovating the property, they could secure a higher profit margin when they sell. Obviously, this is dependent on how savvy the investor is with their money when renovating the home,” says Goslett.

According to Goslett another reason that certain investors opt for these kinds of homes is the fact that there is less competition in the market for fixer-uppers. Lower demand for these homes is one of the reasons that they will seller lower prices than other homes in the same area.

“It is said that an investor makes their money on a property purchase when then buy and not when they sell because the success of the investment is based on the decisions made at the beginning of a transaction. If the right decisions are made, it is more likely that the investor will see a healthy return. The ideal home could be covered under a veil of various essential repairs that would normally chase away potential buyers. However, fixer-upper investors will need to see past the property’s outward appearance and envision the home’s true potential,” says Goslett.

He provides some tips for those looking for the perfect fixer-upper:

Location is a key factor

The location of a property will have a greater impact on its investment potential than any other factor. “Where a home is situated will firstly determine its current value, as well as its potential for future growth, which is why it should be the primary focus when deciding whether a home is a good investment,” Goslett advises.

He adds that there are several factors that determine whether a location is considered to be preferable, such as its proximity to a range of amenities. These would include shopping centres, entertainment areas and good schools to name a few.

The home’s layout

It is far easier and less expensive to renovate a home as it stands than change the layout of the home completely. “Ideally, the shell of the home should be well designed and laid out correctly. If the investor intends to add more rooms, then it is important that the current layout of the property allows for that to ensure that there is not a disconnect in the flow of the design. In certain instances, it is better for a buyer to walk away than try and correct a poorly thought out floorplan.

Serious defects

It is important for the investor to assess the structural integrity of the home before they purchase it. Although most defects are repairable, structural damage will be very expensive to fix. If the investor is fully aware of all defects the property has, they will be able to make a call as to whether it is worth the time and money to repair. A good fixer-upper is a home that is at least in a liveable condition. “Upgrading or repairing cosmetic issues is one thing, but major repairs to the structure or foundation of the home will severely eat into any potential returns on the investment,” says Goslett. “If investors are not sure of anything, they should seek the advice of a professional contractor who can inspect the home and provide them with a full list of defects. It’s better to go into an investment with both eyes open, than blindly hoping for the best.”

He concludes by saying that much like any other important financial decision, it is advisable to gather as much information as possible to make an informed decision that will pay off in the long run.

Are you financially prepared to own a home?

Since the National Credit Act came into effect, prospective homebuyers have been required to have their financial affairs in order before they apply for a bond. While banks have become slightly less stringent since the act's inception, financial institutions are likely to tighten up their lending criteria in 2017 and bond applicants will be put through their financial paces before being approved for a home loan, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.

“If you have made the resolution of purchasing a home during 2017, you will need to ensure that you have assessed your financial situation and answered a few pertinent questions before approaching your bank for bond approval. Currently, only around 65% of first-time buyer bond applications are approved, which highlights the importance of being financially prepared before applying,” says Goslett.

He provides a few financial questions that you should answer before approaching your bank for finance:

What is my credit score?

A favourable credit score and clean credit record is a valuable asset when applying for a home loan. Each year consumers can obtain a free credit report from the credit bureaus within the country to assess their finance position. Goslett says that it is advisable for you to know your credit score and check your credit record for any inaccuracies.

“Any missed or slow payment will have a negative impact on a consumer’s credit score. However, it is also important to be mindful of the less obvious credit infractions such as opening too many accounts, numerous credit enquiries, co-signing for a third party or only paying the minimum required payment. All of these things will impair your records and could scare off lenders,” Goslett explains.

What is my annual income?

As a potential homebuyer, the maximum bond amount that you can qualify for is based on your annual income, so be sure to include any bonuses or annual investment returns when making this calculation. Your annual tax return documentation will assist in determining your actual yearly income.

How much debt do I have?

Another major consideration that banks take into account when determining the home loan amount they are willing to grant is the applicant’s amount of disposable income. “To increase the disposable income you have available, get rid of or pay down debt as much as possible. Lenders will require you to provide them with all the debt you currently have to work out a debt-to-income ratio, which will be used as a tool to determine your level of affordability,” says Goslett. “Having a lower debt-to-income ratio will be highly beneficial as it will increase the chance of gaining approval for a higher bond amount.”

What is my financial worth?

Banks will want to see the documentation that relates to any assets, such as vehicles, investments and income-generating properties. Goslett says that all of these aspects add to an applicant’s nett worth and will have a bearing on the amount that the bank is willing to grant.

What kind of deposit can I put down?

According to bond origination company, BetterLife, the average cash deposit required by first-time buyers is 12.3% of the purchase price of the property. Based on the average home price paid by first-time buyers of R739 000, that equates to a cash amount of around R90 000 – not to mention the other costs associated with a home purchase such as transfer fees, attorney fees and bond costs.

What can I afford?

In an ideal situation your monthly home payment, which includes the bond, interest, taxes and insurance should not make up more than around 30% of your income before taxes. It is impossible to get an idea of your affordability levels by using an online bond calculator or consulting with a professional financial adviser. “Even if the bank has approved a certain amount, it is not necessary to find a home at the maximum bond amount if you feel you won’t be comfortable with the monthly repayment. Owning a home is a long-term investment that needs to be sustained for the term of the loan, so it is advisable to purchase a property that you can comfortably afford,” says Goslett. “Financial preparation is the key to homeownership readiness and will make the bond application process far smoother,” he concludes.

Purchasing a property is a large financial commitment, and as such, there are several vital aspects that buyers need to consider before taking the final step towards homeownership, says Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett. He notes that while price, the type of home and cost, are a few of the factors that require buyers’ attention - the most crucial aspect to consider is location.

“Most buyers in today’s market will know that location is important, but not everyone knows what elements make an area a good location or not, or how this influences buying decisions,” says Goslett. “A major influential factor is the amenities within proximity to the area, such as the shopping mall and medical facilities. The one amenity that has the largest impact on property-buying decisions are schools, this is because they have an influence on both the housing prices in the area and children’s education.”

He adds that regardless of whether prospective buyers have children or not, the fact that schools have such a large impact on the potential appreciation in value of the homes in the area, they require buyers consideration. “Irrespective of the person’s life stage, whether they are parents or not planning on having children, schools should have a bearing on the decision-making process due to the influence they have on the investment potential of the property. According to statistics, homes that situated in areas which are the best school districts will on average, sell for more than similar homes outside of these schooling zones,” Goslett explains. “Essentially it all comes down to a matter of demand. Areas within proximity to good schools attract a higher number of potential buyers. The increased demand for property in these regions pushes property values up. The appreciation potential of a home intrinsically links to the demand for property in the area. Even in a slow market, the resale value of homes in a sought-after area will often fare better and be more resilient.”

According to Goslett the reason that schools have such an impact on home values and buying decisions is largely due to the school zoning system. “Subject to there being space, a parent will be able to register their child at any public school. However, the Department of Education states that the school must prioritise children that live within the feeder zone. Children whose home address is within the feeder zone are given preference over those who live outside the zoning area,” Goslett explains.

Preference is also given to children whose parents live at their place of employment, such as in the case of a domestic worker who resides on the property. Children whose parents work in the feeder area are placed higher on the list than those that don’t. Goslett says that once all these children are given a place in the school, the remainder of the applicants will be considered subject to availability. If all spaces are filled, the remainder of the children on the waiting list will have to go to their second-choice school. The provincial department of education is obliged to find every child a place in a school.

“It is advisable for buyers to do their research on the schools in an area and how they are ranked before they purchase a property. Additionally, as purchasing property is viewed as a long-term investment, where possible, buyers should assess what plans they have for the future. While they may not currently have children if they are a part of their plans, then considering the schools in a particular area could become a priority that influences their buying decision,” says Goslett.

To get information about schools in a certain area, buyers can contact their provincial department of education or browse the website. The Department of Education has a countrywide database of all public schools that can be of assistance to property buyers. This database has information such as the school address and contact details.

“Buying a property is a huge decision that should be carefully considered. Having the necessary information at hand will ensure that buyers make the best decision when choosing a home,” Goslett concludes.

Negative aspects that influence property values

Research reveals that it only takes a prospective buyer a few minutes to decide whether they like a home or not, which is why it is essential that the home makes an excellent first impression, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.

He adds that while there are certain things that sellers can do to ensure that their home is in its best possible condition before it is listed on the market, unfortunately, there are elements which are beyond the seller’s control that will have an impact on the home’s marketability before a buyer has seen it.

Goslett looks at a number of these aspects below:

Location

Without a doubt, the number one influence on how a property is valued in buyers’ eyes is its location. “The mantra of location, location, location will continue to ring true throughout the ages. The simple truth of the matter is that location and property values are intrinsically linked,” says Goslett. “Where a home is situated, along with the amenities that surround it will influence the demand for that property. Homes that are in high demand will sell for a higher price. Factors such as its proximity to entertainment and shopping facilities, recreation areas, and good schools will all bear weight on how the property is viewed and valued by potential buyers.”

He adds that in the same way that proximity to positive aspects will have buyers viewing the property in a positive light, proximity to negative elements also plays a role in how buyers view a home. Aspects such as noisy freeways, railway lines or airports or anything else that could be seen by a buyer as a potential annoyance or eyesore will negatively affect their opinion of the property.

Condition of the neighbourhood

Although the home itself could be in pristine condition, the condition of the surrounding neighbourhood will bear influence on how the property is valued by potential buyers. The neighbourhood in which the home is situated can either push up the value of the home or bring it down. This aspect is completely out of the homeowner’s control, however, the upkeep and maintenance of an area will impact on the home’s value. “The state of an area can change over time, be it positive or negative. Many run-down inner city areas have been transformed through urban renewal projects and are now trendy sought-after neighbourhoods. Likewise, there are other areas that were once thriving but have deteriorated due to poor municipal management, high crime rates or large industrial failures,” Goslett explains. “A rundown area could result in the homeowner having to drop their price in order to sell. Where possible, homeowner’s should form or join a homeowner’s association to ensure that the community they live in is properly taken care of. This might mean paying some kind of levy or fee, but the rewards will be worth it in the long run.”

Poor or unusual renovation

Maintaining a home and keeping it current is key, however, homeowners should carefully consider certain renovation projects. “In most cases, renovations will have a positive impact on the perceived value of a property, however, unusual renovations such as a home spa or gym could eliminate it as an option for certain buyers. It is also imperative that all renovations are completed by a professional and are not poorly executed DIY projects. Renovations should be undertaken in the correct manner, through the correct channels and be completed before the home is placed on the market. Poor workmanship or unfinished projects will only devalue the property in the buyer’s eyes,” advises Goslett.

Lack of parking

While this is more prevalent in densely populated areas such as Cape Town’s central business district, property with no or limited parking is viewed as less valuable than those with a secure parking space. Goslett says that in some cases, a secured parking bay can add well over R100 000 to the value of a property where parking is at a premium.

“Much of the money a homeowner makes is when they purchase their home, not when they sell it. Completing the necessary research from day one will help homeowners to look out for potentially negative aspects and avoid their property becoming a financial burden in the future,” Goslett concludes.

Improve your home's value with these holiday maintenance projects

For the majority of people, purchasing a property is the largest financial commitments that they will ever make, and it is also a long-term one too considering that homeowners will often only realise returns on their investment after five years or more.

According to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, a home’s investment potential and the time it takes to realise a growth in value depend on several aspects , such as market conditions during the period that the property was bought and sold, the home’s location, and the size and type of property. However, homeowners also have a vital part to play in ensuring that the home is well-maintained and kept in a good condition. “Knowing that it is such a large financial investment, it would make sense for homeowners to consistently maintain and improve their home to ensure that the investment is protected and grows in value. However, that said, it is also important that homeowners don’t spend too much on home improvements and upgrades, over-capitalising and eating into the possible equity built up in the property,” he says.

Ideally, home maintenance should be kept up throughout the year, however, time constraints can be an issue for many who are office bound for a large portion of their day. The holiday season is a great time for homeowners to undertake maintenance and improvement projects around the house. “Irrespective of whether people are going away on holiday or staying home, December is usually the time of year when people are less busy and are able to find some extra time to attend to home maintenance projects. Many people also receive bonuses during this time of year, which makes it easier to take on some of the bigger projects that they put aside until now,” says Goslett.

He provides a few projects that homeowners can do that will spruce up their home and have it looking great:

A fresh coat

Whether on the exterior or interior of the home, a new coat of paint can refresh a home’s look and give it a complete facelift. Changing the colour of a room can give it a completely different look and will revitalise the space. Goslett suggests that sticking to neutral colours, particularly for the exterior of the home is best. While vibrant colour palettes can be visually interesting, they could possible limit the home’s appeal with potential buyers.

Landscape and add water-wise elements to the garden

A manicured garden is always appealing to the homeowner while they live in the home and potential buyers; however, water restrictions make it difficult to maintain lush lawns and plants. Adding paving or hardscaping elements, such as a stone walkway, will reduce water consumption while adding to the aesthetic appeal of the home’s exterior. The lie of land may influence the placement of hardscaping features, particularly if drainage is affected, and water features should be in shaded areas to reduce evaporation.

Goslett says that when sprucing up the garden, ensure that only indigenous plants are used as they consume very little water and require minimal maintenance. Certain bedding plants can consume a lot of water; however, by adding mulching to the bed and water retention granules to the soil, the need for water can be substantially reduced.

Get rid of the clutter

During the festive season, there are a number of non-profit organisations that will be collecting items for the under-privileged. This is a great opportunity for homeowners to clear out some of their clutter while aiding a worthy cause. A de-cluttered home will feel more spacious and will be easier to clean and maintain.

Areas in the home such as the garage and tool shed usually tend to collect unwanted or unused possessions. While de-cluttering, go through these areas and get rid of items that you know you no longer need. Rather let someone else get the benefit of using them than have them take up potentially valuable storage space.

Perimeter and security upgrade

Whether they are motorised or not, the entrance to the property and the security gates on the doors to the home will require some maintenance, even if it is just a coat of paint and oil on the hinges. Other aspects to check would be the intercom system to ensure that it is working correctly.

Security elements add value to a property and increase buyer appeal. With many people going away for the holiday and leaving their home vulnerable, it is vital to ensure that the home’s security is up to standard and working as it should. The homeowner will need to assess whether their current system is sufficient or if additional security measures are required.

Depending on the homeowner’s maintenance and improvement requirements, there are several different projects that homeowners could decide to do during these holidays. “When it comes to owning a property, there is always something that requires maintenance or attention. The holiday period is the ideal time to tackle what needs to be done and help improve the value of your asset,” Goslett concludes.

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RE/MAX Blog

Plan to succeedFri 17 Feb 2017

Is it possible to terminate a lease agreement without recourse?Wed 15 Feb 2017

Look out for restrictions on your propertyThu 09 Feb 2017

Is your agent right for you?Wed 08 Feb 2017

Dealing with defectsMon 06 Feb 2017

Things to consider before building a homeMon 06 Feb 2017

What happens to your rental deposit?Wed 01 Feb 2017

The ins and outs of a usufructFri 27 Jan 2017

Leave yourself some breathing roomThu 26 Jan 2017

The interest rate and how it impacts the marketTue 24 Jan 2017

Should equity in the bond be used for debt?Mon 23 Jan 2017

Paint and prepare before you move inFri 20 Jan 2017

Safety tips that every child should knowWed 18 Jan 2017

A buyer's guide to keeping track of propertiesMon 16 Jan 2017

You got to love the house you buyWed 11 Jan 2017

Is it worthwhile buying a fixer-upper?Tue 10 Jan 2017

Are you financially prepared to own a home?Fri 06 Jan 2017

Schools impact home valuesWed 04 Jan 2017

Negative aspects that influence property valuesWed 04 Jan 2017

Improve your home's value with these holiday maintenance projectsThu 15 Dec 2016

Get to know us

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RE/MAX Blog

Plan to succeedFri 17 Feb 2017

Is it possible to terminate a lease agreement without recourse?Wed 15 Feb 2017

Look out for restrictions on your propertyThu 09 Feb 2017

Is your agent right for you?Wed 08 Feb 2017

Dealing with defectsMon 06 Feb 2017

Things to consider before building a homeMon 06 Feb 2017

What happens to your rental deposit?Wed 01 Feb 2017

The ins and outs of a usufructFri 27 Jan 2017

Leave yourself some breathing roomThu 26 Jan 2017

The interest rate and how it impacts the marketTue 24 Jan 2017

Should equity in the bond be used for debt?Mon 23 Jan 2017

Paint and prepare before you move inFri 20 Jan 2017

Safety tips that every child should knowWed 18 Jan 2017

A buyer's guide to keeping track of propertiesMon 16 Jan 2017

You got to love the house you buyWed 11 Jan 2017

Is it worthwhile buying a fixer-upper?Tue 10 Jan 2017

Are you financially prepared to own a home?Fri 06 Jan 2017

Schools impact home valuesWed 04 Jan 2017

Negative aspects that influence property valuesWed 04 Jan 2017

Improve your home's value with these holiday maintenance projectsThu 15 Dec 2016

Connect with Us

Get to know us

Join Us

Sell/Rent My Home

Initiatives

Agents

Contact

Our Partners

Property For Sale in Southern Africa