RE/MAX of Southern Africa

Consumers' property needs are evolvingMon 17 Oct 2016

The property needs in South Africa are evolving as more and more people move into urban areas, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa. He notes that in 1960 around 46.6% of the population lived in urban areas, however, that figure has changed dramatically with around two-thirds of the South African population now living in metropolitan hubs.

“According to a survey released by the South African Institute of Race Relations, the proportion of people living in urban areas increased from 52% in 1990 to 62% in 2011. The share of those living in rural areas dropped from 48% to 38% over the same period. Urban living surpassed rural living in South Africa in 2009. Currently, South Africa has a higher urbanization rate than the world average and it is expected to continue increasing at a rapid rate. As a result density, scarcity and re-urbanisation will be the key long-term themes in the property market for some time, as the current stock does not support the growing demand for urban property,” says Goslett.

There are two major causes that have brought about the trend; one being that people in post-apartheid South Africa have more freedom to move around, and the other is that there is higher economic growth within metropolitan areas. “People are drawn to urban areas because there are greater employment opportunities. Urbanisation has created a concentration of economic activity, which is alluring to people who need jobs. The largest percentage of growth in urban areas has been in the smaller cities, this is mostly because of these areas having a small initial population, increasing economic activity and less competition,” says Goslett.

He notes the urbanisation is not a trend that is unique to South Africa. Globally around 54% of the world’s population currently lives in urban areas, which is around 3.9 billion people. It is estimated that this will grow to around 66% by 2050, which is in the region of 6.4 billion people. It is expected that as a continent Africa’s rate of urbanisation will overtake Asia’s by the year 2030.

“Currently the property stock in South Africa is mostly full title homes, with this type of property accounting for 82.7% of the current market stock. Sectional title homes represent around 12% of the property stock, while estates make up the remaining 5%. As the population continues to push into urban areas and land becomes more and more scarce, it is likely that there will be far fewer full title homes being built,” says Goslett.

According to statistics from ABSA bank, in the last 20 years, flats and townhouses have made up 26.6% of newly completely buildings. In the last three years, around 36% of all residential development units financed by ABSA, were sectional title units. “Sectional title homes are in great demand due to a few reasons, such as financial pressure on consumers, inadequacy of land and a changing demand for lifestyle. It has been said that full title properties may well become an impractical and outdated luxury for most South Africans,” says Goslett.

He concludes by saying that the changing property needs within the country are no longer merely a trend they are a reality. People are migrating to suburban inner-city areas where they can live, work and play, eat and shop. This not merely because it is the place to be, but rather because of the convenience and lifestyle urban living provides.

Although it may not have been your original intention to become a landlord and let out your property, there are certain situations in life where the need may arise. Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, says that some homeowners may need to relocate for work or are dealing with financial difficulty that they need to address. If the end goal is to hold onto the property, renting it out could be a feasible option, bearing in mind it does have both advantages and disadvantages.

Some advantages of letting out your property:

Financial relief or the elimination of a double house payment

A rental income will be generated when the property is let out. This money can be used to pay the bond on the property, as well as other expenses related to the home, provided of course, that the rental income is sufficient to cover these overheads. Even in the instance where the money received is not enough to cover everything, it will provide some financial relief to a homeowner who needs to pay for a bond and possibly a rental on another property as well.

In certain cases, it is better to have a tenant in the house than have it stand empty

While there is a certain amount of risk to having a tenant in the home, leaving the home unoccupied can come at a greater cost. If the home is vacant it can become a target for thieves, vandals or squatters. This is especially true if the owner has relocated to another city or province and is not able to keep an eye on the property on a regular basis. Having the right tenant in the home provides some protection to the property and they could also assist in maintaining it.

The tenant could be the future buyer of the property

If the owner decides that they would like to sell the property at a later stage, there is always the possibility that the tenant may decide to purchase it. The tenant may have been renting while they were saving for a deposit or to cover other costs associated with a property transaction and could be the ideal buyer. The rental deposit could also be used as part of the purchase deposit.

Now for the downside to letting out your property:

The owner may require equity to purchase another home

The only way that letting out the property can be a financially viable option is if the owner can afford to rent or buy somewhere else. In the instance where the homeowner has relocated and intends to purchase another home, they may require the equity from their previous home as a deposit. If this is the case, then letting out the home would not be an option.

Certain tenants could make it more difficult to sell the home

If the tenant does not want to purchase the home, they may not be very cooperative during the sales process and could make it difficult for buyers to view the property. There is also the risk that the tenant has done little to ensure the upkeep of the property or has caused damage. If the home is unoccupied, it is far easier to make repairs, clean up and get the property ready for show days.

Dealing with delinquent tenants

Once a tenant has taken occupancy of a property it can be a long and tedious process to evict them, even if they are no longer paying their monthly rental. Landlords always run the risk of having to deal with a delinquent tenant who is costing them money and possibly causing damage to the property. Incurring additional expenses such as lawyer’s fees completely eliminates any benefits of renting the property out. This risk can be mitigated to a degree by proper vetting and background checks of all possible tenants.

Managing the property remotely can be difficult

Managing a rental property could prove to be rather difficult, especially if the homeowner is living in another city. If this is the situation, it would make sense to hire a property management agent who has the expertise to effectively vet tenants, collect rent and ensure the property is well looked after.

“Looking at both the advantages and disadvantages will assist homeowners to determine whether letting out their property is the best decision for them in their current situation. While becoming a landlord can be beneficial, it is definitely not for everyone,” Goslett concludes.

Is signing a sole mandate the right choice?

Is it better to work with one estate agent or work with many? Many homeowners feel that if they sign a sole mandate with an agent they are reducing their chances of finding a buyer in the most optimum time frame and for the highest price. However, according to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, while homeowners may think they are limiting their chances by signing a sole mandate, the truth is that it will be far more beneficial to them than they think.

“Signing a mandate means that the homeowner is giving the real estate agent an exclusive contract to market and sell a specific property. It is then up to that agent to find the right buyer for the home, ideally achieving the highest possible price within the shortest time frame. The agreement also allows the agent the right to deal with all of the legalities that are involved in the property sales transaction,” explains Goslett.

According to Goslett sellers have two options when it comes to mandate agreements – an open mandate or a sole mandate. If a seller opts for the open mandate route they are taking the exclusivity out of the deal. This means that multiple agents, often from a variety of agencies, will be working to secure the sale. “As with most options in life, an open mandate has its pros and cons. While there are several agents tapping into their network to find the right buyer for the home, it can bring about complications and there is always the chance of a possible double commission claim. An open mandate allows for a wider net to be cast, however in doing so also opens up the potential for confusion as to which agent was the effective cause of the successful sale,” says Goslett. “One agent may have signed a sales agreement with a buyer, but it could have been the result of another agent’s advertising and marketing.”

Unlike a sole mandate, which is a written agreement, an open mandate can simply be a verbal agreement between the parties. If there is no written agreement in place, certain aspects could be misinterpreted, which could cause conflict. A clear, written contract protects both the seller and agent, reducing the risk of any misunderstandings. “A written contract will also ensure that the agent puts maximum effort into fulfilling the goals that have been set. If an agent is working on an open mandate they may be less inclined to spend as much time and money marketing the property, which will reduce the home’s chances of selling,” says Goslett.

Conversely, a sole mandate is a legally-binding document that must be reduced to writing. Within the agreement, an agent is given the exclusive right to sell the property for a period of time. During the allotted time frame, the seller may not appoint another agent to market the property. In the event that the seller is not satisfied with the service they receive from the selected agent they can appoint another agent once the sole mandate period has elapsed. If a homeowner has signed a sole mandate they will still be entitled to market and sell the property themselves, but only if it has been confirmed in writing with the estate agency that has been awarded the mandate. In an instance where the homeowner does sell their property, they may still be required to pay a fee to the sole mandated agent.

“Homeowners can opt to give an agent an exclusive sole mandate, which is the same as a sole mandate but slightly more restrictive in that the homeowner is not allowed to sell the property themselves. An optional term of an exclusive sole mandate is that the seller may authorise the agent to accept or reject an offer on their behalf,” Goslett explains.

He notes that the reason for a sole mandate is to ensure that the transaction is handled in the most efficient way possible and all parties are protected. “It is highly beneficial for sellers to have a sole mandate in place, which is why most financial institutions and estate agencies recommend that sellers have one in place. Having a sole mandate will ensure more effective marketing of the property and an orderly conclusion to the sale,” says Goslett.

From a logistical standpoint, a sole mandate makes more sense because the seller only has to liaise and deal with one agent, not several. This simplifies the process with far less time spent coordinating the seller’s schedule with the various agents. It is also better from a safety perspective, as only one agent will have access to the property.

Goslett says that before sellers sign any mandate, they must know that they are working with the right agent for their needs. “It is imperative that sellers select a qualified agent with a valid Fidelity Fund Certificate (FFC).The agent should also provide the seller with a marketing plan for the property. If at any stage during the process the agent is not following the marketing plan they have provided, the seller will have the right to cancel the mandate,” he says. At all times the agent should work according to what is in sellers best interest, giving sound professional advice and assisting them to make the right decisions - especially when multiple offers have been presented.

“While sellers might be inclined to think that signing a sole mandate is restricting their options, it is actually an opportunity to simplify the property sales process by working with one reputable, experienced estate agent. It will ensure that an entire team within a real estate network is cooperating to sell the property within a reasonable time frame at the best possible price,” Goslett concludes.

As the market transitions to favour buyers, it is becoming ever more important for sellers to stand out from the crowd - especially if they want to achieve the optimum results when putting their home on the market. This is according to Adrian Goslett, Regional Director and CEO Of RE/MAX of Southern Africa, who says that while there are buyers in the market, competition among sellers has started to heat up.

“Due to the current difficult economic conditions that many South Africans are facing, the market has slowed with many buyers adopting a wait-and-see approach to the housing sector. With a smaller pool of buyers in the market, sellers will need to focus on showcasing their home’s best features in order to gain a competitive edge over other homes on offer. This is the only way that they will be able to realise the property’s true sales potential,” says Goslett. “To sell a home at the best possible price within the best possible time frame requires two crucial elements - the right real estate professional and some effort on the seller’s part.”

Goslett says that there is no need for sellers to completely change their existing home or embark on a costly renovation project – it is simply about sellers looking at ways to highlight their home’s key selling points. “If done in the right way, subtle changes can make a big difference. Well-chosen, contemporary updates can revamp the entire home giving it a modern and fresh look and feel, without breaking the bank. A new coat of paint and tidying up is already a great start to ensuring that the home is in show-day condition,” he advises.

Goslett offers sellers a few additional pointers to have the property in top form on show day:

Kitchen

Often considered to be the heart of the home, the kitchen is possibly one of the most important areas. For many buyers, the kitchen can be the deciding factor as to whether or not they decide to purchase the home. An updated kitchen will increase the perceived value of the home and leave a lasting impression with potential buyers.

The kitchen will be completely reinvented and modernised by refurbishing the countertops and cupboards. Updating large appliances will also breathe new life into the space. Adding an island is also a functional way to add to the room’s aesthetic appeal, while entirely changing the area’s dynamic with additional counter space.

Bathrooms

Another area in the home that draws buyers in or has them heading for the door. Not much needs to be done in a bathroom for it to feel completely different. Just by changing the taps to a more contemporary style or adding a mirror can freshen up the look and alter the space. Modern lighting can also change the feel of the room and breathe fresh life into an outdated area.

Storage and organisation

While dependent on the space and layout of the home, installing additional cupboards or storage space will be a practical way to create a selling feature. Buyers are often looking for homes with ample storage capacity, so an extra cupboard, expanding existing cupboards or a walk-in pantry can become an extra selling point. Built–in shelves or a wall unit in areas with a lot of open wall space can also be a unique and interesting feature. These are generally relatively easy to install and will be a functional addition that could give the home added interest.

Flooring

If the home is carpeted, the carpets should be in good repair and professionally cleaned. This will make them look good and leave the whole house smelling great. If the carpets are not in a good state of repair, depending on what’s underneath it might be worthwhile to have them lifted. Many older homes will have wooden flooring underneath the carpeting, which can be sanded and revarnished. Wooden floors have always been a timeless feature that has once again come into fashion. In the instance where the home does not already have wooden floors underneath the carpeting, synthetic alternatives are available that look similar but cost far less. The right flooring option can make a room appear larger and will completely revamp its look and feel.

Outside areas and garden

The outside areas of a property will be the basis on which buyers will form their first impression of the home. Features such as decks and patios can impress, however, they aren’t always in the budget and are not necessarily needed to make the garden look good. A garden that is neat and well-kept will make an outstanding impression with buyers.

“Making sure that the home is in its best condition before it is listed will improve sellers’ chances of standing out from the crowd and achieving their highest possible selling price,” Goslett concludes.

The large majority of South Africans aspire to own a home because they want to have a piece of land that they can call theirs and an asset that will appreciate and provide them with a cornerstone to financial security. According to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, while owning a property is considered as possessing an asset, not every home is considered a true asset.

He notes that in order to determine whether a home is a true asset, one needs to first define what exactly a true asset is. The dictionary defines the word ‘asset’ as any item of economic value that is owned by either an individual or corporation, which can be converted to cash. “This definition provides an explanation of the word but does not give a clear definition of a true asset. Is it merely a figure that appears on the bottom line of a balance sheet, or is there more to it?” asks Goslett. “The defining factor that separates an asset from a true asset, is that a true asset is something that generates an income which is more than the expenses that it takes to retain it. While it is possible for property to be that asset, a vital element is for the property investor to make their money when they purchase the property and not when they sell it.”

According to Goslett much of the potential return on investment is determined when the buyer purchases the home. “It is imperative to always purchase a property that represents good value,” he advises. “While this may entail a great deal of time and research, the end result is worth the effort. If a buyer is able to purchase a home that offers good value for money, they will already be ahead of the curve and won’t have to wait for a boom in the market to see real appreciation on their property’s value.”

He adds that for a buyer to evaluate whether their home is a true asset, they will need to determine if the costs to maintain the property and the monthly expenses are less than the income that the property could generate. Generally, the only way in which a property can generate an income would be through letting it out. In this instance, the operational income would be the rental amount less tax. For the property to be a true asset, this amount should be more than the monthly total cost of owning the property. Goslett says that if managed correctly, the profit made from owning a true asset can be used to save up and purchase the next true asset. A true asset can be the foundation of building wealth.

What happens if the home is purchased as a primary residence and not an investment property? Can a primary residence be classified as a true asset?

A primary residence will not generate an income and there are maintenance costs and running expenses to keep it, however, it can be a good asset that benefits from capital appreciation over the long term. “While a home’s value may not see substantial growth over the short to medium term, over the long term it should outstrip most other investment classes. Again, however, it is important to apply the same principle as an investment property and purchase a home at fair-market value. There is also the crucial element of purchasing within a good location that is close to amenities and good schools,” says Goslett.

“Purchasing the right property can provide the owner with more than just an asset. The right property can be a true asset that outperforms other financial vehicles and provides a solid return on investment,” he concludes.

Why using an agent is better than selling solo

In an attempt to cut down on costs some sellers might be contemplating listing their homes without the services of a real estate professional. Although it may seem like a great way to reduce costs and avoid paying an agent’s commission, it also means that seller will have to do all the work themselves, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.

“At first glance selling a property privately may appear to be an easy process of just listing the home online and waiting for a potential buyer to come calling, but there is a reason that only 5% of South African homeowners decide to take this route. Apart from the convenience of leaving it to a professional, an estate agent brings several other crucial values to the table. As an expert working within the property market on a daily basis, an agent will be able to assist the seller to correctly price their home, marketing and advertising the house, be available for show days and negotiate the sale,” says Goslett.

He adds that because of their expertise in the field, an agent is far more equipped to handle the sale process, taking much of the responsibility off the seller’s shoulders. If an estate agent does not sell the property, they do not get paid, so it is in their best interest to ensure that they make every effort to successfully find the right calibre of prospective buyers.

Goslett provides four other reasons why using an agent will help sellers to make the most money in the shortest time when selling their homes:

An agent can increase your potential profit

While many people think they will make more money by avoiding paying an agent’s commission and handling the sale themselves, statistics reveal otherwise. In most cases selling the property will bring about a higher profit, often enough to cover the agent’s commission and more. Why is this? Well, for one thing, the estate agent has the experience and resources to price the home appropriately. According to studies, homes that are priced correctly when they are first listed on the market will sell faster, and for a better price than those that list at inflated prices and linger on the market for longer than they should. Homes priced above market value will be ignored by buyers and the longer the home stays on the market, the more the price tag will decrease.

Agents save sellers time

It won’t take long to list the property online, but that is not where it ends. There is also the matter of handling potential buyers, not to mention home inspectors and appraisers. All of this can be extremely time-consuming. An agent will also be able to screen buyers, help sellers to prepare for home inspections and ensure that the whole sales process is handled in an efficient manner.

The agent has the negotiation skills

Agents negotiate and make deals for a living, so there is a good chance that an agent will get a better deal for the seller than they would themselves. Considering that a home sale is probably one of the biggest deals that a seller will make in the lives, wouldn’t they want the negotiating skills of a seasoned professional helping them along? Listing the home with an agent also means that the seller will get the agent’s marketing power, access to their network and connections.

Working with an agent will lower the seller’s risk

If a homeowner sells the property themselves they run the risk of making mistakes and dealing with the possible legal consequences. The process can be completed and there is a lot of paperwork that needs to be completed in the correct manner. An agent will know the ins and outs of what it required and how it needs to be filled out.

“Due to the nature of property sales and the huge financial impact these transactions have on people’s lives, the right estate agent can add value and be a helpful professional guide for homeowners to rely on,” Goslett concludes.

Putting in an offer to purchase (OTP) and having it accepted by the seller is a great feeling, but this doesn’t mean that the deal is complete and the house is yours. According to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, there are still a few more hurdles that need to be dealt with between the time that the offer to accepted, and the keys to the front door are handed over. Not being able to overcome any one of them, could result in the deal falling through and the buyer having to start the house search over again.

“Knowing what the possible hurdles are and how to prepare for them will put buyers in good stead when going through the home buying procedure,” says Goslett. “Understanding what problems could arise during the process will allow buyers to either prevent the issue or mitigate it to some extent.”

Hurdle 1 – Mortgage loan not granted

Ideally a buyer should always get preapproval from the bank, with a written loan commitment letter from the bank that they can show the seller. Likewise, sellers should preferably deal with buyers who have preapproval. However, even if the buyer was preapproved, it is not an absolute given that the buyer will obtain a loan. Certain factors could change causing the finances to fall through, such as a sharp increase in the interest rate affecting affordability of the loan, a change of employment or job loss.

Hurdle 2 – the property appraisal isn’t high enough

In order to protect their interest in the property, the mortgage bank will send an appraiser to the home to have it valued. This is to ensure that the home is worth at least as much as the buyer is willing to pay for it or that the mortgage loan amount is at an acceptable ratio to the value to the bank. If at any stage in future the buyer defaults on repaying the mortgage loan with the bank, the bank wants to be in the best possible position to recoup its losses. In the case where the bank’s appraisal is lower than the purchase price on the offer to purchase, a price reduction may be negotiated with the seller or the buyer will need to pay the difference in cash. If the buyer does not have the extra cash and the seller is not willing to compromise on the selling price, it may be a deal breaker.

Hurdle 3 – You decide to back out of the deal

The OTP should contain a cooling-off period where the buyer will be able to step away from the transaction if the purchase price is below R250 000. All other property transactions above this mark are exempt from the cooling-off period and the agreement becomes legally binding as soon as it is signed.

In terms of the Consumer Protection Act (CPA), a right is created in favour of a buyer to rescind an Offer to Purchase. However, this right is only applicable if the sale resulted as a result of direct marketing. The CPA is furthermore only applicable to transactions where the seller deals with property in the normal course of his business. The fact that an estate agent is involved in the transaction also does not make the CPA automatically applicable to a transaction.

Cancellation of the OTP could be negotiated with the seller and the estate agents involved. If unsuccessful and a purchaser does not comply with the obligations created in the OTP, he will be in breach of contract and if legal action is instituted by the seller and/or the estate agent, the purchaser could be held liable for payment of damages to the seller and estate agent’s commission.

Hurdle 4 – Home inspection exposes a major defect

All sale of property transactions are still according to our legal system subject to the “voetstoots” clause if such a clause in contained in the OTP. Note that the word “voetstoots” need not appear and the clause could be termed “Property sold “as it now lies” or something sililar. This means that sellers are protected against any claims arising from patent (openly visible) defects or even latent (hidden) defects in the property. However, should the seller have known about the latent defect and willfully or fraudulently withheld this from a purchaser, voetstoots does not protect him. However, that said, proving prior knowledge of latent defects are in most instances very difficult.

Nowadays, the effect of voetstoots is often qualified by a disclosure annexure which often forms part of the offer to purchase. Within the annexure, the seller declares in detail what the condition of various aspect of property is.

A buyer whose offer has just been accepted is in a fortunate position in that he can bring the defect under the attention of the mortgage bank. If the defect is serious enough, a bank will not grant a bond. If the issue is not that serious, the buyer should engage the services of an independent attorney (not the transferring conveyancer – as he acts on behalf of the seller) who could negotiate or litigate for a price reduction.

“The transfer process can be a stressful situation for buyers and sellers, especially considering the number of things that need to be organised and dealt with, not to mention the ramifications of not overcoming a certain hurdle. Ideally buyers should take their time and familiarise themselves with the process and its possible pitfalls to ensure that they are ready for any situation,” Goslett concludes.

Welcomed relief as rate remains unchanged

Consumers throughout the country welcomed the decision made by the South African Reserve Bank to keep the interest rates unchanged, with the repo rate staying at 7% and the prime lending rate at 10.5%.

“There are approximately18 million credit users in South Africa. Around 50% of those credit users have an impaired credit rating due to high levels of debt. An increase in the interest rate would only place further financial pressure on consumers who are already strapped for cash,” says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa. “Hopefully the Reserve Bank’s hiking cycle has come to an end for the time being and consumers can use this window to sort out their financial affairs.”

Over the last few years the prime lending rate has increased by 2%, which has had a marked impact on homeowners and prospective buyers seeking to get into the door. A homeowner, who purchased a property for R1 million at the end of 2014 with a bond linked to prime, will currently be paying R1 306 more for their home. According to household and property sector strategist at FNB, John Loos, from the end of 2013 up until June this year, the cumulative increase in the bond instalment on the average priced home has increased by 42.1%.

According to Goslett, the Monetary Policy Committee’s decision to keep the rates unchanged is the right decision for both the property market and the greater economy. “An interest rate hike would only dampen consumer sentiment and further slowdown the property market. This year has been tough for consumers who have already had to absorb two interest rate hikes, along with an increased cost of living. While the housing market still reflects an ongoing demand, the effects of the slower economy and higher financial demands on consumers has been felt in the property sector,” says Goslett.

He notes that affordability will continue to be a driving force behind the property market and a rate hike would negatively impact that. “Consumers who are able to reduce their household debt-to-income levels have an increased chance of showing the necessary affordability levels to purchase a home. While it may be difficult to adjust to a more restrictive financial plan at first, it will bring them a step closer to owning a home,” Goslett concludes.

The idea of having a home built to their exact specifications is an exciting notion for many prospective homeowners. “However,” says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, “although building a home does have numerous benefits, there are also several vital aspects that should be considered before the project is started such as cost, time and personal preference.”

Goslett says that perhaps one of the biggest reasons that certain owners opt to build their own home is the fact that they can customise it to suit their individual preferences. He adds that a new home is also more energy efficient, especially with more energy-saving elements being introduced to the market in recent years. Opting for a new home can also be a health benefit, as purchasing an older home the owner runs the risk of being exposed to certain toxic materials, such as asbestos, lead paint and mould.

Despite the perks, there is also a downside to building a home, such as the fact that often the estimated costs are rarely accurate and the project can cost substantially more than initially expected. There is also the task of finding the right contractor for the job. According to Goslett one of the first aspects that need to be considered and researched thoroughly is the competency of the builder. “The success of a building project will largely be based on how competent the contractor is to complete the endeavour in a professional manner and within the allotted time period. Regardless of whether it is building a home from the ground up or merely taking on a renovation project – using the right contractor is essential,” Goslett advises. “Perhaps the riskiest part of building a home is the construction, which is why it is so important to scrutinise the builder’s credentials and track record. Below standard workmanship will cause issues down the road and will be costly to rectify at a later stage – not to mention the fact that the home will be unsafe for its occupants.”

Goslett says that if an owner has decided to build their home, they should ensure that the builder they chose to work with is certified with the National Home Builders Registration Council (NHBRC). “The aim of the NHBRC is to reduce the risk of subpar workmanship as much as possible and ensure that only qualified and experienced contractors are used to build homes. For their own protection homeowners should only use building contractors who are affiliated to the organisation. To a large degree this will ensure that the standard of workmanship is up to standard and provide some protection against defects occurring from substandard building,” says Goslett. “In the instance where the build has been financed, the bank will insist that the builder is a registered member of the NHBRC before releasing the necessary money.”

Timing is another aspect that requires careful consideration. If the property has not been completed within the expected time frame, it can have some harsh financial implications. “During the time that the home is being built, the owner will require accommodation until the property is habitable. Either the owner needs to stay with friends or family, which is cost effective but sometimes inconvenient, or the owner will have to incur the additional cost of renting a home while they wait - bearing in mind that the owner will also be paying for the land and building costs of their new property. A delay in the project can cause a financial setback if the owner is not prepared, as they will be liable for the additional expenses over a longer time period than what they originally anticipated,” Goslett explains.

He notes that if a bank is financing a building project, the owner is required to provide several documents such as the building plans, which should include a schedule of finishes to determine the property’s market-related value once it is complete. Goslett says that these documents will be used to determine the size of the loan granted within the parameters of the bank’s credit policy. “Irrespective of whether buyers decide to purchase an existing home or build one, in most cases they will be required to have a deposit. However, due to the higher risk involved with building a home, the deposit required in order to finance the build of a home will be higher,” says Goslett.

Along with the risk involved in building, there is also the chance that the cost of the project will be greater than what the buyer would pay if they had to purchase an existing property with similar features. Numerous factors can have an influence on the cost of the project and need to be taken into account before any decision is made. However, despite the risk and possible complexities of building a home, many owners would still prefer to have the creative freedom to design their own home, even if the financial cost is higher.

Both building a home and buying an existing home have their pros and cons. The answer to what would be a better option will be based on the owner’s personal preference, individual requirements and financial situation. “Regardless of the option that the owner chooses, property should always be viewed as a long term investment and the necessary research should be done in order to make an informed decision,” Goslett concludes.

How to keep track of your property options

Finding the right home may sound like an easy process, but many buyers don’t realise that it can take more time and effort than they initially expected – especially if it’s not handled in the correct manner. Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, says that fortunately for buyers there are methods that can ease the stress of finding the ideal home that meets their criteria.

“With the sheer volume and wide variety of properties available on the market, perhaps the largest challenge that buyers face is deciding where to start. Statistically only a small percentage of buyers will purchase the first home that they view, and viewing a great number of random show homes will only create confusion and make the decision more difficult,” says Goslett. “Not having a clear plan of action and looking at numerous show houses in a short space of time will make it difficult to keep track of what each home has to offer, what you liked about each property and what it is selling for. Preparing beforehand by creating a concise plan will simplify the process and ultimately make the home buying decision far easier.”

Irrespective of how urgently you need to find a home, the decision should never be rushed. Rather than trying to get through as many properties as possible in the shortest amount of time, it is best to take your time and work methodically, viewing small numbers of properties at a time. “By working through only a few properties at a time you will be able to retain as much information about each home as possible. Buyers who are looking for a property urgently may be inclined to want to speed the process up by using multiple agents and cramming in as many show homes as possible in one day. However, while this may give you a broad view of the homes available on the market, it will make it next to impossible to keep track of which homes appeal to you the most, who showed you the home and why it was so appealing in the first instance,” says Goslett.

According to Goslett it is advisable to use only one real estate professional who has extensive knowledge of the area you are interested in and you are comfortable with. He adds that ideally prospective buyers should view no more than four homes on any given day. “A good, reputable agent will have a wide variety of listings on their books, but will be able to narrow down the search and viewings based on the information and criteria that you provide to them. Doing this will save massive amounts of time that would have been spent on viewing properties that don’t fit into your criteria,” says Goslett.

He provides a few ways that can be used to keep tabs on the various properties that have been viewed in order to compare them. These include:

• Take down notes on each and every property that is viewed. This can be done using a smartphone, tablet or the more traditional pen and notebook. Make a list of the pros and cons of each property, incorporating likes and dislikes and stand-out features.

• Document each home by taking photos - this can be done with the camera on your cell phone. Take photos of the interior and exterior of the home focusing on aspects that are particularly important to you.

• Only keep records of properties that you are really interested in.

• If in doubt about anything, talk to the agent who showed you the property. They will have a record of the homes that they have showed you 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.

“Buying a home can be both exciting and stressful. However, adopting a calm and logical approach and working through the process systematically will reduce the stress and allow you to fully enjoy the experience,” Goslett concludes.

Inexpensive home updates that pack a punch

In the current competitive real estate market sellers need all the help they can get to make their home shine and stand out from the crowd; however this doesn’t mean that they need to break the bank with expensive updates. According to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, there are a number of cost-effective ways that sellers can make their home more appealing and increase their chances of selling for the best possible price in the shortest possible time frame.

“Sellers don’t always have to go to extreme measures to create a big impact. Often just subtle, reasonably inexpensive updates can go a long way to increasing the property’s appeal and give the seller the competitive edge. The updates will add to the seller’s confidence when putting their home on the market, with the added benefit of possibly pushing up the sale price,” says Goslett.

He provides some low-cost updates the sellers could do before listing their home:

Do a walk-through

The initial step is to visit each room and make a checklist of items that need to be either repaired or replaced. During this part of the process it is best to be as objective as possible, so it might be helpful to have a friend or family member provide a second opinion. Look for outdated styles, bold patterns and colours, dated fixtures, unfinished projects and over-cluttered cupboards and countertops. When looking at these features consider what elements showcase the home in its best possible light and what doesn’t. Once the checklist has been established, the next step is to develop a budget and diarise a date on the calendar to complete the tasks at hand.

Incorporate contemporary styles

Each home and style will be as individual as the owner. While you may love a certain look, be it ultramodern, the majority of buyers may not. Ideally it is best incorporating modern elements into the home, but going for a transitional style that hits the sweet spot between traditional elegance and contemporary cool. The idea is to tick the ‘just right’ box – not too cold or formal and not too fussy. A transitional style blends the comfort and warmth of traditional design with the clean lines and muted tones of the modern look.

First impressions count

According to research it takes just 15 seconds for a buyer to decide whether they like a house or not. First impressions count, so ensure it leaves the right mark. An impression of the home is not only formed by what buyers see inside the home, but starts from outside the property walls. Buyers driving past will judge whether they want to have a look at the property by the way it looks from the street. Curb-appeal is vitally important and vastly contributes to the success of attracting buyers to the home. Start maintenance from the pavement outside the property and work your way inwards. Basic improvements such as exterior painting, cutting the grass and planting some flowers can tremendously improve the look of a home from the outside. Special attention should also be given to the driveway, ensuring that it is weeded and in good repair.

Pay attention the kitchen and bathrooms

As some of the most frequently used areas in any home, the kitchen and bathrooms will be a focal point for buyers. Extra effort should be made to ensure that these areas are fresh and looking great. Things such as stained shower stalls and toilets, broken or missing grout, leaky taps or dated cabinet hardware are easily replaced at minimum cost. If replacement is not an option, have shower stalls or bathtubs professionally resprayed for a fresh look.

A new coat

A fresh coat of paint is a great way to revitalise the home with a reasonably minimal investment, especially if you have the skills to do the job yourself. Paint can drastically transform a space and can be used in a variety of applications on walls, doors, cabinets, fixtures and even tiles. When selecting a colour palette, neutral muted tones will be the most universally pleasing.

“By making these small updates before listing a property, sellers are giving themselves the best possible chance of setting their home apart and achieving their asking price. While these updates may not cost a lot, they will have a big impact on the overall appeal of the property in the eyes of buyers,” Goslett concludes.

An often contentious issue, the definition of what is regarded as a fixture in the home has caused many a dispute between buyers and sellers during the property sales process. Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, says that to avoid disagreements it is imperative that the sales agreement between the two parties is clear regarding what stays in the home and what will be removed by the seller when they vacate the premises.

“It is not out of the ordinary for a homeowner to install an item that they intend taking with them if they sell the property. Even if the item would traditionally be regarded as a fixture, the seller is within their right to take the item, as long as the buyer is aware of the fact and it has been agreed upon in the sales agreement,” Goslett explains. “It is vital that the sales agreement is as detailed as possible and addresses all aspect related to the sale – nothing should be left to interpretation.”

He adds that arguments and issues happen when the agreement is vague and does not specifically list the items that are included in the sale of the property. “As preparation for selling their home, sellers should compile a list itemising exactly what is to be sold with the house and what will be removed. This 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,” says Goslett. “An alternative is for sellers to remove the items from the home before it is listed, to avoid any confusion.”

As a general rule when the buyer purchases a home, they will 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, along with fixtures and fittings of a permanent nature.

Goslett points out that there are three aspects to consider when defining whether a fixture or fitting is of permanent nature:

1. The intended purpose or nature of the item when it was attached. Was the item attached to the land or a structure erected on the land and was the intention to serve the land on a permanent nature?

2. The manner in which the item was attached plays a part. Is the item attached to the degree that removing it would cause damage to the structure or land that it is attached to?

3. The owner’s intention when attaching the item should be taken into account. If the intention of the owner was to permanently attach the item, then that should be given consideration.

“If an item has been bolted down, cemented to the ground, sown or planted and has taken root it is generally regarded as permanent. An ambiguous area that often causes disputes is around structures such as sheds, pergolas or other similar structures. Issues also arise around items that are not fixed but are used in conjunction with a fixture such as pool cleaners, garage door remotes and batteries for solar power systems,” says Goslett.

He adds that a basic clause regarding the fixtures and fittings should be included in the agreement of sale to avoid disputes down the line. The clause should be similar to the following: The property is sold inclusive of all existing fixtures and fittings of a permanent nature, which the seller warrants are his/her exclusive property, fully paid for and in working condition, including but not limited to: the existing garden, trees, shrubs, plants, curtain rails, rods, pelmets, fitted carpets, the light fittings, stove and/or oven, hanging mirrors, towel racks, shelves, as well as special tap fittings, removable kitchen units, tennis court net, fireplace grate/blower, fitted kitchen storage units, awnings, post box, burglar alarm system, doorbell/knocker, the television aerial and accessories (if applicable), pool filter, pump and all cleaning equipment including automatic pool cleaner (whether fixed or movable, if applicable), swimming pool equipment, inner and outer door keys.

“Ideally the clause needs to be as specific as possible to the transaction to ensure that nothing can be misconstrued. While it may seem like a tedious exercise, including the relevant details will assist in avoiding conflict,” says Goslett. He adds that there could potentially be a verbal agreement between the two parties, if the agreement has not been reduced to writing it is very hard to prove anything at a later stage should the need arise.

“It is vital that during the sales process there is an open channel of communication and sellers intentions are made clear to buyers from the start. Communicating and being up front will ensure that conflict is avoided by both parties,” Goslett concludes.

In an effort to lower their monthly bond repayment many prospective buyers might be looking at financing their bond over a period of 30 years. However, before they do so, it is best for potential buyers to carefully consider the financial impact of the additional interest charged over the longer term loan period. This is according to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, who recommends the more traditional 20 year bond to avoid unnecessary interest payments.

“Many would-be homeowners may look at a 30 year bond as an attractive option because the lower monthly repayment makes it seem more affordable from the onset. However, while the buyer will pay around 8.3% less on their bond each month, over a period of 30 years they will end up paying 64% more interest than they would on a 20 year bond term,” advises Goslett. “The savings on the monthly bond repayment is not enough to justify paying the massive amount of additional interest.”

He adds that home prices have seen an upward trajectory over the past few decades, while salaries have not followed suit. Getting into the property market has become more difficult for younger generations, which is why many buyers tend to choose a longer-term bond option. Affordability is an issue for many South Africans who are forced to find ways to cut down on repayments to get by; however it comes at a cost over the long term.

If a buyer purchases a home for R1 million at prime, which is currently 10.5%, on a 20 year bond term, their repayments will be R9 984. If the buyer makes no additional payments into their bond account and pays the minimum instalment over the 240 month term, they will pay back a total of R2 396 112, of which R1 396 112 is interest.

If the buyer purchased the same property over a 30 year bond term, their monthly bond repayment would be R9 147. Again, if they made no other payments other than the monthly instalments, they would paid back a total of R3 293 061. In this instance the interest paid is over the term of the loan is R896 949 more.

“If the money saved on the monthly repayment is used to pay off other short-term debt or is spent on an interest-bearing investment with a higher return than the additional interest paid on the longer bond term, it might be a worthwhile endeavour. However, if the money is spent on consumables each month, the buyer will be in a far worse financial position in the long run,” says Goslett. “Prospective buyers might be convinced to opt for a 30 year bond due to the perceived short-term gain, but the accumulative effect of the additional 10 year period should be carefully considered before any final decision is taken. It is imperative that the pros and cons are carefully weighed up and an informed decision is made.”

According to Goslett, if a buyer has purchased their home with a 30 year bond and their financial situation has changed, if they can afford to pay more into their bond they should. This will reduce the term of the loan and overall interest paid. “Regardless of the term of the loan, interest is only charged on the outstanding balance of the bond. Therefore if the buyer pays more than they are contractually required to, they will bring down the total amount of interest payable, simultaneously cutting time off the loan period,” Goslett explains.

He concludes by saying that there are very few situations where a longer-term loan would be financially beneficial. Therefore before buyers are enticed by a lower monthly repayment, they need to consider their long-term finance position.

Buy a starter home or your forever home?

As more and more properties enter the market and inventory grows, first-time buyers have more options available to them than they did in last few years. With market conditions tipping in buyers favour, it may have many asking whether they should purchase a starter home now or wait until they can afford to buy their forever home.

According to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, the definition of what constitutes a starter home will differ from one person to the next. “When some people think about a starter home they may have a fixer-upper in mind, however this is not necessarily the case. One person’s starter home might be exactly what another person is looking for in a forever home. Generally speaking a starter home is a property that will suit your needs for approximately the next five years or until your circumstances change, whereas a forever home is a property that you can see yourself living in indefinitely or at least for the next 20 to 30 years. It is the home that meets all the criteria of your dream home - the right location, the right size and all the features you would ever want or need,” says Goslett.

Essentially the decision to buy a starter home now or wait will be determined by a number of aspects, such as affordability and buyers individual needs. While all buyers would rather opt to purchase their dream home straight away, the large majority of first-time buyers are not in a financial position to do so. Home prices and debt levels have continued to rise over the years, while salaries have barely budged. A few decades ago one income purchased a respectable home, however in today’s market two professional incomes still may not be enough to comfortably afford a home in some of the more expensive areas.

Another factor is that there are advantages of starting out with a more manageable property and upgrading at a later stage, such as being able to build up equity. “Once a buyer is in the property market it is generally easier for them to build from there, as they have an appreciating asset that they can sell to help them upgrade. They also have the option of keeping their starter home as an investment property and renting it out to get a passive income,” says Goslett.

He adds that while purchasing property should be viewed as a long-term decision, there might be features that buyers want but don’t necessarily need at the moment, such as an extra bedroom or large garden. It would make sense to rather save money and compromise on unnecessary features that can severely impact the price of a home. The lower bond repayment and less expensive upkeep will allow the buyer to save money for their future forever home.

Goslett notes that many first-time buyers are young couples and executives who are in the early stages of their careers, so buying a starter home may give them a chance to build up their income and affordability ratios to be able to afford a higher bond repayment and bigger property when their current home no longer meets their requirements. “Living in a starter home will also give the buyer a chance to assess what features they want in their dream home and what they don’t, as well as get a handle on the different responsibilities and expenses that accompany homeownership,” he says.

If buyers decide to wait for their forever home, ideally they should rent a property that is reasonably-priced so that they can build up as much savings as possible to put down a sizeable deposit. The larger deposit they are able to put down the better, as this will reduce the monthly bond repayment. According to Goslett an advantage of waiting is avoiding the chance of being stuck with a property in a bad time to sell and being unable to move up. A disadvantage of waiting is home prices will continue to increase, so something that is not affordable now might be potentially less affordable in the future. “Buyers will be hoping to earn more in the next few years, plus they will have some savings, but they aren’t making more land. The population continues to grow, while the available property and land remains the same. Consistent demand for property will always result in property prices following an upward trajectory over time,” says Goslett. “Even though real estate is cyclical and will have its ups and down, it will be harder to purchase your dream home without first getting into the market.”

Goslett offers some advice to first-time buyers who want to fast-track their forever home purchase:

Start where you can and build up

The first property bought may not be your dream home, but it’s a foot in the door.

Have extra money saved for expenses

Buyers should have around 5% of the value of the home saved for other expenses, such as maintenance or renovations.

Pay more to reduce the bond term

An additional payment of just R300 on the monthly bond repayment, can reduce a 20 year bond of R500 000 by almost four years. This will also reduce the amount of interest paid over the term of the bond.

Prepare for the unexpected

Prepare financially for possible future scenarios such as an interest rate increase or any other scenario that could financially threaten future plans.

“Buyers can still enjoy the benefits of owning their own home and having their foot in the door without over-committing themselves financially and compromising their financial well-being in the future,” Goslett concludes.

What you want isn't always what you need

It can be an exciting endeavour to shop for one of your largest investments – a home. However, before getting carried away with a list of dream features, it is best to define what it is that you want in a home versus what it is that you actually need. Often things that were once seen as a must-have aren’t that important when lifestyles and circumstances change.

“When it comes to finding the right home, it is best to sit down and think about what it is that you really need – and not just what you want. After some contemplation you may find that the ideal home for you and your family is not what you initially thought it would be,” says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa. “Buyers may want a large home with a garden and room for entertaining, only to find that their lifestyle and busy schedules don’t allow for it and a low-maintenance, lock-up-and-go property would suit them better. Carefully considering your lifestyle with help you to create a list of what is truly needed.”

Buyers should ask themselves, what do I need from my home? Goslett says that the keyword to remember is ‘need’. “When it comes to making a major financial commitment such as purchasing a home, or for that matter any life-changing decisions – a need should always trump a want. The challenge is separating and truly determining the difference between a need and want,” says Goslett.

He provides a few considerations to help buyers determine whether they are looking for a property with the right mind-set:

Create a list

A great way to organise one’s thoughts is to put pen to paper. Create a list with two columns – one for wants and the other for needs. The needs column should include elements such as location, school zones, neighbourhood, budget, number of bedrooms, features and amenities, plumbing and electrical that are updated, stand size, number of garage spaces, Home Owner’s Association and Body Corporate details where applicable. The wants column is for the aspects that are regarded as nonessentials such as the specific style of the home, renovated kitchen or bathrooms, deck, swimming pool, hot tub, flooring material, fireplace or wood stove, window material and landscaping.

Discuss the matter with other family members

If the home is being purchased for more than just one person, it is best to consult with those who will be living there to further define what they regard as needs and wants. Certain aspects will be more important to certain family members. For example a larger kitchen might be a priority for the lady of the home, while the children may need extra cupboard space for their hobbies or interests. Discussing the matter with all family members is a helpful way to determining wants and needs. It is important to consider how you and your family want to live in the home, as studies have shown that the size and layout of the home can have an impact on the relationship between its occupants.

Consider your future plans

A major consideration is how long you plan to stay in the property. This aspect in itself can have a massive impact on your needs and wants. If you are planning on staying in the home for five years or longer you should think about possible upcoming life changes. These could include having a baby or accommodating an aging parent. While the home may not currently have an extra bedroom, could it be added onto to meet your future needs?

Be prepared to compromise

Searching for a new home and going through the buying process can be exhausting. However, being realistic will ease your mind and reduce stress. Life often indoctrinates people by telling them they need certain aspects to be happy. It is best to take a step back and ask what truly makes you happy. The answer to that question will be unique to everyone - if a large garden will make you and your family happy, then make that a need. However, be prepared to compromise on other wants if necessary. Spend time defining your lifestyle and what you could forgo in order to be happy in your home.

“Determining the difference between a want and need will make the decision aspect of the home buying process far easier. While buying a dream home is a good aspiration to have, it is more important to buy the right home,” Goslett concludes.

A detrimental mistake that many sellers make when listing their property on the market is inflating the asking price. This is according to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, who says that sellers often ask for a higher amount in order to give themselves a cushion during the negotiation process.

“A seller may have a certain amount that they would like to get out of the sale of the property. Anticipating that prospective buyers will put in lower offers than the initial asking price, sellers often inflate the price of the home to counter this and still get out what they hoped for. However, the problem is that if a property is overpriced, it will have limited appeal among buyers. Buyers won’t take the time to view a property that they deem to be overpriced and would rather look at homes priced at what they deem to be reasonable market value. An inflated asking price will only make correctly-priced homes look more appealing,” says Goslett.

Emotional attachment is another reason many sellers over evaluate their property. Homeowners who have lived in their home for many years and have put a lot of time, money and effort into making it their own, will feel that it may be worth more than the market dictates. “Emotions are often what leads sellers to see their home has having more value than other properties in their area, however, buyers won’t have the same perception of the property,” says Goslett.

He notes that while price is not the only factor that buyers consider, homes that are priced correctly at fair market value will appeal to a larger target market and won’t be on the market for very long. When buyers are comparing properties that are in the same area and offer similar features, price becomes the number one factor that will influence their decision making process.

With the number of properties available on the market showing signs of growth, sellers that over price their homes are taking themselves out of the game in the current competitive environment. Goslett says that homes that sit on the market for long periods of time generally lose their appeal and sellers are eventually forced to lower their prices anyway. In many cases sellers are eventually selling their homes for a lot less than what they would have received if the home was priced correctly at the start.

According to data, homes that are priced at fair market value are generally sold within the first 42 days being listed. Homes that are on the market for around five to 12 weeks sold for 3% less than the asking price, 13 to 24 weeks for 6% less and houses that were on the market for 24 weeks or more sold for more than 10% less.

The question is, how does the seller know that their asking price is market related? Goslett says that a real estate professional will be able to guide the seller through the process of correctly pricing their home. “An estate agent will be able to provide the homeowner with a comparative market analysis (CMA), which will give them an accurate indication of what other homes are selling for in that specific neighbourhood. Factors that should be included in a CMA are the average price per square metre in the area, recent sales prices of similar homes and comparative prices of other properties that are still on the market. This information will help establish a reasonable price bracket for the property,” he advises.

Working within the correct price bracket for the property, an agent will then be able to determine what features or unique qualities could set the home apart from others in the area to give a more accurate gauge of the its value.

“Market conditions will have a massive influence on the estimated value of the home. Sellers will need to adjust their thinking to relate to the current market. Currently conditions are tipping in buyers’ favour as they are spoilt for choice when it comes to well-priced investment opportunities. Sellers will need to ensure that their property is priced accordingly or run the risk of watching the market from the side-lines,” Goslett concludes.

Tenant selection is imperative to rental success

Purchasing an investment property and renting it out can be a mutually beneficial arrangement for both the landlord and tenant, provided the owner of the property adheres to a few key principles from the start when selecting a suitable tenant.

This is according to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, who says that due to South African legislation, selecting the right tenant can be a rather complex process. However, there are several methods that landlords can use to ensure that they are protected from the risk of delinquent tenants and choose the best possible tenant to occupy their property.

“The initial step that landlords should take before they advertise the rental property is determining the conditions of the rental agreement. Landlords should be specific about what they want with regards to the conditions within the agreement, dealing with issues such as pets and whether or not the tenant is a smoker. It is essential for the landlords to stipulate in their advertisement that each tenant will be vetted before any rental agreement is entered into. This will have a significant impact on the number of potential tenants who decide to view the property, narrowing the selection down to only those who meet the landlord’s criteria,” says Goslett.

He adds that landlords can narrow down the selection further by requesting that each potential tenant fills out a detailed application form when applying. “The application form should request the tenant’s personal information such as their employment details and contactable references. Tenants can also be asked to provide supporting documents which would include a copy of their identity document and a salary slip to verify employment and affordability,” advises Goslett.

According to Goslett, once the landlord has received an application form with the attached supporting documents, they will be able to proceed with a credit check and criminal record check. During this stage of the vetting process the references provided by the tenant should be contacted and verified.

“Once the vetting process has been complete and a suitable tenant has been selected, it is imperative that a comprehensive and legally-sound lease agreement is drawn up, which stipulates all necessary conditions in detail. The terms of the agreement must be agreed upon and signed by both parties. To avoid any confusion or uncertainty regarding each party’s obligations, the lease agreement should be as detailed as possible. The agreement should include a pre-occupation inspection report to be concluded with the tenant present, along with details regarding aspects such as the deposit, rental amount, maintenance and upkeep. Time frames should be allocated to the required clauses as well as penalties, should any condition be breached,” advises Goslett.

Even though a lease agreement has been signed, the property still remains the landlord’s responsibility. Goslett says that if at any stage of the tenancy, a utility bill is not paid; the landlord will ultimately be required to settle the outstanding balance. Ideally landlords should be aware of what is happening with their property and ensure that all accounts are paid and up-to-date. He adds that certain measures can be taken to minimise the risk posed by a defaulting tenant, such as prepaid electricity and water meters, for example. If this is not an option, a deposit for these accounts can be agreed upon beforehand.

While landlords need to be respectful of the tenant’s rights and their privacy, it is advisable that home inspections are conducted on a regular basis. The inspections must be at the tenant’s convenience, ensuring that any issues or breaches in the contract are dealt with as soon as possible. “If problems are left, they will cost a lot more to rectify further down the line. For example, if a late or non-payment is not addressed immediately, within a short space of time the tenant could be a few months behind and incurring further utility costs. Aside from the escalating costs, legal action may need to be taken in order to get the tenant removed from the property, which will also be a costly and time-consuming exercise,” says Goslett.

He advises that a professional rental agent is a good option for landlords who don’t have the time to manage their rental portfolio. For a percentage of the rental income, an experienced, reputable rental management agent will have the expertise and resources to ensure that the property is managed in the correct manner. “A professional management agent will assist the landlord with tenant selection, reference and credit checks along with the day-to-day management of the property. They will also be up-to-date with the latest legal and regulatory developments to protect landlords and tenants. Rental agents will have procedures and systems in place to professionally avoid any potential problems and deal with any disputes that may arise. If necessary, they will also have access to the legal resources and experience to deal with any situation efficiently,” says Goslett.

If a property rental is handled in the correct way from the start, with ongoing professional management, many unnecessary and unpleasant situations can be avoided. Goslett concludes by saying that taking the right measures from day one can be the difference between a landlord in trouble and one whose buy-to-let portfolio is producing a regular income and growing in capital value.

It doesn’t matter whether it is across the road or across the country, moving from one home to another can be a stressful experience, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa. He adds that most people will move to a new home at some stage in their lives. “While moving will be a relatively easy process for some people, with few or no issues, for the others the experience could be enough for them never to want to move again,” says Goslett.

He notes that the difference between a smooth moving experience and a difficult one is normally preparation. Goslett provides a few tips that people can use to make their move as organised and hassle-free as possible.

Keep a record

The majority of moving company will require an inventory of household items before they will be able to provide a quote for their services, so homeowners will need to compile a list of all their possessions. According to Goslett moving companies require an inventory of goods in order for them to determine the amount of space required for the move. He adds that making lists while packing is also a great way to keep track of what is in each box. “Having a list with the number of boxes and contents of each box will make it far easier to determine whether items or boxes are missing,” says Goslett. “The more specific a homeowner is with their inventory and box labels, the easier it will be for them to find certain items when unpacking. For example using labels on boxes such as winter jackets is better than just labelling the box as clothes.”

Assign an area in the home for packing

Having all the necessary items such as a marker pen and box tape in a central allocated area will make the packing process easier and will alleviate the frustration of constantly looking for these items. Everyone in the home who is helping pack will know to find anything related to the pack at the allocated packing station. Items to be keep at the packing station should include all lists, scissors, labels, bubble wrap and packing paper. Goslett says that homeowners should take care when wrapping items in printed newspaper as it could strain the item with ink.

Rather more than less

It is better to have too many supplies and boxes than not enough, as running out of these items will cause a delay in the packing process. “Generally homeowners require more boxes than they initially think. If the boxes have been supplied to the homeowner by their moving company, they will normally be able to get a refund for any unused boxes provided they are in a good condition. If a homeowner gets the boxes for free from a supermarket, it is simply a matter of taking the leftover boxes to a recycling bin or passing them onto a friend who may be moving in the near future,” says Goslett.

As a precautionary measure homeowners should have approximately 10 boxes set aside for last minute items that can only be packed on moving day, such as bedding, clothes and cleaning supplies.

Prioritise the packing order

Items that are used daily or on a regular basis should be packed last, while other items can be packed away and ready to go. Anything that is not essential up until the day of the move should be packed first. This will give the homeowner a good indication as to how much more needs to be packed and less will be left to do as moving day draws closer. “There is no need to keep winter clothes out if the move is happening during the summer months, and duplicate items can be pared down to only the bare essentials,” says Goslett.

Keep similar or matching items together

If a household item is used in conjunction with something else, it is best to keep all of these items together to make it easier to unpack. For example appliances should be packed together with their detachable parts or books together with book ends. Place all screws, bolts or small parts into a re-sealable plastic bag or envelope and tape it to the piece of furniture or corresponding appliance they come from. Goslett says that another effective method is to label each bag or envelope and place them all into one box along with accessories such as remote controls, extension cords and Allen keys. Ensure that this box is marked clearly so that it can be easily found.

Colour code boxes and items

While the homeowner may know which box goes to which room, the movers won’t. An easy way to resolve this problem is by designating each room in the new home a certain colour and marking each box or item with a sticker of the corresponding colour. For example, all bedroom items will be marked in blue and kitchen items in red. By putting a matching sticker on the door post of each room, movers will know the destination of each item or box.

Personal and important items

Each member of the family should pack a bag containing all the personal items that they will want immediate access to when arriving at the new home, such as cell phone, toothbrush or pyjamas. According to Goslett it is also advisable to have a bag or box that contains all valuable items and important documents, which can be kept with the homeowner at all times.

Check your insurance

Goslett says that before the move the homeowner should phone their insurance company and check what is covered by their homeowners’ insurance during the move and if any additional insurance it required from the mover. “Also find out what is required in the instance that items are lost or stolen, as some insurance companies may need receipts, appraisals or photos of valuable items,” advises Goslett.

He notes that while moving can be a rather daunting exercise, with the right planning and organisation with make it a far less stressful endeavour. “If everything is organised and ready to go, then the process can be an exciting experience that everyone can look forward to,” Goslett concludes.

Buying a home is an incredible milestone to achieve and an exciting time for many first-time buyers. However, there are several new responsibilities that come with the title homeowner, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.

“Apart from the financial commitment, there are also some other necessary home maintenance responsibilities that need to be addressed on a regular basis,” says Goslett. “Purchasing a home that is in good repair is great, but then it is up to the new owner to ensure that it stays that way. It is always advisable to get into the routine of doing regular maintenance checks, rather than waiting for something to go wrong and having to deal with costly repairs. It is far better to ensure that everything gets the required attention before it turns into a major problem and financial burden. Advanced warning will also allow the homeowner to do some comparative shopping and find the best person for the job, instead of rushing around in an emergency situation.”

According to Goslett, ideally preventative maintenance inspections should be carried out at least twice a year, although certain areas of the home may require slightly more attention and others less. “Generally the majority of checks and maintenance can be done by the homeowner, however there are certain aspects of the home that may require the services of a professional contractor,” advises Goslett.

He provides new homeowners with some areas in the home that will need to be checked and maintained regularly:

Main electrical panel

The main electrical panel should be checked for signs of water penetration as this could be potentially dangerous. Look for water marks or sections of the panel that show signs of rust. The circuit breaker switches should all be turned off and back on to ensure that they are all working and none have seized. If the panel is warm to the touch or smells of burnt insulation it is advisable to have it inspected by a professional electrician.

Roofs

Windy, stormy weather can shift or damage roofing tiles, so this is an area of the home that should be checked regularly. Roof tiles that are missing or damaged should be replaced as they could lead to leaks and water damage inside the home. Homes with flat roofs must also be checked, especially for areas that are blistering or have bubbles. Debris should be cleared off the roof and any trees or branches that make contact with the roof should be cut back.

Chimneys

Another aspect that homeowners should pay attention to while on the roof is the chimney. Make sure that there are no loose or damaged bricks and that the mortar is in good repair. It is also a good idea to check that the waterproofing elements around the base of the chimney are in a suitable condition. The chimney should be professionally swept as least once a year to clear away any built up creosote and other flammable materials inside the chimney flue. While this will not apply to gas fireplaces, it is important to have them serviced and have a licensed gas technician ensure that everything is operating correctly.

Gutters

Debris such as foliage and other foreign objects can cause gutters and downpipes to clog, causing the water to overflow into unwanted areas. This could cause water damage and damp inside the ceiling space or within the walls of the home. In order to avoid this, gutters should be cleaned and checked regularly, ensuring that there are no leaks or holes that may require some repair. It is also advisable to check that the gutters are securely attached to the wall and that they are positioned to drain water away from the house.

Windows and doors

Broken or cracked window panes can be a potential safety hazard so it is best to have them replaced. Old, cracking, sun-damaged window putty should also be reapplied where necessary. Window and door finishes should be checked for any paint deterioration or rot. Ensuring that the windows and doors seal properly will assist in reducing utility costs, as it will be easier to heat or cool down the inside of the home. It is vital to check whether any door frames have shifted over the last six months as this could point to an issue with the foundation or structure of the home.

Walls and ceilings

The most important aspects to look for when inspecting walls and ceilings are cracks and damp spots. Narrow vertical cracks in walls are often caused by minor settlement or normal shrinkage and should be too much cause for concern. However, if the vertical crack is around 3mm wide or wider, it could be a result of major settlement problems and should be checked and evaluated by an engineer.

If water marks appear of either the walls or the ceiling it is important that they are monitored. Damp within the wall will cause the paint to bubble and flake, while damp in the ceiling could cause it to sag or in severe causes collapse. Water marks on the ceiling are generally a symptom of a leaking roof.

Paint

While most people use paint to change the look and feel of their home, its primary function is to provide the home with a protective layer against the elements. It provides a waterproofing layer to walls, protects metal from rust and wooden fixtures from sun-damage, insects and rot. Painted areas that are bubbling, peeling, cracked or blistered should be inspected, repaired and repainted.

Patios and decks

Much like paint, vanish or sealant also acts as a protective layer for wooden features such as decks. Wooden patios and decks need to be sealed properly to avoid warping or water damage. If the deck is sealed correctly, water should bead on the surface, however if the water is absorbed, it is ineffective and the deck will need to be sanded down and resealed. Another concern with wooden elements is insect infestation, so these features should be inspected and fumigated if necessary.

General fixtures

Once all the major elements have been inspected, check for things such as toilets that run continuously and leaking taps as these elements will eat into utility costs. Ensure that toilets are sealed and secured to the floor and check that the sealant and grouting around all kitchen and bathroom fixtures is in good repair. This will prevent water from leaking in behind tiles, which can cause mould and rot.

“Getting into a routine of regularly taking preventative measures is far better than being caught unaware. Taking good care of a home will help to ensure the safety of those who live there, along with its capital appreciation over the long term,” Goslett concludes.

Create a home maintenance and project fund

There is much more to homeownership than paying a monthly bond repayment, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, who points out that maintaining the property, is an intricate element of being a homeowner.

“Becoming a homeowner has a number of advantages such as the potential of owning an asset that will increase in value over the long term. Other benefits include being able to make changes to the home and decide what it looks like without having to consult with somebody else. However, with the advantages comes the responsibility of maintaining the property to ensure that it reaches its full investment potential,” says Goslett. “Affording a property is not just about meeting the monthly bond requirements, but also being in a financial position to be able to put some money away for when the unexpected happens.”

He adds that while the majority of major issues and damages that could occur from a fire, flooding, natural disasters or the like, are covered by home insurance, the general up keep and maintenance of the property is not. “Policies will differ from one insurance company to the next in terms of what damage or disaster they will cover and what they won’t. However, homeowners can be assured that insurance policies won’t cover general home maintenance or damage that is a result of neglect or poor maintenance. The upkeep of the property will be for the homeowner’s own account. For example, a roof that has been damaged by a fire will generally be covered by insurance, whereas an old roof in need of repair won’t. Replacing or repairing a roof could be a huge financial burden if the homeowner has not prepared and set aside money in some kind of a contingency fund,” says Goslett.

According to Goslett it is vital for homeowners to have an emergency fund to avoid incurring additional debt to pay for home maintenance and unforeseen costly repairs. “Ideally homeowners should aim to set aside at least 1% of the value of their home annually to cover maintenance, bearing in mind the value of the property will increase. This translates to an annual savings of around R10 000 per R1 million of the home’s value. In the instance where the money has not been used during the year, it should be kept and added to the next year’s savings to ensure that the homeowner is covered in the event of a major expense,” advises Goslett.

Although 1% of the home’s value should be the minimum, how much a homeowner can set aside will largely demand on their financial situation, taking into account their income, expenses and savings goal. “Additional factors to consider include the home’s condition and age, as newly built homes will initially require very little maintenance compared to older properties. It is best for homeowners to have a balanced approach to their financial priorities, with consideration given to reducing debt levels, saving to cover expenses in the event of job loss and retirement,” says Goslett.

He adds that each circumstance will be unique, so homeowners will need to work out what kind of savings plan will work in their situation. It is a matter of introspectively assessing their financial position and deciding what amount they can realistically set aside consistently – sustainability is a vital aspect to building savings.

With factors such as increased food prices, interest rate hikes and inflated utility tariff fees placed financial pressure on households; certain homeowners may only be able to build up their project fund slowly. If this is the case, Goslett says that homeowners should prioritise maintenance projects based on their necessity and push purely cosmetic tasks down the list.

“Although not always possible, in certain instances homeowners could divide large project into more manageable portions so that they won’t have to pay large sums of money all at once and have additional time to build up savings. If need be, rather focus on one room at a time than the entire house all at once,” he adds.

The ideal way to start a savings fund is by setting up an automatic transfer from the homeowner’s cheque account into their savings account. “Research reveals that consumers are more likely to forget about money that is automatically set aside and their savings fund can start to grow without them even thinking about it. A contingency fund will assist homeowners to maintain and improve their home, never having to worry about being caught unprepared,” Goslett concludes.

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RE/MAX Blog

Consumers' property needs are evolvingMon 17 Oct 2016

Renting your home - The pros and consThu 13 Oct 2016

Is signing a sole mandate the right choice?Tue 11 Oct 2016

Highlight your home's finest featuresMon 10 Oct 2016

Property, is it a true asset?Fri 07 Oct 2016

Why using an agent is better than selling soloThu 06 Oct 2016

A few hurdles before closing the dealTue 04 Oct 2016

Welcomed relief as rate remains unchangedThu 22 Sep 2016

Buy or build?Tue 20 Sep 2016

How to keep track of your property optionsFri 16 Sep 2016

Inexpensive home updates that pack a punchTue 13 Sep 2016

What goes and what stays?Mon 12 Sep 2016

Are 30 year bonds worthwhile?Fri 09 Sep 2016

Buy a starter home or your forever home?Thu 08 Sep 2016

What you want isn't always what you needWed 07 Sep 2016

Property pricing is crucialTue 06 Sep 2016

Tenant selection is imperative to rental successFri 02 Sep 2016

Tips for a stress-free moveThu 01 Sep 2016

Maintaining a new homeTue 30 Aug 2016

Create a home maintenance and project fundTue 30 Aug 2016

Get to know us

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RE/MAX Blog

Consumers' property needs are evolvingMon 17 Oct 2016

Renting your home - The pros and consThu 13 Oct 2016

Is signing a sole mandate the right choice?Tue 11 Oct 2016

Highlight your home's finest featuresMon 10 Oct 2016

Property, is it a true asset?Fri 07 Oct 2016

Why using an agent is better than selling soloThu 06 Oct 2016

A few hurdles before closing the dealTue 04 Oct 2016

Welcomed relief as rate remains unchangedThu 22 Sep 2016

Buy or build?Tue 20 Sep 2016

How to keep track of your property optionsFri 16 Sep 2016

Inexpensive home updates that pack a punchTue 13 Sep 2016

What goes and what stays?Mon 12 Sep 2016

Are 30 year bonds worthwhile?Fri 09 Sep 2016

Buy a starter home or your forever home?Thu 08 Sep 2016

What you want isn't always what you needWed 07 Sep 2016

Property pricing is crucialTue 06 Sep 2016

Tenant selection is imperative to rental successFri 02 Sep 2016

Tips for a stress-free moveThu 01 Sep 2016

Maintaining a new homeTue 30 Aug 2016

Create a home maintenance and project fundTue 30 Aug 2016

Connect with Us

Get to know us

Join Us

Sell/Rent My Home

Initiatives

Agents

Contact

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Property For Sale in Southern Africa