As spring starts and the temperatures begin to heat up, more and more buyers will be venturing out to look for their ideal home, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa. He notes that homeowners, who are thinking of placing their property on the market, may want to take of advantage of the fact that there are generally higher volumes of buyer foot traffic during the warmer seasons.

According to Goslett the property market generally sees an uptick in sales as the temperatures rise, making the seasonal change an ideal time for would-be sellers to spring clean their homes and prepare for listing on the market. He adds that there are a number of things that homeowners can do this season to get their homes in show day condition and ensure that the property stands out in the current competitive real estate environment.  

First impressions count – Simply put, when it comes to property appearances matter – so make it count in the right way. If buyers have the choice between two homes in an area that offer similar features and are within the same price bracket, then the determining factor that will distinguish one home from the other will be the look and buyer’s overall first impression of the property. 

“The first impression of a home will be created by the prospective buyers’ sensory perception of the property. It will be based on what they see, hear, smell and feel when they first enter the home. All of these elements will contribute to and influence the overall feel of the home, which will generate an emotional response from buyers. If this experience is positive and results in a favourable impression, it is more likely that the buyer will feel compelled to make an offer,” says Goslett.

Get a trusted second opinion – Homeowners often have an emotional attachment to their home, often making it difficult for them to have an objective view. Because of this, it is advised that they call in a second opinion with regard to what improvements might need to be made to get the home into show day condition. “Rather than avoiding input from others, homeowners should seek out honest opinions that focus on both the home’s good points as well as the bad. If the homeowner is worried about possible conflict with friends or family, a trusted estate agent will give their honest and direct opinion with regards to what should be done to make the home more marketable,” advises Goslett.

Spring clean, means clean – Once the areas of improvement have been identified, it is time to put in the work and clean and make the necessary changes to the home. Apart from washing the scrubbing the home, spring cleaning also entails decluttering and getting rid of unused items. 

“Attention should be paid to every detail in the home, ensuring that even the slightest cracked window pane has been replaced. Although the homeowner may not notice minor defects in and around their property, buyers will specifically be looking for things that are wrong with the home.  It is always important to remember that the home is competing with others in the area, so it is imperative that every effort is made to ensure the home is in its best condition, especially considering that there may be newer homes on the market,” says Goslett.

Allow buyers to picture themselves living there – It is important for sellers to make buyers feel as welcome as possible in the home. Potential buyers need the space to be able to view the home at their own leisure and be able to visualise themselves living in there. “Ways in which homeowners can make buyers feel more at ease is by packing away personal items and photos. This will help the buyers to see themselves in the home and not the current owner. It is also best to decorate or paint the home in neutral, muted colours with only a few well-placed items to add interest and warmth. Sellers can aesthetically enhance the home with a vase of some fresh flowers or potpourri in the bathroom. Home-decor magazines are a great resource for tips,” says Goslett.

Get rid of bad odours – Unpleasant odours can potentially drive prospective buyers away. For this reason it is imperative that homeowners make every effort to ensure that their home smells inviting. Traces of food, pets or smoking and other disagreeable odours can kill deals fast. 

“Ensuring the home is show day ready will be a vital element in setting the property apart from others in the neighbourhood and will give the seller the best possible advantage in a competitive real estate market,” Goslett concludes.

 

Although kitchen and bathroom renovations still top the list as the upgrades that add the most value to a property, a growing number of homeowners are now looking to improve their outdoor living areas, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.

“With the warmer months around the corner, many homeowners will once again turn their attention to their outdoor living spaces because of the benefits it provides to their families. In spring and summer, South African families generally spend a great deal of time outdoors. An outdoor home improvement project will assist in maximising the enjoyment of the property’s outdoor spaces and add to the appeal of the home when it comes time to sell,” says Goslett.

He notes that there are several reasons why investing in the outdoor living area of your home could pay off in the long run:

Increased value and buyer appeal

“To a large extent a homeowner will be able to recoup a significant portion of the money they spend on renovating and upgrading their home, as long as they do not overcapitalise and spend above the ceiling price of the neighbourhood,” says Goslett. 

He adds that an outdoor addition such as a deck or swimming pool will increase the value of a property, and depending on the circumstances, between 65% and 90% of the cost could be recouped at sale. “Apart from adding value to the property, an outdoor improvement will also add to the home’s overall buyer appeal, which might be the determining factor that pushes the deal in the seller’s favour. Buyers will like the fact that the home has pleasant outdoor features and spaces.”

Enjoyment and entertaining

Increasing the property’s value is a massive benefit to any home improvement, however this can only be realised if the property is sold. Goslett says that immediate benefit is that once the project is complete, the home’s occupants will be able to use and enjoy the improved outdoor space. An outdoor area designed around a homeowner’s specific needs and preferences can optimise the space and act as an extension of the liveable area of the home.

Space to relax and de-stress 

According to medical research spending time outdoors can help with alleviating stress, as well as improving one’s mood. “A pleasant and accessible outdoor area can bring all the benefits of spending time in nature into the comfort of your own home,” adds Goslett. 

Potentially saving money and water 

Adding functional outdoor features such as a low-maintenance deck or patio will reduce areas of lawn that require watering, which in turn will lower utility costs. Having an outdoor recreational area means that the family is likely to spend more time at home, which will also reduce entertainment costs. 

“The benefits to homeowners of investing in their outdoor living spaces can be reaped in several ways,” says Goslett. “Not only can it add to the home’s value financially, it will also create a space for the whole family to relax and reconnect at the end of a hard day,” he concludes.

 

Finding the right home is only one step in the process to becoming a homeowner. Once you have narrowed down the search and found the home that meets your criteria, the next step is to put pen to paper and make an offer to purchase. While some may find this a rather overwhelming undertaking, following a few simple guidelines will make it a far less daunting experience, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.

“An offer to purchase is essentially an agreement that lays out the terms and conditions of the property transaction between the buyer and seller,” Goslett explains. “All of the terms and conditions will need to be agreed upon by both parties before the contract is signed. It is imperative that everything that each party has agreed to is put down on paper and listed in the offer to purchase document to avoid possible conflict further down the road. Once the document is signed by both parties it is a legal and binding document.”

He notes that as with any contract between parties, an offer to purchase serves to protect the parties involved in the transaction and ensure that nothing is left to interpretation. If there is any ambiguity it could lead to a misunderstanding or conflict, so is best to be avoided. “It is vital that the offer to purchase thoroughly covers all the agreed upon terms, which should include issues such as the date of occupation, occupational rent, fixtures and fittings and the conditions of sale. Once the offer to purchase has been concluded and signed by both parties it will become the deed of sale on that property,” says Goslett.

According to Goslett the offer to purchase should be as detailed and as specific as possible. “It may seem like a tedious endeavour, but making the offer to purchase as detailed as possible will provide protection to both parties. If every detail of the transaction is covered within the document, there will be little or no chance of either party negating on the agreed upon terms at a later stage,” says Goslett. “There are cases where items of furniture or curtains have been specifically made for a uniquely shaped room in the home. In these instances it would make sense for the seller to sell these items with the property and list it in the offer to purchase. If the item is not listed, there is no obligation for the seller to leave it. This is where the details in the document become important.”

Goslett points out that both parties must be in agreement as to what items are included in the sale of the property and what aren’t. As a general rule of thumb any fixtures or fittings that have been attached to the property (nailed, bolted, glued or screwed down) will stay. 

“It is fairly common in today’s market for a buyer to submit an offer to purchase while they currently own another property. It is also common practise for buyers to include a condition which states they are submitted the offer subject to bond approval.  In these situations the offer to purchase will include a suspensive condition that states that the sale is only subject to the buyer’s other property being sold or them receiving the necessary finance,” says Goslett. 

He adds that a suspensive condition will normally include a time limit that will depend on the agreement made between the buyer and seller. Once the suspensive condition has been fulfilled, the buyer should notify the real estate agent without delay so that the offer to purchase can be made unconditional. “This step in the process is vital because the offer to purchase could become null and void and the whole transaction could fall through if the requirements have not been met in a timeous fashion,” advises Goslett.

An essential inclusion in any offer to purchase agreement is the date of occupation, which stipulates the date on which the seller will vacate the property and the buyer will take occupation. Apart from the fact that it will provide both parties with a clear date to work around in terms of moving, it will also determine whether either party may need to pay occupational rent. The buyer will be required to pay occupational rent to the seller if they move in to the property before it is registered in their name. Conversely occupational rent will be paid to the buyer should the seller not be out by the time the transfer of ownership has occurred.  The rental amount should be market-related and can be agreed on by both parties with the help of an agent. The occupational rent amount should be included in the offer to purchase.

“Once the document has been signed by both parties it is contractually binding, so it is imperative that the buyer is fully satisfied before they put pen to paper. Buyers should go through the document thoroughly dotting their proverbial ‘I’s and crossing their ‘T’s. If there is any clause that they need clarification on, they should ask their agent for an explanation or obtain a professional opinion from a lawyer.”

After negotiations have reached their conclusion, the offer to purchase has been signed and the relevant cooling-off period has passed, any deposit made by the buyer will be placed into an interest-bearing trust account until transfer of ownership is complete. The interest on this account will be for the benefit of the buyer.

“An offer to purchase is a vital part of a property transaction and if used correctly, it will make the process of buying a home as easy and transparent as possible, assisting buyers and sellers to avoid any misunderstandings,” Goslett concludes.

 

The current challenging economic circumstances have not only had an effect on those wanting to own property, it has also impacted on many tenants and landlords within the residential market, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.

“Some landlords may find themselves in the situation where their tenant is no longer able to pay their monthly rent; however landlords cannot simply evict the tenant as they are protected by the Prevention of Illegal Eviction from Unlawful Occupation of Land Act, No. 19 of 1998, also known as the PIE Act,” says Goslett. “Essentially the act applies to the occupation of premises which constitute a dwelling, which in the case of a landlord and tenant relationship would be the residential property in an urban area. The reason that the act was introduced was to ensure that tenants were protected from being unlawfully evicted from the property. However, it is important to note that while the act aims to prevent wrongful eviction, it does not mean that the tenant cannot be evicted, merely that the correct procedure needs to be adhered to during the process.”

Goslett says that it is imperative that any homeowner or investors who wishes to let out a property familiarise themselves with the PIE Act, along with the numerous procedures it advocates for the lawful dealing of a defaulting tenant. “While the act was created with the tenant’s protection in mind, it is not prejudice against landlords, but ensures that the eviction process is followed in the correct manner according to legislation and that tenants are treated with respect,” he explains. 

According to the PIE Act, in order to lawfully evict a tenant, landlords will have to adhere to the following process:

If by failing to pay the agreed rental amount, the tenant has breached the lease agreement, the initial step would be for the landlord to send notice to the tenant informing him of such breach, referring specifically to the breach clause stated in the agreement.  “This emphasises the importance of ensuring that all lease agreements with tenants meet legislative requirements and include the necessary clauses providing them with protection. The more detailed the lease agreement, the better for both parties,” says Goslett.

He advises that the lease agreement will also need to fall in line with the Consumer Protection Act (CPA) in that, regardless of the time period stipulated by the breach clause, the landlord is required by the CPA to give at least a 20 business day notice to the tenant to allow them to rectify the breach before the agreement is cancelled, provided the tenant does not remedy the breach within the given time frame. 

Once the notice period has lapsed without the situation being rectified, the landlord will be faced the decision of proceeding with a summons with an automatic rent interdict or immediate cancellation of the agreement. In certain instances the landlord might be able recover their legal costs for the process, although this is only possible if the lease agreement makes provision for this. “If after the summons the tenant has still not made any attempt to pay the outstanding rental amount, the landlord is within their rights to cancel the lease agreement. If the agreement is cancelled the tenant will no longer fall under its protection and will be regarded an illegal occupier of the property. In terms of the PIE Act, the landlord will then be able to legally evict the tenant,” says Goslett. He notes that provided the lease has been cancelled, the landlord can initiate the summons proceedings for outstanding rent and the eviction proceedings simultaneously.

There are a few aspects the landlords should consider when applying for an illegal occupier to be evicted from their property, such as the fact that the application must be made to either a Magistrate’s court or the High Court. Goslett says that if the application is unopposed; it can take at least eight to ten weeks for the eviction order to be granted. Even if the eviction order is granted on the date of the hearing, it is common practice in South Africa to provide the tenant with at least another 14 days to find other accommodation before the eviction order is executed. After this period the sheriff will be lawfully entitled to proceed with evicting the tenant. Cost is another important consideration that the landlord will need to take into account.  The cost may vary depending on the sheriff’s fees and whether the matter is opposed or not. An unopposed eviction could cost between R12 000 and R20 000 in legal costs plus disbursements, while the cost of an opposed matter will be substantially more. 

“It is essential for landlords to take the necessary precautions from the day the start to ensure they are protected by the law. Seeking the advice of a reputable property management agent or attorney when entering into a lease agreement will ensure that the landlord avoids unnecessary situations with their tenants and enjoys maximum protection,” Goslett concludes.

Transferring the ownership of a property from the seller to the buyer can sometimes be a complicated and misunderstood process, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.  He notes that the process involves a number of parties, many of who have conflicting interests. 

“Regardless of each party’s interest in the process, all have to work together and coordinate their efforts to ensure that the documentation arrives at the Deeds Office simultaneously. Certain parties such as the real estate agent, mortgage lender and bond originator, who have a financial interest in the transaction, often want the process to be concluded in the shortest possible time frame, much like the buyer and sellers themselves,” says Goslett.

He adds that understanding the sequence of events during the transfer procedure will assist buyers and sellers to accurately monitor the process and provide them with an idea of the time remaining at each stage. “On average the process can take around three months, starting from the date of sale and ending with the property being registered in the new owner’s name. That said there are a few external factors that could postpone the process. These could include obtaining clearance certificates or the fulfilment of a stipulated condition in the contract,” says Goslett. 

He provides some of the typical steps required to transfer a residential property:

Step 1

The buyer signs an offer to purchase (OTP). The sale agreement or deed of sale is a binding contract between the buyer and the seller that forms the basis of the transaction.

Step 2 

The buyer or bond originator applies to the bank for finance. A bond application will normally form part of the suspensive conditions, which are events that need to happen before the sale is finalised. Another common suspensive condition is the sale of the buyer’s existing home. 

Step 3

The estate agent will send the sale agreement to the transferring attorney – one of three attorneys that will be appointed during the process. If there is an existing bond over the property, the transferring attorney will then contact the seller’s bank and request the original title deed and cancellation figures, also referred to as discharge costs - this is the figure required to settle the seller’s bond. 

Step 4

The buyer’s bank will then instruct a bond attorney to register a mortgage bond, which is a special loan which uses fixed property as security and is registered in the Deeds Office.

Step 5 

The seller’s bank instructs their attorney, the cancellation attorney, to cancel the seller’s bond. The cancelation attorney then sends the title deed and guarantee requirements to the bond attorney and the transferring attorney.

Step 6

The transferring attorney requested a Rates Clearance Certificate from the local authority. 

According to South African law, a property can only be transferred once all municipal charges and associated costs have been paid in full to the relevant parties. Once this is done, a rates clearance certificate will be issued by the local council. The seller may be required to pay a few months in advance to obtain the certificate, however any credit on the account at the date of transfer will be refunded. At this stage the transferring attorney will also do a Deeds Office search to check all the details of the property.

After this is complete the transferring attorney will assemble and prepare the required documentation, which can take up to three weeks to prepare. 

Step 7

At this stage the buyer will be contacted by the transferring attorney to come in and sign the documents. The buyer will be required to sign a Power of Attorney to Transfer, as well as a number of affidavits to verify their marital status, financial status and identity. Buyers can prepare for this by getting the following documentation in order:

• A proof of address (not older than three months)

• A certified copy of their identity document 

• Their income tax number. 

• Declaration in respect of marital and solvency status

• Particulars concerning the identity of the attorney transferring the purchaser’s property if the buyer is utilising the proceeds to pay for his purchase

• Particulars of the bond granted

These documents will be needed to meet the Financial Intelligence Centre Act (FICA) requirements. Apart from FICA, the transfer process is required to satisfy the necessary criteria of several regulatory institutions such as the Transfer Duty Act and the Value Added Tax Act for the South African Revenue Service (SARS) and the Municipal Property Rates Act.  

Step 8

The buyer pays the transfer costs and their share of the rates and taxes. A proforma account will be presented to the buyer with estimated costs. The buyer will receive a final account after the property has been registered and the actual costs are known. The costs vary because the date of registration is unknown at this stage of the process and a portion of the costs are determined by this date. 

Step 9

The transferring attorney instructs the lodging attorney to lodge the documents with the Deeds Office. The lodging attorney is located near to the Deeds Office and acts on behalf of the transferring attorney, who may not be in the vicinity. The lodging attorney will contact both the cancelling attorney and bond attorney to ensure that all the documents are lodged on the same day. The documents must be registered at the same time because the seller’s bank has guarantees to ensure it will be paid when the bond is cancelled, and they are not prepared to cancel the bond until the new bond is registered.

Step 10

A Deeds Office examiner will carefully check over all the documentation. This will take between seven and ten days working days depending on how busy the Deeds Office is. Once the documents have been examined, the examiner will contact all the attorneys to inform them that they are in order and will be registered the following day. 

Step 11

The documents are registered – the buyer becomes the owner of the property and the seller is paid out the net proceeds. At this stage the estate agent will also be paid their commission.  At this stage the transferring attorney will send the original title deed to the buyer’s bank. In the instance where the buyer does not have a bond, the title deed will be sent directly to the buyer.

“While it can be a complex process, a professional real estate agent will be able to provide guidance to both buyers and sellers. Understanding the transfer sequence and having all the necessary documentation at hand before the start of the process will ensure that everything progresses without incident,” Goslett concludes.

While married couples still represent a large percentage of first-time buyers in the market, there are a growing number of people who are flying solo and purchasing a property on their own. Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, says that although the process of buying a home as a sole owner may seem daunting at first, it can actually be an extremely good financial move if done in the correct manner.

Goslett provides a few tips to make the solo house hunt and property investment a success:

Stay within your budget

For most, buying a home will likely be the largest financial purchase they will ever make and it is a great long-term investment. However, before anything else, it is vital to work out an affordable budget and stay within those limits. When deciding what is affordable it is imperative to consider all recurring monthly expenses such as home maintenance and repairs. According to Goslett, another important aspect when budgeting is determining what can be put aside in a contingency fund in case of emergency. “Considering there will only be one person responsible for the bond repayment, there needs to be enough money put away to counter any unexpected circumstances or loss of income,” says Goslett.

An additional factor to consider is that as a solo buyer there is likely to be a smaller budget than a couple who can join their savings and income, therefore solo buyers will need to be smart with their money.  

Be smart and save beforehand

Goslett says that in today’s market most buyers will be required to have a deposit of between 10% and 25% of the purchase price of the property. “It is advisable to have at least a 10% deposit saved up, along with enough money to cover all the other costs associated with buying a home. These costs include transfer duty, attorney fees, home insurance and bond costs,” advises Goslett.  

Choose the right home for you

The buyer’s future plans will largely determine the type of home that will suit them best. “Are you looking for a home with the potential to add-on or merely a small starter home that can be rented out in the future? The answer to these questions will help the buyer narrow down their search and pinpoint the right property to meet their needs,” says Goslett. 

He adds that a sectional title property would mean less maintenance and possibly a lower bond repayment; however there will be the cost of the levies to consider, as well as the rules and regulations of the body corporate. A freehold home would offer the buyer the freedom to do what they want with their home, but it could be less secure and more expensive to maintain.  

Be realistic

The reality is that a buyer purchasing a property on their own may need to compromise on certain aspects and features. “Ideally it is advisable to look at location before the property itself. A property can be renovated or changed, but where it is situated cannot. It is important to research the areas that are within the budget and then work from there. Buying in a better area might mean purchasing a smaller home, however it will be a wiser investment that will see greater returns over the long term,” advises Goslett. 

Determine the reason for the purchase

Is the home to live in or is it purely for investment purposes? This answer to this question will have a huge bearing on the decision-making process. If the home is being purchased as a primary residence, the motives and reasoning behind the decisions that are made will be far more emotionally driven. “If the home is for investment purposes, decisions will be made solely on research and logic, not emotion. The buyer will need to purchase in an area that will attract tenants, which is within proximity to public transport, amenities and schools,” says Goslett.

If needed, ask for help

Purchasing a home solo doesn’t mean that every decision has to be made alone. Family and friends who have purchased a property can act as a soundboard, providing honest and objective feedback.  A reputable, experienced real estate professional can also be a valuable asset, providing guidance and advice through the home buying process. An agent will be able to provide information regarding the suburbs they work in, as well as the best properties to suit both the buyer’s lifestyle and budget. 

“While going it alone can be overwhelming at times, purchasing a home solo should also be an exciting time. It provides the buyer with the opportunity to make their own decisions and choose a home that they really to buy,” Goslett concludes.

 

Challenging economic conditions have led to an increasing number of homeowners finding themselves in financial distress. According to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, the rising cost of living, interest rate hikes and job losses have taken their toll on the market and have contributed to the growing number of distressed property owners.

“Many homeowners are currently battling with financial strain and are not sure whether they will continue to be able to afford the home that they live in.  A large number of South African homeowners have high debt-to-income ratios and have been struggling to make ends meet. With the ongoing food price increases and tariff hikes, these homeowners are fighting to keep their heads above water,” says Goslett. “If financially distressed homeowners don’t relook at their situation and make the necessary adjustments as soon as they can, they will find themselves in a far more dire predicament.”

According to Goslett the worst thing that a financially distressed homeowner can do is nothing – it is imperative that action be taken without delay. “Unfortunately pride stops many homeowners from admitting that they need help with their current financial situation. Often they also don’t know where to turn and who to ask for help. Ignoring the situation or pretending everything is okay will only make the matter worse. Ideally it is best to act decisively and reach out for assistance as soon as there is a problem,” advises Goslett. 

He provides homeowners with some advice on how to handle this often complicated situation:

Assess your situation

The first step for homeowners who are struggling financially is to take stock of their current situation and determine whether they will be able to continue to bond their bond or not. “If the answer to this question is no, it is best to take action as soon possible. The homeowner should contact their bank and notify them of their current financial circumstances,” advises Goslett. “Many homeowners avoid contacting their bank about their financial strain because they are worried about the house being repossessed, however this is ill advised.  Not contacting the lender and defaulting on the bond repayment will not only result in the homeowner potentially losing their property, it will also lead to a blemished credit record and black listing.” 

He adds that a negative credit record can make even renting a property difficult due to the fact that most landlords do credit checks on their potential tenants. 

Communication is key

It is in both the banks and homeowner’s best interest for the owner of the property to continue living there and paying the bond. For this reason banks will often try and assist homeowners where possible by possibly rescheduling the debt or giving financial advice.  According to Goslett, this can only happen if the bank is aware of the situation at an early enough stage and the homeowner has the means to continue to pay. “Communication between the homeowner and the bank is crucial if the homeowner wants to resolve the situation. In certain instances banks are able to renegotiate the term of the loan from 20 years to 30 years in order to decrease the amount of the monthly bond instalment. Certain financial institutions could be willing to offer the homeowner a payment holiday of between three and six months - this might be all that is needed to provide the homeowner with enough breathing room to get back on their feet,” says Goslett.   

Speak to the professionals

In the instance where the situation has moved beyond the homeowner’s own capabilities, it is advisable that they consult with a professional debt counsellor who can review the homeowner’s circumstances and provide a possible solution or guidance. Once the counsellor has assessed the homeowner’s finances they will be able to submit a repayment proposal to all the relevant creditors. An application will then be made in court to have the proposed repayment plan granted to ensure that legal action cannot be taken against the homeowner and the bank will not be able to repossess the property. “An alternative option is for the homeowner to be placed under administration rather than debt review. In this case the property can be repossessed to mitigate loss,” Goslett explains.

Sell the distressed property

Goslett says that if the homeowner is not in a position to keep their home, it may be prudent to place the home on the market. In this case, it is advisable to contact a real estate agency that has experience in dealing with distressed property sales. The banks do work hand-in-hand with reputable estate agencies to sell distressed properties at market-related prices.

“If a homeowner is in financial distress sometimes selling the property through the distressed property channel is the most effective way to recover. In the case where the homeowner has managed to build up some equity, there might be enough money to cover their outstanding bond, as well as all or some of their other debt. This option could help the homeowner to start with a clean slate and re-establish themselves and their credit record,” says Goslett, who adds that RE/MAX of Southern Africa is the only real estate company in the country that has a dedicated distressed property department.

He concludes by saying that while financial distress is a stressful and complicated situation, homeowners who are in need can make use of certified real estate professionals who have the qualifications to successfully guide them through the sale of their property during these difficult circumstances.

 

This month South Africans around the country will exercise their right to vote in the Municipal Elections to decide which party will run their Municipal district for the next five years. Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, says that he has been asked on a few occasions what influence the upcoming elections have had on the property market over the last few months and what we can expect afterwards. 

“To be honest this isn’t an easy question to answer, considering who of us can truly say for certain what will happen in the future. However, I can offer my opinion on where I see the market going based on my experience working within the property industry,” says Goslett. “It would certainly seem that people have been hesitant to invest in property leading up to the elections, with many potential buyers adopting a wait-and-see approach. Many are holding back to see where things are going from a political perspective, however this is not the only factor that is having an impact.”

He adds that there are several things happening from an economic standpoint at the moment and many consumers are nervous about whether the market will experience a dip down in the near future. “That said, I think that after the elections there is likely to be resurgence in the property market and a bit of an uptick as consumer confidence returns and more buyers get ready to get back into market,” says Goslett.  

He notes that many within the real estate industry have coined the months leading up to this point as a slowdown in the market. However, Goslett says that he would prefer to look at it in another way. “While the numbers in the property market do reflect a slowdown - there are buyers in the market and there is a certain amount of available stock. Nevertheless we have reached the point where buyers are not prepared to pay the prices at which the stock is currently being marketed, putting the market in a state of flux,” he says. “Over the next few months as home prices adjust, and they will have to adjust downwards if sellers want to sell their properties, you will see the market begin to flow again. While there are issues around banks’ lending, or rumours that the banks are tightening up their lending criteria, I don’t think that is as much of an issue as buyers just not wanting to pay inflated home prices.”

Goslett believes that the market is currently in a transition period with momentum shifting towards the buyer. The shift will cause property prices to stagnant for the time being. However, opportunities often reveal themselves in times of change. While there is any number of factors that could influence the property market and its performance during the remainder of this year, the residential market continues to hold its own, despite challenging economic conditions. The crux is for buyers and sellers to understand the market conditions in which they are trading and tailor their buying and selling decisions and behaviour accordingly. 

“Interesting times lie ahead for the country and the property market. Those who are prepared and ready will be able to make the most of the times ahead,” Goslett concludes.

Just as buyers need to do their research before taking on homeownership, those who are considering placing their home on the market also need to spend some time contemplating certain aspects before they list their property, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.  In fact, there are three questions that every homeowner should ask themselves before placing their home on the market.

Question one – Is it the right time to sell?

There are phases in the property market that will favour buyers, and there are phases that will favour sellers. It all depends on the economic environment and conditions that surround the property market. While there is generally a market trend throughout the country, there will also be certain areas that buck the trend due to specific, unique circumstances that influence a particular market. “Ideally, before listing their property, a homeowner should talk to a real estate professional with extensive working knowledge of their specific market who can analyse current sales inventory and trends,” advises Goslett. “A good agent will be able to determine whether it is the prime time to list the property to get the best possible price. In certain cases there may be all kinds of reasons to hold back on listing the home, such as a large number of homes on the market in the area that are similar to the seller’s.”

Question two – Is the price right?

According to Goslett, setting the right asking price is imperative to getting the best possible result out of the home sale. “A crucial mistake that many sellers make is overpricing the home to counteract buyer negotiations. The problem with pricing a home above its perceived fair market value is that many buyers won’t even take the time to view it. Buyers would rather look at other properties that they deem to be priced at what they consider a reasonable, market-related price. All over estimated prices will do is make properties that are priced correctly look like a bargain buy,” advises Goslett. 

He adds that a home that is priced correctly will appeal to a wider range of buyers and be sold within the shortest possible time. When a buyer is comparing properties that are in a similar area and offer similar features, price becomes the number one factor that will influence their decision making process. 

How does a seller know whether their home is priced correctly?   “An estate agent will be able to provide the seller with a comparative market analysis (CMA), which will give them an accurate indication of what other homes are selling for in their particular area. Factors that are included in a CMA would be the average price per square metre in the area, recent sale 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,” says Goslett.  

Once the agent has the correct price bracket for the home, they will then determine what features or unique qualities could set the property apart from others in the area to give a more accurate gauge of the home’s value.

Question three – What is the exit strategy?

Although it is possible to have an estimated time frame as to how long the property will be on the market, it is impossible to pinpoint the exact day the home will be sold. The seller will need to establish a plan in case it happens quickly.  “Before the home is listed it is a good idea for the seller to know where they will go if they are in between homes. They will need to decide whether they would want to stay in their current property and pay occupation rent, or move to a temporary housing situation with a friend or relative perhaps. A post-sale plan will take some of the anxiety out of selling your home,” says Goslett.

He concludes by saying that having the answers to these three questions will help to ensure that the process of selling a home is less stressful and a far easier procedure to handle.

Giving a fresh new look to an outdated bathroom can modernise and add value to a home without costing too much,  says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.

He adds that renovations and contemporary remodelling of bathrooms are known to boost the marketability of a home and, in addition, bathrooms and kitchens are the two areas of a home where the cost of the renovation can be largely recouped on the sale of the property. “According to statistics on average sellers can expect to get between 65% and 75% of the renovation cost back when renovating a full bathroom and approximately 65% of the cost back when adding a new bathroom,” says Goslett.

Over the past few years bathroom renovations have become extremely popular with many homeowners opting to renovate their bathrooms before any other room in the home. “This can be attributed to the fact that bathrooms and kitchens are major focal points that buyers look at before they put in an offer to purchase a property. Additionally bathrooms are generally smaller than other rooms in the home, so the cost of renovation can be managed more effectively,” says Goslett. 

While it is a good idea to use a professional contractor with the necessary qualifications for larger complex projects, homeowners will be able to complete simple updates themselves. “Depending on the project, a simple renovation can be as effective as a complete remodel. Sometimes all that a bathroom needs is modern fixtures, a tile and grout scrub and a fresh coat of paint to transform it into a completely new space. Sanitary warehouses and hardware stores are always getting new inventory, which means it is easy to for homeowners to find fixtures on sale that will suit their particular taste. It might be a matter of merely changing the tap fixtures or perhaps a bath tub. Consider changing to a double sink instead of a single one, recessed lighting, or new floor and wall tiles,” says Goslett.

According to Goslett, homeowners who are looking to do the renovations themselves can find a wealth of information on bathroom do-it-yourself projects from the local library, bookstores and of course online. There are countless books and reputable websites available that can help guide homeowners through the process, whether the primary focus is design, functionality or cost.  Homeowners can check whether their local hardware store has do-it-yourself classes or seminars that they can attend, which will provide guidance and practical examples.  Goslett says that DIY projects are a great way to add value to a home – provided the work is completed properly. If installed or completed incorrectly, the project could end up costing twice as much to fix as a professional would have charged in the first place. 

“Homeowners, who are planning on undergoing an extensive renovation project or adding another bathroom to their home, should get proper plans drawn up. If contractors are called in to do any work on the home and require the plans, keep the original and give them copies. While renovating a bathroom may cause some inconvenience, this is a small price to pay when compared to the aesthetic appeal and value that is adds to the property,” Goslett concludes.

 

As consumers continue to face the ever increasing cost of living, along with the possibility of further interest hikes before the end of the year, many homeowners may be reassessing their financial situation and looking at ways to save money and cut down on costs, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa. 

“One of the ways in which homeowners can save money is by taking a look at their current home insurance policies and possibly changing their cover,” says Goslett. “While insurance is a necessity for homeowners, this does not mean that it has to be a financially draining burden. Homeowners should shop around and see what options are available to them from various insurance providers.”

Goslett advises that comparing various quotes from an array of insurance companies will give homeowners insight into the options available to them and will help them choose the best cover for the best possible price. “Homeowners have the option of either phoning the insurance companies directly themselves, or using the services of a broker who can source numerous quotes for the homeowner to peruse. Having a number of quotes will give the homeowner the chance to compare apples with apples and the range of various products that each service provider offers. Doing this one thing could assist the homeowner to save money in finding a cheaper option that provides as much, or perhaps more cover,”  he explains.

Often consumers will accept the annual increase on their insurance policies without questioning or researching whether there are better and cheaper options that cater to their specific criteria. In fact statistics suggest that only half of all homeowners will investigate their insurance policies when they have been increased. “Research may take some time and effort, but it is always worthwhile to ensure that the current policy is still the best option, meeting all the requirements while offering good value for money.  In order to be competitive in the market insurance companies launch new products regularly and are consistently trying to find ways to undercut their competitors. As result it is often possible to find good insurance products at lower rates. Without putting in the effort, it is impossible to know what the best option is,” says Goslett.

Ideally homeowners should review their insurance policies as part of an annual financial assessment. Every year the value of the property as well as its contents vary, so it is imperative that the homeowner’s insurance cover is adjusted accordingly. 

With the internet at our fingertips, collecting information and quotes from various insurance providers is a relatively painless endeavour. There is very little that homeowners will not be able to find online. In fact there are centralised sites that will provide homeowners with quotes from different providers without them having to search on other portals. “We live in an age where things are far more accessible. To a large degree the work of finding comparative quotes has been taken out of the process and the procedure has been simplified and streamlined as much as possible. The homeowner will be required to load their details and insurance criteria, after which they will receive a list of all insurance companies and policies they offer which match the requirements. The list will also include the premiums that would be paid by the homeowner for each option. This will quickly paint a picture of which company can provide the best value,” says Goslett.

He provides a few basic elements that homeowners should consider when comparing policies: 

1. Check for possible liability cover. This covers any injury or damage done to other people or their property, where the homeowner is at fault.

2. Look at the cover for household contents and personal property. This pertains to all items inside the home that are not a part of the structure itself such as appliances, furniture and clothing. An inventory should be complied to assess the level of personal cover required. Peruse this clause carefully as certain items may be excluded or covered under another type of insurance.

3. Check if there are certain items that need to be specified such as jewellery and laptops/other electronic devices.

After comparing quotes and selecting the appropriate one, Goslett says that homeowners that there are still further ways to decrease the premium such as upgrading the home’s security. “Added or upgrading the home’s security can reduce the monthly premium by as much as 5% in some instances. Certain insurance companies will also reduce their rates if the client is associated with a neighbourhood watch or block watch programme,” he says.

Often preferential premium rates will also be given to homeowners with a low or no claim history. “For this reason, it is best to only make use of the insurance policy when it is absolutely necessary. If possible, it is better to pay for small incidents from a contingency fund and leave the insurance policy for when it is really needed,” advises Goslett. “Homeowners can reduce their premiums by opting for a higher excess on claims; however this would mean having the excess amount put away in savings.”

If there are elements within the insurance policy that need clarification, it is advisable for the homeowner to seek guidance from a professional financial adviser or insurance broker. 

“A home insurance policy is a vital aspect of homeownership - paying exorbitant premiums is not. Using these tips and reducing insurance premiums will ensure that homeowners can reduce their costs, while still having their property adequately covered for unexpected incidents,” Goslett concludes.

 

Although the large majority of property transactions will not be subject to Capital Gains Tax (CGT), it is still important for prospective sellers to understand the implications that could have on their sale, should their home be sold for more than the primary residence exclusion threshold, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.

“Forming part of an individual’s income tax, CGT is part of an ongoing reform programme which was introduced in South Africa in October 2001. The tax pertains to the disposal of an asset such as an immovable property or any capital sale of assets globally, where the proceeds exceed its base cost,” Goslett explains. “The tax applies to South African resident taxpayers, trusts and companies. Non-residents are liable to pay CGT only on the sale of their immovable property in South Africa. Additionally a withholding tax applies to non-resident sellers of immovable property in terms of section 35A of the Act. The amount withheld by the buyer serves as an advance payment towards the seller’s final income tax liability.”

Goslett says that although CGT was only introduced in this country 15 years ago, it was implemented in many of the countries that South Africa trades with a few decades ago. While there are numerous capital gains or losses on the disposal of an asset that are subject to taxation, there are instances where transactions are exempt due to certain concessions. The conditions pertaining to these exclusions are found in the Eighth Schedule to the Income Tax Act, 1962 (the Act), which determines a taxable capital gain or assessed capital loss. 

With regard to the sale of a primary residence, there is exclusion on the first R2 million of any capital gain or loss. “If a property defined as a primary residence is sold for a capital gain of R2.5 million, the first R2 million will be disregarded and only the remaining R500 000 would be subject to taxation,” says Goslett.  

He notes that in terms of the Act, a primary residence is defined as any structure, boat, caravan or mobile home, which is used as a place of residence by a natural person. Either a natural person or a special trust must own an interest in the residence. The owner, their spouse or a beneficiary of the special trust, must ordinarily reside in the property as their main residence and it must predominantly be used for domestic purposes. In cases where the property has been used for business purposes, the exemption will be apportioned for those periods where the property is not used as a primary residence. 

According to Goslett, in the instance where a primary residence is jointly registered in the names of two people such as a husband and wife, each would benefit from the residential exclusion according to their interest that residence. If each spouse holds a 50% share in the property, each would qualify for a primary residence exclusion of R1 million - provided they both reside in the home together and do not own separate primary residences. No exemption will apply on capital gain realised from the sale of an individual’s second home or holiday home.

Goslett says that there certain instances where the owner of the property will be treated as having been ordinarily resident for a continuous period of up to two years, even if they have not been living in the primary residence that period, provided the following circumstances apply: 

• The primary residence has been accidentally rendered uninhabitable.

• The primary residence was in the process of being sold while a new primary residence was acquired or was in the process of being acquired.

• The property was being built on land acquired for the purpose of erecting a primary residence.

“It is important to remember that CGT applies to the capital gain or loss during a property sale and not on the purchase price of the property. In order to determine whether the taxation is relevant, there are a number of expenses that need to be deducted,” says Goslett.

He notes that for a seller to determine the capital gain or loss made during the transaction, they need to deduct the selling price of the home from the base cost of the property. The base cost is determined by combining the original price paid for the home, along with all costs incurred acquiring and selling the property. These costs would include transfer cost, transfer duty, agent’s commission, advertising costs, VAT and any professional fees. If the seller has receipts and invoices, they will also be able to include the costs of improvements, alterations and renovations - routine maintenance, insurance and rates and taxes may not be included. “It is essential for homeowners to keep accurate records of the money they spend on their property. If they are unable to prove any costs through their records, they will not be able to deduct them from the proceeds to determine the capital gain,” says Goslett.

Once the base cost has been determined, it is then possible for SARS to calculate the CGT to be paid based on the net profit realised. Goslett says that Section 26A of the Act provides that 33.3% of the capital gain must be included in the seller’s taxable income for the years 2013 to 2015, and will be taxed according to their tax bracket. Government has proposed that the CGT inclusion rate for individuals be raised to 40% from March 1 this year. The CGT is payable when the individual’s income tax return is submitted at the end of the financial year during which the property was sold.  “All records should be kept for at least four years after the date that the income tax return reflecting the capital gain or lose is submitted,” advises Goslett.

“Property tax can be highly complicated, so it is always advisable for sellers to seek the advice of a professional tax consultant who can point them in the right direction regarding CGT,” advises Goslett. “An expert tax consultant or conveyancing attorney can offer invaluable guidance through the submission process,” he concludes.

 

South African Reserve Bank governor Lesetja Kganyago announced today at the Monetary Policy Committee (MPC) meeting that interest rates would remain where they are for now, with the repo rate currently at 7% and the prime lending rate at 10.5%. 

According to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, this is good news as an increase at this stage would only serve to negatively impact the residential housing markets with consumers already facing increasing financial strain with high debt levels and the cost of living escalating. 

With slow economic growth and inflation already placing financial strain on consumers, an interest rate hike would add to the pressure and adversely affect consumer sentiment towards the property market. “Affordability is already an issue for many consumers who want to buy property, but don’t meet the necessary qualifying criteria. An interest rate hike will further widen the gap between homeownership dreams and reality,” says Goslett.   

He notes that during the first half of this year demand for property has dampened as many buyers adopt a wait-and-see approach to the market. As a result the dynamics of the property market are slowly beginning to shift with more homes entering the market and the pool of potential buyers decreasing – this weighs in buyers’ favour, with sellers having to become more competitive with their prices.

What would you do if you won R1 million?  Would you spend it, invest it or give it to charity? For many the answers to these questions are only in their dreams, but for RE/MAX Infoglobe Sales Associate, Bertus Myburgh, the dream became reality by winning the BetterLife Dream Lottery and walking away with a cheque for R1 million.

Through the BetterLife, BetterRewards programme, real estate agents received a scratch card for every qualifying Offer to Purchase they submitted to the bond originator, giving them a chance to enter the draw. A group of 471 agents secured places in the nine regional draws which were held to narrow down the field and increase the agents’ chances of winning the grand prise. Approximately ten agents from each province got into the final draw, with Myburgh the second last to make it in. The finalists’ names were printed onto the Dream Machine Wheel of Fortune which was spun by BetterLife Group CEO, Rudi Botha at a gala event held at the Protea Fire & Ice at Melrose Arch in Johannesburg. 

“This could not have happened at a more perfect time. My wife and I were in a financial crisis when we first started with RE/MAX; however we have slowly been able to get back onto our feet to some degree. We have two children and are currently in the process of building a modest two-bedroom family home, but we were not in a position to be able to complete the home in the way we wanted. Adjustments had to be made to scale down, which meant the kids sharing a room, as well as foregoing some other features. My wife and I have been praying for a solution since the first BetterLife draw and now God has answered those prayers. Winning the money means being able to change the layout of the home to make it a bit bigger, adding an extra room so the children and each have their own space and we are able to finish off the garden, driveway and other elements which we wouldn’t have been able to do,” says an elated Myburgh, standing on the site of his soon-to-be-upgraded family home.

Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, says a big congratulations to Myburgh. “It is amazing to see a life changed in a moment. As real estate professionals we often have a front row seat and the privilege of seeing people’s lives change for the better as they realise their homeownership dreams. Through the BetterRewards programme, not only are clients lives changed, but agents too,” says Goslett.  

Myburgh adds that apart from upgrading his home, he will be giving 10% of his winnings to the church, as well as sponsoring part of Jenny Venter (BetterLife consultant) and her son’s trip to the USA because he remembers her saying once before that she couldn’t afford the total cost.  “It was through prayer that we received this money. It is God’s money and I want to honour Him by giving back and helping out where I can,” he concludes.

 

Working with the right attorney during a property sales transaction can make all the difference to how long and cumbersome the process can be, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.

He explains that during the property transfer and registration process, there are usually three different conveyancers involved – a bond attorney, bond cancellation attorney and the transferring attorney. Goslett says that the bond attorney represents the bank or financial institution that is issuing the finance to the purchaser. Their role would be to handle the registration of the bond in favour of the mortgagee over the specified property, which occurs at the same time as transfer. 

“In the instance where the seller of the property currently has an outstanding bond, the bank holding the bond would instruct a bond cancellation attorney to attend to its termination. This occurs once guarantees have been provided for the outstanding bond amount on the property and all the necessary documentation has been completed by the bank,” says Goslett.

He adds that although it is generally the appropriate bank that will appoint both of these attorneys, in most cases it is the seller who gets to appoint the transferring attorney. The attorney who is appointed will be tasked with handling the transfer of the property from the seller’s name into the new buyer’s name. They will also be responsible for co-ordinating the registration process with the other two attorneys to ensure that all processes register at the same time with the deeds office. “It is important that sellers choose the right attorney to act as the transferring attorney, as they play a vital role in protecting the seller’s interests and ensuring the process runs smoothly,” says Goslett.

He notes that while there are real estate companies that want the seller to use a certain attorney, it is entirely up to the seller as to who they decide to use. “There have been cases where agencies have forced their clients to make use of attorneys that are situated more than 100km away from both the buyer and seller’s physical address. As per the Estate Agents Affairs Board code of conduct, an agent is not permitted to force a seller to use a specific attorney firm.  The other issue is that the buyer and seller are required to sign documentation at the attorney’s office, so it would be unfair to appoint an attorney that is hundreds of kilometres away from where they are staying.  When an out-of-town attorney is appointed, they then have to appoint a local attorney for the signing of the documentation. This logistical issue and cost can be avoided by appointing a local attorney firm,” advises Goslett. 

He adds that due to the fact that conveyancing is a complex series of tasks that requires specific conveyancing knowledge; it is advisable to select an attorney who is well-versed with the property transfer process. “It is best to appoint an attorney from a conveyancing firm that handles property transfers on a daily basis. The legal fees charged by the transfer attorney are based on the value of the property, not their experience with regard to conveyancing - therefore it makes sense to use an attorney that specialises in property transfers,” says Goslett.  

If everything goes as it should, the transfer process should take between two and three months to be finalised. The process can be delayed if there are certain conditions of the sale that still need to be fulfilled or if documentation and certificates are not in order. Legislation requires the transferring attorney to acquire a rates clearance certificate from the local council. “Sellers are often required to pay a few months rates in advance in order to obtain their clearance certificate. Once the transfer is complete, any money that has been overpaid will be refunded to the seller,” says Goslett.

Selecting the right attorney is a crucial element to the property transfer process. It is imperative that the seller is comfortable with their choice and trusts their attorney. “Working with an experienced, local attorney will ensure that the process is as quick and easy as possible,” Goslett concludes. 

According to research the majority of homebuyers only take a few minutes to make the decision as to whether or not they like a property. Often there are certain factors that influence buyers’ decisions of a home before they have even walked through the front door, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa. 

“Most experts within the property sector would agree that generally the reason a home would not be viewed favourably is its location. Aspects such as the property’s proximity to amenities like shopping malls, good schools and recreation areas, all have an impact on how the property is perceived to be valued by potential buyers. Ideally the property needs to be within an easily accessible range to these elements,” says Goslett. 

He adds that adversely if the property is located within proximity to power lines or unsightly mobile phone masts, this will have a negative effect on the home’s perceived value. “Apart from the fact that they don’t look great, many people don’t want to live near mobile phone masts because they are concerned about the possible negative health implications. As a result, the marketability of homes around mobile phone masts can suffer when it comes time to resale,” advises Goslett. “Basically anything that could be seen by buyers as an annoyance or eyesore will harmfully impact their opinion of a property. Examples of these things could be a noisy highway or airport in the nearby vicinity.”

According to Goslett, there are also a considerable number of buyers who take into account the condition of the neighbourhood in which the property is located. An area with subpar service delivery that is rundown and poorly maintained will push buyers away, even if the property itself is well looked after. If the neighbourhood has deteriorated over time, the home’s value and marketability will also decrease.

Goslett says that regardless of the external factors that could the home’s marketability; it is still vital for homeowners to ensure that their particular home has curb appeal and stands out from the competition.  “If a buyer has the choice between two homes in the same area, that both offer the same or similar features, they are more likely to purchase the one that well-maintained and more aesthetically appealing. If the home’s curb appeal becomes the determining factor, a fresh coat of paint and a mowed, weeded and de-cluttered lawn could make all the difference,” he says.

According to Goslett, another factor that many buyers are considering is the availability of parking. Garages and off-street parking are particularly popular among buyers. In heavily populated metros such as Cape Town CBD, off-street parking or lack thereof can seriously influence the property’s perceived value with buyers. While most properties will have some kind of allocated parking space for residents, some buyers also want additional available parking for visitors.

Although most renovations will increase the marketability of a home, certain unorthodox renovations will negatively impact a property’s value. Renovations that are specific to the current owner’s tastes or interests, such as a gym or greenhouse, may not appeal to buyers viewing the home. Unfinished renovations or poor workmanship can also devalue the property. There is no reasonable explanation for below standard DIY renovations that could be expensive to rectify. It is also important that if any major renovations have been undertaken, all documentation and permission has been granted by the necessary governing bodies.

“If possible homeowners should try at all costs to avoid the pitfalls that could devalue their property. Likewise, buyers should do the necessary research to avoid purchasing a property that could become a financial burden in the future. Knowledge is an essential key for buyers looking to invest in a property that will appreciate in value over the long term,” Goslett concludes.

 

Purchasing a home is an exciting time in one’s life; it is a milestone that many aspire to and a symbol of success. However, according to studies, nearly 80% of homebuyers have at least one significant regret regarding their property purchase decision. Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, says that so many homebuyers get caught up in the emotional journey of purchasing a property and sometimes overlook certain important elements. It is only once they have moved into their new home and everything has settled that the reality of the situation sets in and they start to see the things they previously didn’t. 

“Buying a home is a massive financial commitment, yet many buyers base their home buying decision on only a few minutes of viewing the property. If buyers are not fully prepared and do not have an idea of exactly what they are looking for, it could be easy for them to miss something or make an incorrect decision,” says Goslett.

He notes that there are a few tips the homebuyers can use to avoid buyer’s regretting their purchase:

Stay focused 

Ideally before a buyer starts to look for a home, they should have made a list of their needs and wants, prioritising the must-haves and noting the elements that they are willing to compromise on. “It is important to not get distracted by the wants and remain focused on the must-haves. If the house has many of the buyer’s wants, but does not meet their main objectives – it is not the right house. Considering the fact that purchasing a property is a long-term commitment, buyers will have to deal with their compromises for a long period. For this reason, it is essential that they make the right decision upfront,” advises Goslett. “Working with an experienced, reputable real estate professional will assist the buyer to keep on track and find a home that meets all their criteria.”

Check the finances, and then check them again

One of the main reasons that buyers regret their home purchase is unexpected costs. It is vital for buyers to calculate how much they can afford, taking into account all the associated costs that go along with homeownership such as homeowner’s insurance and maintenance. A bond origination company such as BetterLife or a professional financial adviser will be able to provide potential buyers with a list of costs that they can expect to pay when purchasing a home. 

Goslett says that having the home inspected will also give buyers an idea of the type of repairs that they can expect so that they can budget for this beforehand.   

Don’t get caught up in a bidding war

With inventory stock still an issue in many sectors of the market, it may be possible to get sucked into a bidding war and lose some perspective.  “A competitive offer from another prospective purchaser could make a home seem more attractive than it really is and lead the buyer to push up their offer. However, it is important to stay objective and keep in mind that you are trying to buy the right home – not win an auction. It is best to walk away from a home, than overpay as a result of a bidding battle. Paying more for a property will mean larger deposit requirements, higher transfer costs and thousands of rand of additional interest on a larger bond. Another down side is that it will take much longer to build up any equity,” says Goslett. 

He concludes by saying that purchasing a home is one of the largest financial investments most people will make in their lives. While finding the right home can be an emotional rollercoaster, it is important to keep things in perspective and focus on what really matters to avoid any remorse.

 

The South African Savings Institute (SASI) revealed that at the end of March this year the country’s official savings rate was 15%, household savings was 1.1% and the average household’s debt as a percentage of disposable income was 76.6%. These sobering figures point to the fact that as a country we have one of the worst savings rates globally. 

“South Africa generally has a very poor savings culture, which impacts on many sectors of the economy. One would be tempted to think that the poor saving rate is due to low salaries and an inflationary cost of living, however, while these are contributing factors there are nations such as China and India that typically earn less, but are able to put away a higher percentage of their income,” says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.  

According to the SASI other factors that have impacted on the country’s saving rate have been low disposable income growth, low employment growth, a rising tax burden and a lack of confidence in the future. 

Goslett says that the implications of a low saving culture at household level is that there is generally not enough funds to meet the necessary financial requirements of the household, whether it be for consumption or investment purposes. As a result, consumers are forced to borrow money, creating an endless cycle. The more that consumers borrow, the smaller their percentage of disposable income and the poorer their creditworthiness. According to SA government statistics, South African consumers are now borrowing more money than they are saving. Countrywide household debt has reached around 80% of total household income. This percentage includes aspects such as personal loans, overdrafts, credit cards, accounts and home loans. “Financial institutions will view consumers with low disposable income levels as risky, resulting in them either granting finance at a higher interest rate or not granting finance at all,” says Goslett.

He adds that if consumers want to get into the property market in the future, they will have to start changing their financial strategy and begin a savings plan of some kind.  “The market is slowly shifting to favour buyers, however if they have not financially prepared, they won’t be able to make the most of the opportunities that will present themselves. In order to obtain the necessary finance to get into the property market, buyers will need to work on increasing their affordability levels by reducing debt and putting money aside. Buyers will need to have a personal financial plan in place to do this and achieve their homeownership goals,” says Goslett. 

The reality is that in today’s market, prospective buyers will be required to have a deposit, along with enough savings to cover the associated costs of purchasing a home. “According to BetterLife statistics, from January to June this year, the average deposit amount required was between 19% and 23% of the property’s purchase price. Considering the fact that the average home purchased during this period was around R1.2 million, buyers needed to have at least R228 000 saved up, just to cover the deposit,” says Goslett.

Pre-recession approximately two thirds of bond applicants were approved for finance; however that number drastically decreased in 2008, with only around 28% of home loan applications received being granted. Today the number of approvals through bond origination companies has improved to around 51%, which indicates that finance institutions have an appetite for lending, but still adhere to a stringent approval process.

“An individual’s finances are closely scrutinised before credit is issued. Banks require a holistic view of the client’s credit history, the total amount of credit outstanding, as well as the applicant’s ability to pay debt off. This has made it vital for consumers to manage their debt responsibly and show the require affordability ratios,” says Goslett. 

He adds that there are several ways in which consumers can cut back on living expenses and show higher levels of affordability: 

• Consult with a professional financial adviser and planner, who can assist in formulating a personal finance plan

• Create a budget which includes a savings plan and stick to it

• Cut down on or cut out luxury and unnecessary expenses

• Compare prices – this will help you find the best value for items and services

• Whenever possible pay cash rather than charging on credit

• Review insurance policies and medical aids regularly to ensure you are getting the best deal available

• Go green - save on electricity and water costs by cutting down consumption

“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.

 

Is there ever a good time to use your home equity? Homeowners who have equity available in the bond accounts might be tempted to withdraw some of the money and use it for more immediate needs or wants. Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, says that while it is not always a wise decision to take equity out of the bond, there are a few circumstances where is can actually benefit the homeowner.

He notes that if a homeowner does decide to use their home equity, it should be utilised in a way that will put the homeowner in a better financial position than they were in previously. “The crux of the matter is that the homeowner needs to be responsible with their borrowing and determine whether taking the equity will advance them or impede them financially,” advises Goslett. 

According to Goslett there are a few common situations in which homeowner choose to use their home equity. While some reasons for using the equity make good financial sense, others don’t – the decision will largely be based on the homeowner’s circumstances and future plans.

Renovating the home

Yes – One of the most common reasons that homeowners withdraw equity is to renovate and improve their property. Goslett says that there are a number of benefits to using home equity for renovation. Apart from the fact that it will add to the home’s marketability when it comes time to sell, it gives the homeowner the opportunity to change aspects about the home that they may not have liked when they initially moved in. “The homeowner can update areas of the home such as the kitchen and bathrooms to give the home a more contemporary look and feel or they could build on a much needed extra bedroom. This will add to the occupants living experience in the home and improve the home’s value,” says Goslett. “When deciding to renovate it is important not to overcapitalise and to ensure that the planned project will in fact add to the perceived value of the home.”

Renovation is a very attractive option if the property has appreciated in value a lot and the homeowner has substantial equity built up. “It is a good reason to use the equity, provided the homeowner is able to make use of it without severely increasing their monthly overheads or pushing themselves out of their affordability levels. Careful consideration needs to be given to the fact that interest rates are in a hiking cycle,” advises Goslett.  

For investment purposes

It depends – With investment there is always an element of risk so using home equity to fund an investment depends on whether the homeowner has done their research and is confident that the degree of risk is worth the potential return. Part of the research a homeowner should do is whether the return on the investment is going to be greater than the interest charged on the borrowed money. “The current prime interest rate is 10.50%. In order for the investment to make financial sense, the return on the said investment will need to exceed that percentage, bearing in mind that interest rates are expected to continue to rise,” explains Goslett. 

He adds that another popular use for home equity is for the homeowner to start their own business or further their education. In scenarios such as these it would be advisable to consult with an objective financial advisor who can provide guidance and advice regarding these options.  

Pay for children’s education 

Possibly – Interest rates on student loans start at prime and go upwards depending on credit profile and level of affordability. In some cases the interest charged on the home equity would be lower and the loan amount could be higher. While using home equity to finance your children’s education is a tempting option, it does have its risks.

“The feasibility of this option largely depends on the parent’s age and financial well-being,” says Goslett. “Taking equity out of the bond could delay the homeowner’s retirement, or worse put them in a financial position where they could risk losing their property. In these instances it is best not to take the money from the home equity. According to studies, children are generally better off with financially secure parents than being financially secure themselves and having to look after their parents.”

An emergency fund 

Perhaps – If the homeowner is in dire need, home equity can be used in an emergency, however it is important to remember that at some stage it will need to be paid back. Goslett says that home equity should only be used as an emergency fund if the homeowner has no other available options. “Ideally homeowners should put aside money each month to build up a contingency fund, so they do not find themselves in a situation where they have to use their equity for an emergency,” advises Goslett. 

Consolidating debt 

No – Many homeowners opt to use their home equity to pay off credit cards, car loans and other forms of personal debt. This option will provide the homeowner with additional disposable cash initially, but if they obtain new debt they will be far more worse off in the future.  “Interest rates on credit card debt and personal loans are generally higher than bond interest rates, so it will make financial sense from that perspective. However, if the homeowner does do this, they will have to ensure that they don’t continue to use credit cards and take out further debt,” advises Goslett.

He notes that homeowners who are thinking of using their home equity should consult with a financial adviser if they have any doubts or would like an objective opinion. “Regardless of the reason a homeowner uses their equity, the most important aspect is that the decision should be beneficial and does not hinder them financially in the future,” Goslett concludes.

 

There is little doubt that South Africa is among the most beautiful countries in the world, with an array of incredible things to offer such as great weather, oceans, mountains, forests and many interesting people and cultures. “We as South Africans are privileged to be able to call this unique and diverse country our home,” says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa. “Unfortunately there is one negative aspect that plagues so many living in this country and that is the crime.”

He adds that the reality is that many people living in South Africa have either been affected by crime directly or at least know of someone who has. “With the high levels of crime experienced in this country, South African home buyers are some of the most security conscious in the world,” says Goslett. “In fact, security has become a major determining factor in where people choose to purchase their homes. As a result properties with top-end security features or those located in security estates are highly sought-after and often fetch a higher price than other types of properties.”

According to Goslett, while homes within security estates generally provide a greater return on investment over the long term, these kinds of homes are not affordable to everyone. However this does not mean that home owners have to compromise on their safety and become soft targets. He notes that there are a number of ways in which homeowners can increase their home’s security and deter criminals:

Make it as hard as possible to break in

Intruders will generally target homes that they perceive as being easy and quick to get into. The more time it will take to break into a property, the less likely it will happen.  “It is best not to leave anything lying around that could assist someone to break into the home, such as ladders or gardening tools. Ideally it is also a good idea to keep foliage and shrubs cut back to reduce the number of areas where intruders can hide. If there are no lights near the entrance areas of the property, putting up lights will make these area more visible and aid in deterring intruders,” advises Goslett. 

He adds that entry points such as garage doors should be locked at all times, even if the car is not parked inside. The garage is an area of the home where intruders know they can find items that will help them gain entrance to the home.  “While not all homeowners will have the facilities, a trained guard-dog is an excellent deterrent and household companion. It is vital that homeowners tell their children and domestic workers to identify people before allowing them to gain access to the home,” says Goslett. 

Visible and physical protection is best

Security experts say that the best form of deterrent is a visible, physical barrier, such as palisading or a good quality electric fence around the perimeter of the property. As a precautionary measure, Goslett says that homeowners can use motion sensors and beams to provide a back-up to the primary physical barrier. Ideally all security barriers and entry points should be connected to an alarm system as an early detection device to alert the necessary people.

Don’t let people know you are away

Most intruders would prefer to avoid confrontation, so would rather break into a property while the occupants are not home. “Homeowners who are going away for a holiday should avoid leaving any tell-tale signs that no-one is home, such as uncollected post or newspapers.  An unoccupied home will be more vulnerable to possible intrusion,” says Goslett. “Timers on the lighting inside and outside the home will give the appearance that people are there. Provided it is safe to do so, a car can be parked in the property where it is visible, which will also give the impression that someone is home.”     

If homeowners are at home, that should ensure that they always answer their intercom or buzzer. On occasion criminals will check to see if the occupants of a property are there by ringing the intercom – so never ignore it, irrespective of the time of day or night. An unanswered intercom could be seen as an invitation to an unwelcome home invasion. If the intercom does not work, remove or repair it as soon as possible. 

Don’t leave the keys in the usual places

According to crime reports, often criminals will take the vehicles along with the household contents. In order to avoid this from happening, any vehicle keys or spare keys should be hidden or kept in an unusual place – especially if the home’s occupants are away on holiday. “Although it is convenient, it is best to not have keys on key hooks or counters where they are easily seen, but rather put them out of sight and in a safe place,” advises Goslett. 

Community involvement

A great way to get to know the neighbours and assist in keeping the community safer is by joining the local community policing forum or neighbourhood watch. In these organisations time and responsibility is shared among residents to make the community a safer place to stay. 

“It is better to prevent criminal activity from affecting your home, than having to deal with the aftermath.  While it may be difficult to completely ensure that a home is never broken into, taking the necessary precautions is the right step toward making the home and its occupants safer,” Goslett concludes.