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2018, December 20

Blog Real Estate in 2019

Real Estate in 2019

 

As the sun sets on 2018 there is much speculation around what to expect in the real estate world in 2019. Let’s face it – we live in Africa. Almost anything could happen and it wouldn’t surprise us! However, when considering the previous impact of an election on the market, and taking the economic factors into consideration – I’ll give an opinion on what I believe to be the most likely scenario.

 

Unfortunately economic pressures aren’t going to go away. The country is really just keeping its’ head above water and there are grave concerns over the ability of Eskom to produce the power that industry and business needs in order to grow. While there’s no arguing that the Eskom situation is an unforgivable mess, I think the government is finally taking some responsibility and we’ll find a way to navigate through the load shedding for a few years.

 

The average consumer will continue to shop around and purchase only what represents great value – and that applies to real estate too. We can’t expect property values in general to appreciate – at least not until supply reduces and demand increases. I expect we’ll be well into 2020 when we see good growth in property values again – with 2019 being tough for the first 6 months and then showing signs of stability in quarters 3 and 4.

 

There will be much electioneering for the next 4 to 5 months, and this will undoubtedly include the topic of land expropriation. The ANC has had to adopt the policy in order to win EFF votes. But make no mistake – the powers that be are no fools. They know full well that an uncontrolled land-grab will result in the end of the economy. I don’t believe that residential property is under any threat, and internal documents appear to have surfaced confirming this. It’s time for cool heads. Don’t overreact to the emotion of “election talk”.

 

It’s likely there will be some violence and “protests” in the next few months, and the news will portray this with all the usual negativity. But once the election has passed there will be a return to normalcy. People will get on with their lives, and confidence will return – just as it always does.

 

Once this happens it’s expected that sales volumes will increase. Purchasers who wanted to “wait and see” will realize that life carries on. This will be the first early sign of recovery that should translate into growth in property values in 2020.

 

That means the best time to purchase is now, before the election. Sellers who are motivated to sell and will listen to the market. So take advantage of this if you’re considering a purchase. For sellers, don’t hold your breath for values to grow beyond their current value until late 2019 or early 2020. Don’t sell if you don’t need to. And if you do need to sell, then get your price right and sell today.

 

This is not the time for panic. Stay calm. Be positive. There will be great opportunities in real estate in 2019 – be sure to take them!

 

Steve Caradoc-Davies

Principal of Harcourts Platinum

December 13, 2018

Reflecting on the 2018 Property Market

It’s hard to believe another year is almost over. It’s definitely been a challenging year in the property market, amongst other things. As we predicted 12 months ago, there was a sharp decline in the number of buyers with an appetite to purchase. This was in stark contrast to the increase of property owners who decided to sell in a tough economic climate.

 

As with all markets, when the supply increases and the demand decreases, there is downward pressure on pricing. We’re fortunate that our local property market is resilient, but it has nevertheless felt the pressure this year.

 

Selling times increased, buyers became more shrewd in determining what represents good value, and as a result, only the sellers who responded to the market managed to sell their properties.

 

The good news is that there are still buyers out there. In fact, this is the absolute best time to invest in property. Serious sellers have had no choice but to meet the market by reducing their list prices, and where fair offers have been made a sale has been concluded.

 

We expect the current trend to continue until the elections next year. We have, however, seen sales volumes start to increase in the last 2 to 3 months. That’s a really good sign that there is market confidence when the pricing is correct. There is also more optimism and many are starting to look beyond the elections, which are not far off at all.

 

We’ve seen the strong marketing and selling strategies are more vital than ever in helping a seller achieve the best price the market will pay. The year has also highlighted flat fee estate agencies. These companies provide an alternative to full-service estate agents and it’s more apparent than ever that, for any agent to survive, they need to justify their value. That’s good for the customers and good for the industry.

 

Ultimately customers deserve a choice. As long as everyone understands the pros and cons of each option, they can make an informed decision as to what’s best for them. What we’ve seen again this year is that skilled agents with solutions achieve the best results for sellers, especially in a tough market. That’s why it’s possible to achieve multiple offers and full price sales for those at the top of their game.

 

Next year will certainly have its’ challenges. The sooner the election is over the sooner everyone can move on with their futures. South Africans are generally optimistic people, and I have no doubt that quarters 3 and 4 of 2019 will mark a strong recovery in the market as everyone gets on with the new norm, whatever that may be.

 

For the shrewd, the next few months will still present some outstanding investment opportunities. Take advantage of the narrowing window of opportunity. As the year winds down it’s a great time to reflect on what we can be grateful for. Bring on 2019!

 

Steve Caradoc-Davies

Principal, Harcourts Platinum

 

December 6, 2018

What to Consider When Purchasing a Sectional Title Property

Two of the most common forms of property ownership are Freehold and Sectional Title. It’s important for a purchaser to understand the difference between the two, and what to consider when purchasing a sectional title property.

 

Freehold is where you purchase a piece of land and the improvements thereon. You have title to the property, and you are 100% responsible for it. In some instances, a freehold property may be part of a Homeowners Association, where there are additional obligations such as compliance of architectural guidelines, and levies to cover security (in the case of a gated estate), maintenance of private open spaces, and so on.

 

When purchasing a sectional title property you are not purchasing the land. You are purchasing a section of the buildings on a piece of land, and an undivided share in the common property (which includes the land and any common buildings).

 

You own the section, and in some instances, you may also enjoy the benefit of exclusive use areas, which could be the use of a garden area or parking bay. As a member of the sectional title scheme, you take on certain responsibilities and have certain benefits.

 

An owner in a sectional title scheme will pay monthly levies that usually cover external maintenance of the units, security, upkeep of the common areas, building insurance, and a contribution towards a fund used to cover future costs. Your levy is calculated according to your participation quota – based on your unit size as a percentage of the total scheme, and your exclusive use areas.

 

You still pay your rates and taxes and in many cases your electricity and water if separately metered. However, your building insurance and maintenance issues are all taken care for you.

 

When considering to purchase in a sectional title complex you need to be aware of the rules and regulations, as well as the financial position of the scheme. Are pets allowed? How many? What are the rules and how will they impact you? Where may you park?

 

It’s important to see the latest financial statements of the Body Corporate before you purchase. How well is the body corporate managed? Are there surplus funds to cover maintenance concerns? If not, it may be that a special levy has to be raised to which you will have to contribute. Ask to see the minutes of the last AGM. Are there any plans for a special levy, and if so, how will this impact you? Should you speak to the managing agent?

 

A seller is meant to declare to a purchaser if a special levy will be raised and what this is, but they don’t always – so ask. A well-managed body corporate adds significant value to a sectional title property, and sectional title can be a very stress-free form of property ownership. Just be sure what you’re buying in to.

 

Steve Caradoc-Davies

Principal of Harcourts Platinum

Email your real estate question to steve.cd@harcourts.co.za.

November 29, 2018

Where To Start When Searching for Your Property

Making the decision to purchase a property isn’t one that you take easily. For most of us, our property is our biggest financial asset. Searching for the right property is important, so here are some tips on how to go about it.

 

The very first thing you need to do, before you start shopping, is to have yourself property pre-qualified so that you know what finance you qualify for, what cash you need to have on hand for the costs and for a deposit, and what you can afford.

 

Resist the temptation to search for properties until you know this. It doesn’t take long. A bond originator such as Ooba can do this in a day or so. If you’re self-employed, you will need additional supporting documentation. Do this process correctly and not only will you know what you can afford, but when you do make an offer, when you are pre-qualified it carries much more weight.

 

Once you know what you can afford, then you can commence the process of finding a suitable property. First research the areas you want to live in. Are there properties in your price range? If not, you will need to look in alternative areas.

 

Start your search by looking at the property portal websites and the local newspapers. You will be able to identify properties that fit your criteria and price range. You should search for properties listed within 7-10% of your maximum price. That doesn’t mean every property is negotiable, as some are correctly priced – but others may be slightly overpriced and the sellers may respond to a fair market value offer.

 

Once you have your shortlist contact the listing agent to view the property. Some agents may offer to source listings for you from different companies. In most cases though, it’s much better for you to work directly with the listing agent. When you do, you know your agent can negotiate directly with the seller for you. You will usually know if there are competing offers, and it will give you the best opportunity to secure the property you want.

 

When viewing properties there are important questions to ask: How long has the property been listed for? Are there any structural defects the seller needs to disclose? Are there approved plans for the property as it stands (and ask to see them)? Are there any competing offers on the property?

 

Once you have viewed the properties then rate them against your criteria. Any property scoring 7 out of 10 merits serious consideration. Select the property you like best and make a written offer. My advice is to make your best offer. Ask the agent what terms the seller would like – such as transfer and occupation dates. Let the agent know it’s your best offer. If you can’t reach an agreement with the seller, then offer on your 2nd choice. Put down a deposit, and get your bond application in. Happy shopping!

 

Steve Caradoc-Davies

Principal of Harcourts Platinum
Director of Harcourts South Africa

 

November 22, 2018

The Smart Time to Buy Property

The most important questions that need answering in real estate are: when is the best time to sell? And when is the best time to buy?

 

The best time to sell is when there are lots of buyers, fewer competing listings, and prices are increasing. This is the most common of markets that we experience, and it’s the reason that property values show very healthy growth over time. However, it’s not the market we’re in at the moment.

 

Indications are that the current market conditions are expected to continue until after the elections next year.

 

So when is the best time to purchase property? It’s when there are fewer buyers, an increased level of properties for sale, and prices have dropped to offer much better value.

 

The good news for buyers is that we’re definitely in a buyers market right now. There are a growing number of properties that are coming to market. It’s true that there are still a number of agents who consistently overprice listings to get a mandate. But sellers are realizing that, if they want to sell in this market, their only option is to react to market feedback and lower their selling expectations. And that’s exactly what we’re seeing.

 

So when do you make the decision to purchase then? It’s impossible to know when the market will turn and prices start moving upwards. But there are always signs when we get near to that point. The first sign is an increased number of sales. It shows that buyers are taking advantage of the better value and making the decision to purchase.

 

We’ve seen in the last few weeks that this is exactly what’s happening. Sales volumes are increasing. The second sign is that, as sales numbers increase, so the lower section of the market starts to see a gentle upturn in value. This is the sign that we’re just starting to see in recent weeks, especially in suburbs with lower median selling prices.

 

Whilst this doesn’t mean the market has yet turned, it does indicate that we’re very close to the bottom of the cycle. In other words, it’s unlikely that property values will fall much further. So, if you’re waiting for the best time to buy – it’s right now!

 

Not only is there some exceptional value on the market, but the banks are also hungry for your home loan. Their pricing is competitive, especially if you’re able to pay a deposit of 10-20%. All these factors combine to make it the best time to put pen to paper.

 

So, if you’re considering a property purchase in the next 2-4 months, I’d suggest you don’t delay much longer. If you haven’t already done so, get pre-qualified so you know exactly what finance you will obtain. Make a shortlist of the properties you want to view – and make an offer on the property that suits you best. Buying now is the smart move.

 

Steve Caradoc-Davies

Principal of Harcourts Platinum

 

November 15, 2018

Do I Rent, or Is It Time to Buy?

It’s the question many tenants ask themselves – do we continue to rent, or is it time to purchase a property?

 

There can be advantages to renting a property.  For one, your monthly outgoing expenses will be less than if you purchase.  You don’t have costs such as insurance, rates and taxes, and the maintenance that goes with owning a property.

 

You also have flexibility.  If you decide to move you can do so once your lease has run its’ course, or is terminated.

 

But that’s about where the benefits of renting a property end.  The reality is that, when you rent a property, you are paying towards the cost of someone else’s asset.  That money is an expense, never to be seen again.  I know of clients who have rented a property for decades and have absolutely nothing to show for it.

 

Contrast that to purchasing a property.  To stay within your budget you would probably have to purchase a property that is inferior to one that you could afford to rent.  It would be inferior in the sense that it may be smaller or need more work, or perhaps be in an area of lesser value than the rental property you could afford.

 

By compensating in this way you will free up enough in your budget to cover the costs associated with owning a property, such as the maintenance, in addition to the cost of servicing your mortgage bond.

 

It’s important to realize that you will also need to have funds available to cover the cost of purchasing, such as transfer duty and lawyers’ fees, and bond registration costs.  It may be possible for you to obtain a 100% bond, but if not, you would also need a deposit.

 

In working out your budget it’s also important that you allow for an increase in interest rates of at least 2%.  By doing this you will ensure that, when interest rates increase, you can cope with the additional instalment on your bond.

 

As a property owner, you will have the satisfaction of knowing that every single instalment you make on your bond allows you to own an asset that, in most markets, increases in value each year.  Even with the global financial crisis of 2008 property values over the past 10 years have increased handsomely.

 

The result is that you will own an asset that increases in value, with a liability (your bond) that decreases.  The difference at the end of the day represents your wealth.  Your monthly costs are not purely expenses – they become an investment in your asset, which will yield you a respectable return over time.

 

After 20 years, when your bond is paid off, you will own a property worth considerably more than you paid.  And there is nothing like owning your own home. Contrast this to the tenant who paid rental for 20 years and has nothing to show for it.  Which would you rather be?

 

Steve Caradoc-Davies

Principal, Harcourts Platinum

November 8, 2018

Sole Mandate, Joint Mandate, or Open Mandate?


It’s a big decision that every seller has to make: how do I list my property for sale? By Sole mandate, Joint mandate, or Open mandate?

 

Here’s the brutal truth regarding each option. Naturally, you’ll have to interview the agents you are considering to ensure what their individual offering is – but this should guide you.

 

Open Mandate – this is when you list with many different real estate agencies and you have no commitment to any of them. Some sellers think this will give them access to a wide range of buyers, and that the agents will be motivated to work hard for a sale. Nothing could be further from the truth.

 

If you give no commitment, you’ll get no commitment. That means you’ll get the absolute minimum marketing, you’ll be listed online my multiple companies (often at different prices), and you’ll be sending a message to buyers that you have no plan and that you’re open to anything. It’s the worst possible selling method. I’ve almost never seen a great result when it’s been used.

 

Joint Mandate – when a mandate is given exclusively to two or more agencies. It’s used by sellers who want commitment – and who believe that they will be exposed to more buyers and receive more marketing by listing with multiple agencies. The reality is that the marketing will be very average. Agencies won’t invest what’s needed when they have no assurance of a sale.

 

The same applies to their level of commitment. They will be motivated to get your listing sold – but sold at their price, not at the best price. They’ll push for you to accept their offer for fear another agent has a better offer and they don’t make the sale. They’re really not on your side. It’s a very bad strategy to employ if you want your agent to work for you to achieve you the best price.

 

Sole Mandate – where an exclusive mandate is given to one agency. This is always the best selling method to use – but only on 3 conditions. Firstly, the agency must commit, in writing, to a strong marketing plan. You need to be convinced that all the buyers will see that marketing and find your listing. When properly done, a single agency can reach the full buyer pool.

 

Secondly, you need to be assured of their commitment to provide you honest feedback and good service. Without this, you won’t know what you need to do to get your listing sold. This also needs to be in writing.

 

Thirdly, you will need the sole mandate to specify that, should the agency not deliver on their marketing and service promise, you can cancel the mandate. That way you are at no risk of being let down by empty promises.

 

There is convincing evidence that a sole mandate is the very best way for a seller to achieve the maximum price the market will pay. Your agent is committed to you, and the agency employs significant resources to ensure you attract the best buyers, create competition, and sell for the price you deserve.

 

Steve Caradoc-Davies
Principal, Harcourts Platinum

November 1, 2018

Why Isn’t My Property Selling?

 

It’s a cause for concern when you are listed on the market and your property hasn’t sold yet. If properly managed though, there is no need to panic. It’s important to realize that you will need to evaluate the situation and make some decisions if you want a result.

 

Research shows that the quicker a property sells, the more it sells for. That’s because of the initial market period – being the first 2-8 weeks – is where most of the buyer activity happens. Many sellers are tempted to price their property high initially, sometimes on the back of an overvaluation by estate agents keen to “buy” your mandate.

 

By the time you adjust your price to be in line with the market value, you may well have lost the benefit of the initial marketing period where there are most buyer activity and competition. So don’t let that happen.

 

Your agent should be giving you regular feedback on the level of interest, enquiries, and buyer comments. If not, ask for the feedback or change to an agent that does communicate honestly with you.

 

If you have very few enquiries then that means one of two things: either your marketing is too weak, or your property is overpriced and buyers are not even bothering to contact the agent to view. Competing properties will appear to offer better value. Without a foot through the door, you just won't sell.

 

You will want to ensure your property is properly marketed online, in print, and on show. If not, change to an agent that will execute a powerful strategic marketing plan. If your marketing is in place and you still aren’t getting good enquiry, then you can safely conclude your price is too high.

 

What if you are getting viewings, but no offers? In most cases, this means your property marketing is strong, but when buyers view your home they don’t see the value in comparison with other competing properties. Again, this means you may need to reduce your price to present better value.

 

If your property is very unusual and will appeal to a small buyer pool, then you may need to allow additional time to find a suitable buyer. However, for the majority of residential listings, it’s vital to price correctly, marketing strongly, and attract the buyers during the initial marketing period.

 

Ask your agent for the buyer feedback. A skilled agent will know how to extract an honest opinion from a buyer. Listen to the buyers without taking it personally. There may well be some things you can do to overcome objections – such as maintenance or the way your property presents. If buyers indicate your property is overpriced then react quickly and make the adjustment.

 

As the market changes buyers will get more selective over the properties they wish to purchase. They will want the best value, and increasing stock levels mean they now also have more to choose from. Make sure you’re the best listing in your price range and you’re certain to sell.

 

Steve Caradoc-Davies
Harcourts Platinum Principal

October 25, 2018

5 Regrets to Avoid When Selling

Selling your property can be a stressful event when not done properly. In my experience, here are 5 regrets that are best avoided.

 

If only I’d used my own attorney.

Sometimes a buyer may insist on nominating the transferring attorney instead of the seller. In most cases this is because the buyer has an arrangement with his attorney and will save on attorney fees. The problem is that, when the attorney is nominated by the purchaser, he won’t act for the seller if there is a dispute. Always be sure to nominate the attorney – and be sure to select wisely. A good transferring attorney makes a huge difference.

 

If only I’d informed my bank of my intention to cancel my bond.

Banks require 3 months’ written notice when you intend to cancel your bond. If you don’t give them this notice in writing, and transfer takes place less than 3 months after they are eventually notified, you will be charged penalty bond cancellation costs. These can be significant. If in doubt, notify your bank as soon as you list your property for sale.

 

If only I’d disclosed those defects.

A seller has a legal obligation to disclose all known defects to a potential purchaser. Not disclosing them makes you liable. It’s better to be transparent and honest up front. Specify in the Offer to Purchase that the purchaser has been made aware of the specific faults, as this then removes your liability. The same applies to not having approved municipal plans. Disclose everything before a sale is concluded. You may sell for slightly less – but you will be spared the much higher costs of rectifying undisclosed defects.

 

If only I’d known about the Certificate of Compliance (COC) costs.

When you sell you are responsible for obtaining certificates of compliance for your electrical, plumbing, gas, and electric fence installation, as well as a Beetle-free COC. It’s best to use a reputable COC contractor to do the inspection before you list for sale. There may be certain steps you can take to remove an installation, such as non-compliant garden lights, before you go to market. You will also have a better idea of what your rectification costs will be in order to comply.

 

If only I’d chosen my estate agent more wisely.

This is, naturally, my personal favorite. Estate agents can be full of promises at the time of listing, but then fail to deliver. Marketing and service promises need to be in writing. Select an agent wisely by asking them what strategies they will employ to help you achieve the best result. Check on their track record. Ask for testimonials. The agent with the lowest commission isn’t usually the cheapest. In fact, cheap is not good, and good is not cheap. You get what you pay for. All agents are not created equal. Don’t fall for the overpricing lie. It will cost you dearly.

 

Learn from the mistakes that others make and ensure that your selling experience is a positive one.

 

Steve Caradoc-Davies

Principal, Harcourts Platinum

October 18, 2018

Renegotiating a Lease Renewal

When the term of a lease nears its’ conclusion the landlord will usually want to negotiate new terms with a tenant.  In the absence of this, the existing lease will continue on a monthly notice basis – but in most cases, there is a renegotiation that takes place.

 

It’s natural for a tenant to want to pay as little as possible, and for a landlord to want to obtain as much rental as possible – so just how can the two parties negotiate terms that are fair.

 

Much has been said about the significant increase in rental values – which will naturally impact on a tenant.  However, it’s important to also appreciate that landlords have also had to absorb significant increases in their costs.

 

Consider how interest rates have escalated over the past year.  Where a property is bonded, this has an immediate and direct cost to the landlord, which he has had to absorb for the duration of the existing lease.  Also, consider that rates and taxes increase annually.  In most residential leases the landlord is not able to pass the increased rates onto the tenant, however, some leases do allow for this.

 

The landlord also has increases in house insurance and the costs of maintaining his property.  In most cases, these additional costs cannot be passed on to the tenant during an existing lease.

 

Then also consider that rental values have escalated drastically due to the increased demand for rental properties, and the limited supply.  When you put yourself in the landlords’ shoes it makes good business sense to extract the highest rental possible to mitigate the increased costs of owning the property.

 

There are, however, certain factors that would encourage a landlord to accept more modest rental increases – and in most cases, these factors are completely in the hands of the tenant.

 

For example, if the tenant pays promptly every month the landlord will ascribe a value to the fact the tenant is low-risk.  The landlord will also view the tenant in a very favourable light if the property has been well maintained.  The property is, after all, an asset that belongs to the landlord – and when a tenant shows real concern for the condition of the property the landlord will value this.

 

Naturally, if a tenant is a late payer, doesn’t maintain the property, and is hard to manage, the landlord will insist on the maximum increase and have no issues replacing the tenant.

 

Ultimately a shrewd landlord will balance the increased rental with the reduced risk of renting to a tenant that conducts himself well, and has proven his worth.  It’s much easier for a rental agent to motivate a landlord to reach a fair compromise with the tenant if there is evidence of the above.

 

Steve Caradoc-Davies

Principal of Harcourts Platinum, and Director of Harcourts South Africa

October 11, 2018

 

Is Land Expropriation Without Compensation a Threat for Residential Property?

There is much talk about land expropriation without compensation. For property owners across South Africa, it’s not a topic that sits too well. It is also a concern for those who are contemplating purchasing property.

 

I won’t debate the merits of land expropriation. There will be strong arguments on both sides of the issue as to why or why not land should be expropriated without compensation.

 

The reality is that we have not really heard any definitive statements from the various politicians in positions of power that relate to residential property. What we do know is that the ANC approved the policy of land expropriation without compensation with certain conditions – most significantly that this would not negatively impact the production of food, and that it would not have a negative impact on the economy.

 

That being the case, any move to expropriate residential property would have a disastrous impact on the economy. Banks would stop providing home loans, and the entire property market would collapse. That certainly isn’t what any government would be looking to do.

 

Any move to expropriate land that is bonded would also have to stand up to the Constitution. How would it be possible to expropriate someone’s asset and leave them with a debt to service? What of the bond-holders rights? All the legal opinions I have heard have stated that the Constitutional Court would never allow this to happen as it infringes on many other of our constitutional rights.

 

Unfortunately, we have the not so small matter of a general election next year. The current land expropriation talk is obviously aimed at securing votes in the upcoming election – and there is no doubt that those hoping to remain in power are playing a dangerous strategic game.

 

But the reality is that whoever is in power also wants a strong economy. Simply expropriating residential land without compensation would collapse the economy to the point of no return. It would be highly improbable, and almost impossible, for general residential property to be expropriated without compensation.

 

The same logic would apply to agricultural property – although there is no doubt that this is what the politicians are really targeting.

 

So what does this mean for the average property owner? It means that land expropriation of general residential property is not a threat. Were it to happen, the entire property market would collapse – and that’s not an option for anyone. Banks will know this, and they will continue to offer home loans.

 

We’re in a market where there is excellent value on offer to discerning buyers. This is a great time to acquire an asset that will offer great growth in the future. As with all investments, research the area and the property well, and make informed decisions. Think back to those who invested between 2008 – 2010 and saw outstanding returns when they sold in 2015-2016. Once the election is behind us we can expect strong recovery – so now is the time to buy.

 

Steve Caradoc-Davies

Principal of Harcourts Platinum

 

October 4, 2018

Purchasing Off Plan

You’ve seen your dream home – the only problem is it isn’t built yet. Is it ever a good idea to buy off plan? The short answer is yes – there are many advantages to buying a property before it’s been built. The trick, as with purchasing property of any type, is due diligence - and when buying off plan that means some investigation into the detail.

 

Some of the positives of buying off plan are that you can often get the property you want in a good location within a development, and at a lower price when you get in early. Prices can often rise as a development nears completion, especially if it is proving popular.

 

By buying early you are securing a property in the market and can benefit from any market price increases over the period of construction. In some cases, we’ve seen this as high as 16-20% growth by the time the property is completed.

 

The potential negative is that you don’t end up with the property you thought you were buying. There is the risk that it’s built and finished to a different standard than you expected. There is always the possibility that the market may drop between the time you purchase and the time the property is completed.

 

Here are some things to think about before committing to purchase an off-plan development property:

 

Check your sources. Once you’ve found a suitable development property, do some homework on the developer. What projects have they been involved in previously? How successful have they been? Do they have a track record of happy customers or a litany of complaints?

 

Be visionary. If you can, visit the development site and figure out where your chosen property fits. How much sun and natural light is it likely to get and at what times of the day? How much outdoor space and privacy will you have? What will the views be like? Make sure you have a clear picture of how big the property and all the interiors will be. Don’t rely purely on plans, artist impressions and show homes.

 

The devil is in the detail. You need to go over the purchase agreement thoroughly. Most disputes arise because buyers are disappointed the finished property is not up to their expectations. Make sure the contract covers everything the developer is responsible for. You should be clear on how much the developer is permitted to deviate from the original plan during construction and what your rights are.

 

Contracts can also include a sunset clause which allows buyers a way out should the project completion be excessively delayed. However, buyers should also be aware that these clauses have, on occasion, been used by developers to cancel contracts.

 

If you have questions, be sure to ask them so that you know exactly what you’re purchasing. When you go in with “your eyes open” purchasing off plan can be very rewarding, both personally and financially.

 

Steve Caradoc-Davies

Principal of Harcourts Platinum

Director of Harcourts South Africa

 

September 27, 2018

Correct Pricing More Critical Than Ever

In any market, correctly pricing your home is critical to you selling for the most the market will pay.  Why?  Because, if you overprice your home you will attract the wrong buyers to your property.  These buyers will be expecting a property worth more than yours.  They will vote with their feet – and move on.

We’ve all seen properties that sit on the market for many months, possibly even years.  One is immediately suspicious that there is something wrong with the property.   Buyers will almost never pay market value for a property that has been listed for an extended period of time.

Research and experience have proven that a property that is correctly priced sells more quickly than an overpriced property.  We can also, with confidence, say that a property that sells more quickly sells for more money than one that is overpriced.

The reason for this is that, at any one point in time, there is an existing pool of buyers in the market.  When they see a new property coming to market they will respond to the marketing, and view the new listing.  After this initial marketing period, it’s only the trickle of new buyers that come into the market that view the home.

So it stands to reason that most buyers, and the best buyers, will view the property in this initial marketing period.  In our experience at Harcourts this initial marketing period is the first 8 weeks that a property comes to market.  It’s absolutely critical that your listing price is in line with market value in this period in order to attract the correct buyer enquiry.

When you do this – attract the correct buyers – you will create buyer competition.  And that’s when buyers will pay their maximum for your property.

This is true for all markets.  But it’s especially true in our current market.  The reason we say this is because there are fewer buyers shopping for property than there have been in the past few years.  The main reasons for this are economic pressures, political uncertainty, and the inability of the buyer to sell their existing property in order to purchase.

When there are fewer buyers it’s important that, if you want to sell, you need to attract them to your property over other competing listings.  How can you do this? Recent statistics show that buyers respond to properties listed within 5% or less of market value.  If you’re priced too high you just won’t get serious interest.

Additionally, you need to ensure that your property is aggressively marketed.   If your listing is lost in the crowd, perhaps one of many hundreds of listings on a property website, then you just won’t attract the interest that you need.

A comprehensive marketing plan that throws the net wide to attract all the buyers, and correct pricing, are key to you selling for maximum market value.

 

Steve Caradoc-Davies

Principal of Harcourts Platinum

Director of Harcourts South Africa

September 13, 2018

Where Do I Invest Now?

 

There will always be investors, irrespective of the market and the economy. The difference when the economy is unsettled, and the market uncertain, is that investors are more selective about where they invest.

 

For the foreseeable future the Rand will continue to be unstable and will react to any political or economic changes. Just look back at the last few weeks to see how global fears and local issues have negatively impacted the Rand. There may well be a follow-on impact of interest rates increases next week – a careful balancing act that will undoubtedly impact inflation.

 

Consider the investment options. Just how volatile is the stock market? Unless you’re an expert, it’s really a gamble, especially in the current economic climate. Feel for those who had Steinhoff shares in December last year… or who have MTN shares now.

 

If you invest your cash in a bank, all you’ll earn is the interest, on which you are largely taxed. The interest barely covers the cost of inflation. So in real terms, allowing for inflation, you’re no better off.

 

Perhaps you could invest offshore, in foreign currency or property? Whilst it’s great to hedge against the Rand – with exchange rates as they are now, the opportunity has really passed.

 

So that leaves property. In uncertain times investors often turn to property. It’s much less volatile than most other investments. In addition to this, investors can often borrow from their bank to finance their property investment. The rental market is under pressure, but when your rental is correctly priced you will rent it out, and a large portion of your finance costs will be covered. When geared with cash, your rent should cover your finance and running costs.

 

The property market is not nearly as volatile as most other investment options. And whilst markets do move up and downwards, property cycles are more gentle and allow you to make informed decisions as to when to buy and sell. When you can plan ahead and time your decision to sell, you will very rarely do badly.

 

The great thing about the market we’re in is that there are excellent purchasing opportunities. Sellers who do need to sell are pricing their properties in line with current market value. Now is the time to buy! Add to this the fact that banks are keen for your home loan and will offer you a good rate, and you’d be a fool to let this chance pass you bye.

 

As with all investments, it’s important that you never overextend yourself. Allow for the interest rate to increase. Price your rental to attract good tenants. Be patient. When the market starts its’ cycle of recovery, expected late next year, you’ll be glad you invested in real estate.

 

 

Steve Caradoc-Davies
Principal

Harcourts Platinum

September 06, 2018

So How’s the Property Market?

I’ve lost count of how many times I’ve been asked this question in my 29 years of real estate.  It’s the first thing that real estate agents are asked when meeting both new and old acquaintances.   And it’s a question I just love answering.

The obvious answer that most agents would give would be either “good” or “bad”, or somewhere in between.  But in reality, the answer is that there are great opportunities for buyers and sellers alike.

For example, if you were in the market to purchase property at the moment, the market would be absolutely fantastic!  Motivated sellers are very realistic and are listening to the market.  The result is that there are some exceptional buys at the moment.  Even developers appreciate the market we’re in and, in many cases, are incentivizing buyers.

Not only are properties well priced, but the banks are also really hungry to do home loan business.  If you have a deposit and are a low-risk client, you will get a very competitive rate.

The same applies to tenants.  For a number of years now rental values have increased at record rates.  But today there is a strong supply of rental property and lower demand.  The result?  Landlords are listening to the market and pricing accordingly.

So what if you’re a seller?  Well, it’s true that the market isn’t a buoyant as it was a couple of years ago.  In order to sell, you will need to listen to the market.  Despite this, sellers are able to achieve strong prices when correctly priced and well marketed.

Property investment is a medium to long-term project.  In most markets, it shouldn’t be possible to purchase a property and flip it within a year or 2 at a profit.  When this happens it’s the exception, not the norm.  If you purchased a property 10 years ago, even in the current market, you should generally be making a good return on investment.

It’s also true that when you sell in a tougher market you also buy in a tough market.  So what your perceived “loss” is when selling can be recovered when purchasing.  The only time you lose on a property investment is when you’re forced to sell at a loss.  This can be avoided by not overextending yourself so that you can ride out a quieter market and avoid being forced to sell.

The magic word is “opportunity”!  There is opportunity in every market – especially a market like this.  Discerning investors will be turning to property now in the knowledge that, when history repeats itself again, their asset will generate great returns in the next 5 – 10 years.  When you consider the volatile Rand, the high risk in investing on the stock market, and the fact that inflation negates the interest you earn in the bank – where else can you turn to?

Property.  It offers great returns for minimal risk.  Opportunity is knocking…. Speak to a knowledgeable estate agent to take advantage of this market.

 

Steve Caradoc-Davies

Principal, Harcourts Platinum

September 04, 2018

New Developer Offering At Hageland

The original developers of Hageland Residential Estate have been working on a new and exciting offering that has just been released to the public.  Marc Peeters, representing the developers, has released the last 8 opportunities to purchase directly from the developer. This secure estate comprises only 69 properties, situated in a safe and picturesque environment.

 

Purchasers can now purchase a luxurious turnkey home specifically designed for each of the remaining sites.  Plot sizes range from 671m2 to 1004m2 – which are generous in comparison to plots released in most other new estates.

 

Each house plan has been individually designed to maximize the features of the plot, taking into account the views and natural sunlight.  House sizes start at 246m2 up to 372m2, and each home offers a minimum of 3 bedrooms and a study or 4th bedroom.

 

As the properties are sold on a “turnkey” basis, the developer manages and funds the construction and the property is only transferred to the new purchaser on completion.  It’s a hassle-free way of owning a brand new home!

 

Finishes are luxurious, with Hans Grohe taps, Bosch appliances, engineered stone countertops, Geberit toilets, frameless glass showers, built-in braai’s, undercover patio’s, and swimming pools.

 

These homes are marketed by sole mandate agents, Harcourts Platinum.  A deposit of only R 100 000 is required to secure your home, with the balance paid only on transfer.  Prices range from R 3 995 000 – R 5 700 000 including VAT.

 

For more information or an appointment to view the newly competed showhouse please contact:

Di Gillespie on 083 228 3431 or di.gillespie@harcourts.co.za, or

Brian Mathews on 076 561 9286 or brian.mathews@harcourts.co.za.

August 30, 2018

Will Technology Replace the Real Estate Agent?


When you look at some other industries, such as the Travel Industry, technology has had a significant impact on their viability. I travel extensively and I haven’t used a travel agent for many years. Does this mean that real estate agents will perhaps be replaced by technology in the near future?

If you think about it, buyers now have access to most property listings through the property portals – much in the same way that a traveller can access flight and hotel prices online. Wouldn’t it be possible for a buyer to purchase a property online and cut the agent out altogether? Technically it’s possible – but is this good for a seller?

The short answer, I believe, is “no”. It’s not good for a seller and therefor technology won’t replace the skilled estate agent. But what it will do is ensure that estate agents need to demonstrate their value to the seller in order to survive.

When an airline sells their seats they do so on price. That’s the price and you either pay it or choose another flight offering you better value. There is no negotiation.

In real estate, there is a very real negotiation between the seller and various buyers that show interest – and the way this negotiation is handled will make a significant difference to the price the seller will get. Technology cannot replace the skilled estate agent in this process.

Every seller wants to sell his property for the maximum market value. In order to achieve this, marketing and selling strategies need to be employed to attract maximum buyer interest. This is where technology does play a large role – and it’s important that skilled agents use the technologies available to ensure a listing is exposed so as to appeal to a wide buyer pool.

The agent then needs to work that interest to the point where buyers make written offers to purchase a property. There are many components to an offer that can be negotiated until both buyer and seller agree: price, terms, and timing. A lower offer with better terms and timing could be much more attractive to a seller than a slightly higher offer with onerous conditions.

Additionally, a seller would need to know from their agent what other potential interest there may be before accepting an offer. Could there be other pending offers? Could the agent get the buyers to compete for the property?

It’s not uncommon for a skilled agent to sell a property at more than the list price. We recently closed a sale at 12% above list price, much to the delight of the seller. Technology would not be able to achieve the same result and the human element that manages the negotiation is critical to the result.

That doesn’t mean that all agents are indispensable. Only those who demonstrate their ability to use technology and their marketing strategies to create buyer competition, and who have strong negotiation skills, will add real value to the seller.

Steve Caradoc-Davies
Principal, Harcourts Platinum

August 23, 2018

Buyers – Pre-Qualify Yourself Before You Make an Offer

 

It constantly amazes me how buyers will start the house-hunting process, and even make an offer on a property, without first finding out what finance they will qualify for.

 

The banks change their lending criteria on a regular basis – so what you may have qualified for 6 months ago could well not apply today.

 

When buyers say: “I’ve already spoken to my bank” – that sadly, in most cases, means absolutely nothing! If you’ve spoken to someone at your local branch or even a personal banker, they are not the ones who will process or consider your bond application. Their sales pitch to you is that “it shouldn’t be a problem”. Really?

 

In our experience, where a buyer has not been pre-qualified for a home loan, they are mostly disappointed in either the amount of finance they qualify for, the interest rate offered, or the percentage of the purchase price the bank will finance – or a combination of all of the above.

 

I mean, would you go to do your grocery shopping without knowing that you had cash or credit available? How much more so when you purchase a property…?

 

You should start house-hunting once you have a very clear indication what you can afford. Surely it will make a difference as to what properties you will view? Why set your heart on something that you will never be able to purchase…

 

By all means, speak to your bank. But their informal indication of the bond you should obtain really means nothing. You need to request to be pre-qualified. Some banks have this facility – so make use of it. They will even give you a certificate confirming the figure – and this will help you when you come to making an offer on a property.

 

In my experience though, I’d encourage you to work with a bond originator. Why? They will know which bank will consider your application most favourably. They will know where the best deal may be, and they are in a position to submit to multiple banks to try and get you the very best finance deal.

 

There is absolutely NO cost to you. They get paid by the bank and it costs no more than if you went to the bank yourself. It’s just one set of application forms, one set of supporting documentation, one consultant to speak to – and then they fight for you. They’re on your side. Difficult to say that about the banks, who clearly “bat for themselves” given the record profits they are making.

 

For example, Ooba bond originators have a service called Ooba Bond Indicator – it’s on their website. You can “pre-qualify” yourself here and receive a very accurate indication of what finance you should obtain. It’s quick, it’s easy, and it costs you nothing.

 

Once you have been qualified and you make an offer, it will strengthen your ability to beat off competing offers of buyers that haven’t been through this process.

 

Steve Caradoc-Davies

Principal of Harcourts Platinum
Director of Harcourts South Africa

August 16, 2018

 

The Issue of Trust in Real Estate

Selling or purchasing a property is a big decision. For most clients we engage with, their property is their largest asset. It goes without saying that Trust is a consideration for anyone engaging in a property transaction.

 

Let’s first consider the trust issue for a property purchaser. A purchaser has the legal right to know of any defects in a property that the seller or the agent are aware of. Currently, property is sold in South Africa with the “voetstoots” clause – which basically means “buyer beware”. The onus rests on the purchaser to ask questions such as: “Are there approved building plans?”, “Is there any damp that the seller is aware of?”, “Are there any structural defects or roof leaks that the seller is aware of?”, and the like.

 

Where there are serious concerns that a purchaser may have, they may consider adding to their Offer to Purchase a clause that states the Sellers response to the above questions.

 

How does Trust relate to a seller? For one thing, a seller needs to have complete trust in their agent. They need to believe that their agent is being transparent and working for them, not against them. This is best achieved when appointing an agent on sole mandate who will have a legal and contractual obligation to work in the best interests of the seller.

 

When you interview agents, try to determine if they are able to substantiate their claims. On what do they base their appraisal value? Is it factual, or a lie to get your listing? Do they commit to their marketing plan – and it is in writing? What kind of service do they promise you – and is their service promise in writing? What sort of track record and testimonials do they have? Be sure that you are completely comfortable with their proposal and that they are committed to work for you, not against you.

 

How does the issue of Trust relate to the estate agent? An estate agent needs to trust their principal. What values does their principal have? Do they show that they live by their values? A principal that is willing to twist the truth for personal gain, break an agreement, or lie outright, is likely to do the same to you at some point in time.

 

If you’re an agent and you’re associated with a company where the principal, or your colleagues, act in an unethical manner, then their conduct reflects directly on you. For a professional real estate agent, our reputation is the most valuable asset that we have. It wouldn’t make sense to associate yourself with a company or a principal that can damage your good name.

 

Trust is something that is hard to find in todays’ competitive business world. And yet there are professional and ethical people that are an absolute pleasure to work with. Work with the right people and value the trust that others have in you.

 

Steve Caradoc-Davies

Principal, Harcourts Platinum

June 28, 2018

Does Print Marketing Still Work?

 

We live in a very different world to the one we grew up in.  Remember the days of black and white print marketing?  We’ve come a long way since then.  Full-colour newspaper print became the norm.  The advent of the Internet changed things – and we were introduced to property websites.

 

As technology has improved, so we’ve seen video, virtual reality tours, drone footage, augmented reality, and the like.  This is all good.  It creates a better customer experience.  When you’re researching properties you’re able to find out a lot more about them than you would have just 10 years ago.

 

But does that mean that electronic marketing has completely replaced print marketing?  After all, print marketing is expensive.  As a real estate business owner, it constitutes one of my largest monthly expenses. 

 

To answer that question, consider the typical buyer journey.  You determine that you want to purchase a property in a certain area.  The first place you search will be the property portals as well as individual estate agency websites.  You will insert the suburbs or areas of interest, a price range, and perhaps a minimum number of bedrooms.  Your search will result in a list of potential options that you will view online – and then you’ll contact the agents to view the listings of greatest interest.

 

You’ll also usually drive through the areas as part of your research process.  You may well call an agent off a For Sale board.  And you will be very likely to view showhouses as well.  In fact, over 20% of our sales at Harcourts Platinum come off the back of showhouses.  Whilst these may be the most used buyer research tools – they’re not the only ones.

 

In most cases, buyers will also have a look at local print marketing.  What print marketing does that online marketing doesn’t, is expose you to properties that may be in locations and price ranges that you would have missed online.  In browsing through print, it’s not uncommon for a buyer to be attracted to a property at a different price point or suburb they may not have considered, but is their perfect home. 

 

In most cases, print marketing will also direct you to a website where more details can be found on the listing, and where your research can continue.  The result is that print marketing attracts a different kind of purchaser.

 

The purchaser searching online may often be guided mostly on price.  They may only view the properties that seem to represent the best value.  However, the buyer that enquires off print marketing is often a buyer who is attracted to a property more on emotion. 

 

It’s important not to forget those who are not really looking to buy, but who stumble across their dream home in print and end up buying a home they didn’t know they wanted.  There is no doubt that print marketing helps to attract the best buyers.

 

Steve Caradoc-Davies

Principal, Harcourts Platinum

August 02, 2018

Buyers Snap Up Well-priced Properties

Difficult economic times have impacted the market, with more listings available as property owners decide to access the equity in their property or reduce their debt.  With more properties to choose from, buyers are shopping wisely and reacting only to properties that represent the best value.

 

Our research shows that buyers generally respond to properties that are listed within 2-5% of their actual market value.  That means that if a property is listed outside this range, buyers will see it advertised but won’t respond to it.

 

It’s no surprise then that there is a decrease in the number of enquiries on properties, and in many cases, properties will go a week or three without viewings.  That’s a sure sign the list price isn’t close enough to current market value – and that something needs to be done in order to attract buyers.

 

For buyers, this is an excellent opportunity to snap up properties at very realistic prices.  Serious sellers will respond to current market feedback and consider realistic offers.  That doesn’t mean a seller has to give their property away – but it does mean that you can find really good value.

 

Often in tough markets, the banks have a much lower appetite for home loans.  But we’re seeing the major banks still very keen to grant finance to qualifying buyers.  It’s important to have a deposit so that you’re seen as a low-risk client.  When you require 90% or less of the purchase price to be financed the banks are keen to help you – and their rates are competitive.

 

Important to remember is that, if you’re a buyer who is upgrading, what you lose on the swings you gain on the roundabouts.  If you sell low you will also buy low.  So if you’ve made the decision to sell, then listen to the market and get your home sold.  Your ability to negotiate improves significantly once you have sold your existing property.

 

If you’re in the market to buy a property, this is an excellent time to secure your dream home.  Make a shortlist of all the properties that could suit you and arrange to view them.  Identify the listings that meet your requirements and represent the best value.  If you see the value, then make a fair offer and keep the terms as attractive as you can.  A seller will often accept a lower offer when the terms are good – especially when it comes to the suspensive condition of finance.

 

Speak to a mortgage originator in advance, such as Ooba.  They have a Bond Indicator product that virtually pre-qualifies you.  When you make an offer to purchase, supported by a pre-qualification, the seller will consider your offer more seriously.

 

Investors are also turning to property as good mid-to-long term investment options.  Purchasing now at more competitive prices means your rental return is greater.  It also allows you to be more competitive with your rental to secure a tenant.

 

Opportunity knocks.  Don’t miss out.

 

Steve Caradoc-Davies
Principal, Harcourts Platinum

July 26, 2018

Tough Market Calls for Different Strategies

Yes, the market isn’t what most sellers would like it to be.  Difficult economic times are definitely impacting buyer demand.  Inflation is increasing, incomes are not, and many businesses are taking strain under the conditions.  The result is that buyer demand has decreased.  It’s a reality, and there is nothing that any agent or seller can do about the state of the market and the economy.

 

But that doesn’t mean that, if you’re selling, you can’t achieve a good result.  In order to do so, your selling strategies will need to change.

 

As with all markets, when demand decreases and supply increases there is usually downward pressure on pricing.  We’re seeing the same happen in the local property market.  Volumes of sales are down by about 50% in most price ranges.

 

There is no need to panic.  It doesn’t mean that property prices are drastically falling.  What it does mean is that buyers now have more properties to choose from and they are only reacting to properties that represent the best value.

 

We sometimes have sellers suggest to us that the price on their property has no bearing on buyer enquiry.  Nothing could be further from the truth.  Price creates interest.  That’s why shops have “sales”.  It doesn’t matter how much you want a product. If the price doesn’t reflect the fair value you won’t be purchasing it.

 

The facts clearly show that we’re in a very different market to the one we’ve become used to in the last few years.  It’s hard to believe that many agents haven’t adjusted their strategies to cater to this very different market.  The result is that properties will sit on the market with few viewings and no offers.

 

So what needs to change to get a result?  For one thing, the approach to pricing needs to change.  If there are 50 properties on the market with a similar offering, buyers won’t view them all.  They will view the listings that seem to represent the best value.  Their shortlist won’t include overpriced properties.

 

Our research shows that buyers react to properties that are listed at less than 5% above market value in this type of market.  If you’re 15% overpriced you simply won’t attract the right buyers.  Despite this, we see many agents overpricing properties by as much as 35% in order to “buy” a listing.

 

This practice of overpricing isn’t only unethical, but it will cost a seller dearly when they have to sell for less than market value after many months on the market.  Don’t’ fall into this trap.  More than ever, your pricing is critical to you attracting the right buyers and selling for fair market value.

 

In addition to pricing, there are other strategies that need to be implemented in order to achieve a sale in a tough market.  If you have a property to sell, select an agent who can demonstrate what they are doing differently in the current market to get you the result that you deserve.

 

Steve Caradoc-Davies

Principal, Harcourts Platinum

July 19, 2018

Post Elections 2019 could well see a Return to Stability

There is no doubt that we find ourselves dealing with challenging economic conditions. The property market has generally been flat since early 2017 - and there is little indication that this will change before the general election scheduled for the middle of next year.

 

So just what does that mean for the local property market? Property values react to the universal market forces of supply and demand. When there is little supply and high demand, values increase. Conversely, when there is a great supply and little demand, value decreases.

 

What we've seen over the past year is an increase in the number of properties being listed. There hasn't been a flood of properties on the market, as we saw in the Global Financial Crisis of 2008 - 2010. But stock levels are increasing, which means buyers have more options to choose from.

 

What we're expecting to see is even higher levels of stock in the coming months, as growing economic pressure results in more property owners being forced to sell. Unless there is an equivalent increase in buyer demand, this will have a negative impact on property values.

 

Don't hold your breath for much positive change between now and the election. A good result would be more of the same - In other words, no crisis, no violence and peaceful elections. After the elections next year, then certainty returns to the country and to the market... we could see a positive move upwards. But it's unlikely this will happen sooner.

 

So if you're a property seller, you have only a few options. If you don't need to see and the market isn't showing interest in your listing price, you could withdraw from the market and wait until quarters 3 and 4 next year in the hope that values would have escalated by then. As explained above, that would be the soonest we could expect to see real growth in property values - assuming all goes well.

 

If you need to sell within the next 6 months, then you're left with only one option: Listen to the market feedback and adjust your listing price quickly. the sellers who respond fastest to market conditions will attract buyer interest and sell their property. Those who don't respond, simply won't sell.

 

The reality is that the longer you take to react. the less you will sell for. This becomes especially true when more properties come to the market, thus increasing supply in the market where demand doesn't increase. The result could be declining market values. At best, values will remain flat until after the election.

 

When you take inflation into consideration, at approximately 6%, it means that in real terms, in a flat market you are 6% poorer if you sell for the same money in 12 months time. As hard as it is, you need to remove emotion, listen to the market and make the adjustment. swift action is required for the best result.

 

 

Steve Caradoc-Davies

Principal, Harcourts Platinum

 

 

 

July 5, 2018

What Are You Looking For in an Agent?

 

One thing is for sure if you’re considering selling a property: you certainly have “choice” when it comes to selecting your estate agent. So that begs the question – just how do you go about selecting your agent?

 

Let’s start with identifying the outcome that you want. It’s usually the same for most sellers, but not always. Granted, a seller takes their property to market in order to sell it. So you’d need to be clear on whether you just want to sell your property – or if you want to sell it for the most the market will pay.

 

They’re not the same thing. Trust me.

 

Let’s assume you just want to sell your property. In other words, getting the most money isn’t the most important thing. Just sell it, and do it quickly. In reality, you could stick your own For Sale board outside with the wording “Any and all offers considered”. Or you could list it with multiple real estate agencies and see what happens.

 

In truth, when you list with multiple companies on a joint or open mandate basis – you really are saying to the agent and to the market “Just bring me an offer”. The agents will compete to sell your property – but not at the best price for you. They will push to get you to accept their offer, as if you don’t, then they don’t get paid.

 

For most sellers, just getting “any sale” isn’t good enough. For those who want the very best sale, their agent selection criteria are very different.

 

Common sense will tell you that, in order to get a buyer to make their very best offer, they will need to be in a position where they compete with other buyers for your property. The only way to achieve this is to price your property correctly, and then to market it so strongly that all suitable buyers are attracted to your listing.

 

This can only be done by executing a powerful marketing plan. So, in selecting your agent, find out what marketing plan will be implemented to ensure you attract all the suitable buyers out there. And get the plan in writing.

 

The next selection criterion is to understand what strategies the agency will employ to obtain you the best sale. Their strategies will reflect their experience, skills, and ability to get you the best result. Make sure you’re satisfied they have suitable strategies.

 

Next, consider their track record. Granted, track record isn’t everything – but it’s a really strong indication of how successful and skilled the estate agency is. If they can demonstrate a record of success and provide positive testimonials from other happy clients – then that’s a good indication you’re making a wise choice.

 

Lastly, you need to feel comfortable that the agent and the agency connect with you. You need to feel you can trust them, and that they are there to serve you. Select wisely. It makes a significant difference.

 

Steve Caradoc-Davies

Principal, Harcourts Platinum

June 28, 2018

 

D’Stellen – A Development that Delights

 

Not every development can boast the fact that it borders peaceful fields and vineyards. Within walking distance of Somerset College, and only 10 minutes from Stellenbosch and Somerset West lies the boutique development of D’Stellen.

 

The estate comprises of only 33 luxury homes designed by Dennis Moss and Partners. Each property has been designed to maximize the nice views and deliver a spacious, bright, and tranquil living experience.

 

This is one of the flagship developments for Combined Developers, who have been planning the project for a number of years. Great attention to detail and a high specification of finish help to create a quality product that also offers great value for money.

 

Pre-sales have been strong, and installation of the services and civil works is nearing completion. Construction of the first homes is due to commence soon, with occupation early in 2019.

 

The development is marketed by sole agents, Harcourts Platinum, who report that they are already 40% sold out. 3 Bedroom homes start from R4,297,900, including VAT, and suits almost everyone’s needs.

 

More information can be obtained from Jason Hutton on jason.hutton@harcourts.co.za / 073 489 8489 or Brian Mathews on brian.mathews@harcourts.co.za / 076 561 9286, or visit the website www.dstellen.co.za.

June 21, 2018

Tenants – Avoid a Deposit Dispute

 

Sadly it happens too often that there is a dispute between tenant and landlord or agent, which results in unhappiness for one or all parties. In most cases, if the proper processes are followed, the unpleasantness of these disputes can be mitigated or even completely avoided.

 

Let’s start on the premise that all parties are generally good and honest people and don’t want to cheat anyone out of anything. Whilst there are exceptions, let’s use this as the basis for discussion.

 

The consumer protection act requires an inspection to be carried out between the landlord or their agent, and the incoming tenant. The more detailed this inspection is, the more the new tenant is covered and avoids becoming liable for a previous tenants’ sins.

 

It’s important that the tenant is present for the move-in inspection, and that all problems are clearly noted on the inspection report and signed off by all parties. Look inside cupboards and built-in appliances. Ensure they are all in good working order. Check sanitary ware for cracks and missing plugs. Ensure light fittings work and that they all have globes. Make sure the pool pump works, air-conditioner remotes, garage and gate remotes, and all keys are accounted for. Be thorough – you’ll be grateful later.

 

In most cases, the landlord or their agent will inspect the property during the lease period as well. Accommodate this request if you’re the tenant and be present. Note items that are just fair wear and tear. If you have damaged something then be honest and take ownership of it. A record of honesty and transparency with your landlord may give you the benefit of any future doubts.

 

During the lease, if there is any damage to the property, either due to bad weather, or fair wear and tear, report it to the landlord or their agent immediately. Do so in writing by email as well as by phone so that you have a record of it. If you delay in reporting any problems and further damage is done that could have been avoided, you could become liable for those costs. So take all reasonable efforts to act promptly.

 

Prior to you moving out of your rental, a preliminary inspection will be done. Items that you are responsible for will be highlighted. Take immediate action to have them rectified prior to moving out. Once you have moved out, a last inspection will be done. Make sure you are present. Address any issues with the landlord or agent, and hand over all keys and remotes.

 

If everyone is happy then ask for confirmation by email or on the written report that the property is accepted in the condition with no further liability to you. You would have removed most of the pitfalls that lead to disputes and the agent will be in a position to refund your deposit swiftly. If in doubt, communicate, and cover yourself in writing.

 

Steve Caradoc-Davies

Principal, Harcourts Platinum

June 04, 2018

Sellers – Are Your Property Plans Approved?

Property owners with properties that are illegally constructed, or don’t have approved municipal plans, could be in for an unpleasant surprise from the local council.  For many years property owners have, wrongly, made minor alterations to properties without obtaining the necessary planning permission – something that the municipality is picking up on.

 

In some instances, even major alterations have been made without council approval.  We’ve seen cases where current structures breach building lines and are technically illegal.  In other cases, the typical “granny flat” scenario contravenes the single residential zoning restrictions, where no more than one dwelling is permitted on an erf.

 

If you own a property you would do well to obtain copies of the approved plans from council to see if the plans represent the improvements as they currently stand.  If not, it would be prudent to arrange for a qualified person to draw up revised plans and submit to council for approval.

 

It becomes quite a serious matter when you sell a property without approved plans.  Whilst it’s not technically illegal to do so, it is a legal requirement that you disclose to a purchaser whether or not the plans are approved should you be aware that they aren’t.

 

It’s also currently the responsibility of the purchasers’ to enquire as to whether or not the plans are approved.  In doing this, it would be wise to ask for a copy of the approved plans just to confirm you are buying a legal structure.

 

What do you do if you realise the property you want to buy doesn’t have approved plans?  It’s important to determine if there are any building contraventions – building lines breached or dual dwelling zoning issues.  If there are, then be aware that once you’re the owner, these problems become yours and the municipality will, at some time, place the responsibility on you to rectify these.  In some instances, this could even involve demolishing an illegal section of the building if the necessary consents cannot be obtained.

 

Rather than take that risk, many purchasers make their offer subject to the seller having plans of the current improvements approved by council before transfer – but appreciate this will delay transfer for a number of months.

 

If there are no contraventions and it’s just a question of having the plans updated, submitted, and approved, then a potential purchaser may well want to proceed with the purchase but would allow for the cost of having the plans revised and approved.  In most instances, this is not a huge expense, but we’ve seen it vary between R 5 000 and R 20 000 – depending on what’s involved.

 

As a property owner, you have a lot invested in your property.  It would be prudent to deal with any planning issues in good time to avoid future problems from council.  Failure to do so may well result in significant costs, and possibly even legal action against you from council – or from a purchaser to whom you didn’t disclose the lack of approved plans despite being aware of the fact.

 

 

Steve Caradoc-Davies

Principal of Harcourts Platinum
Director of Harcourts South Africa

May 24, 2018

 

“Low-Commission” Estate Agents – What You Need to Know

As a seller, it’s only natural that you would want to save where you can on your selling costs. One of those significant costs is the estate agents commission. If two estate agencies were offering the exact same marketing, service, and results, and one was considerably cheaper than the other one, then it would make perfect sense to go with the cheaper option.

 

But that’s where the problem comes in. In most cases, you would find yourself comparing apples with oranges.

 

For example, there are “low-commission” estate agencies, who offer only some services like online marketing – but don’t do the buyer viewings or negotiation.

 

Then there are the “full-service” real estate agencies, but who offer what appears to be a much lower than normal commission rate. In all cases, it’s important to understand exactly what you are getting for your money. Don’t be fooled into thinking that all real estate agencies, services, and results are equal.

 

As with everything in life – you get what you pay for. So do your homework thoroughly. Here are some pointers on what to research and the questions you should be asking:

 

  • What is the commission rate, and are there any fixed costs that you will incur even if there is no sale? In some cases, you may have to pay for marketing up front irrespective of whether or not the property sells. So what are the costs, and when do you have to pay them?
  • What kind of marketing will you get? If you are offered only Internet or website marketing then be aware that you are not getting a full marketing plan. It’s true that many buyers shop online, but certainly not all of them. What of print marketing? Showhouses? Database marketing? And is the marketing going to make your property stand out in the crowd? A weak marketing plan means weak buyer enquiry and low offers.
  • What service will you get? Who is going to do the buyer viewings? Who will qualify the buyer for finance? Who will do the negotiation? Negotiation is absolutely critical in getting the best price. An experienced agent knows how to create buyer competition – which is the only condition under which a buyer will pay their maximum. Without it, you will get low offers. Period.
  • What is the agency track record? What is their market share? What is their “average days” on the market? What is their average drop between listing and selling price? Simply put, can they show you factual proof that they are able to get you the best result? Talk is cheap – ask for the facts.

 

A low commission rate does not guarantee you the highest net price. Usually, it gets you the opposite. Without powerful marketing and experienced selling skills and strategies you almost certainly won’t get the highest price the market will pay. Be sure to research thoroughly. Often what appears to be the cheapest is the most expensive.

 

Steve Caradoc-Davies
Principal, Harcourts Platinum

 

April 26, 2018

Selling Strategies – Listing with a Price

Every seller wants, and deserves, to sell their property for the highest price the market will pay. Sadly, not every seller achieves this. There is a big difference between selling a property, and selling it for the highest price. I’m sure we’ve all seen properties that have sold and thought: “well that was a bargain!”

 

When it comes to selling, there are many options available to a seller. It is vitally important that a seller make the correct decisions if they want to achieve the best sale, not just any sale.

 

The first decision to make is which selling strategy they will use. The word “strategy” implies there is a well thought out plan that is created and then executed in order to achieve a certain result. Far too often very little thought goes into how to achieve the best result – and a property is just thrown into the mix with other listings to achieve an average result.

 

This week we’ll consider the most commonly used selling strategy: marketing with a price. It’s the way most property is sold in South Africa and, when correctly used, is very effective. With this strategy, it’s imperative that the listing price of the property accurately reflects market value. And therein lies the challenge – to determine what the real current market value is.

 

If the list price is too high above market value then the marketing attracts the wrong buyers. They buyers won’t see value in the property and will move on to better value. In most cases you won’t even receive offers, as it’s not the sort of property these buyers are looking for. This is the “overpricing” risk.

 

The other risk is “underpricing”. It’s a terrible feeling for a seller when they realize they listed too low and could have sold for more.

 

Marketing with a price is effective when the correct listing price is used, and the correct buyers are attracted. It’s also imperative that a powerful marketing plan be used so that all the buyers can find the listing and compete for it. That’s when they make their best offers.

 

The temptation for a seller is to list with the estate agent that promises the highest price for their property. This tactic that unethical agents use is called “buying your listing”. The reality is that what an agent thinks your property is worth is irrelevant. It’s what the market believes the value is that matters. The only way to determine this is by means of a comparative market analysis.

 

Wise sellers will appoint the agent that demonstrates, with facts, what their current market value is. They also appoint the agent that can execute a powerful marketing plan – thus attracting the most and the best buyers.

 

When this strategy is correctly used there is strong competition for the property. Buyers compete and make their best offers – and that’s when you sell for the most the market will pay. Next week we’ll discuss an alternative method that achieves outstanding results.

 

Steve Caradoc-Davies
Principal, Harcourts Platinum
Director Harcourts South Africa

April 19, 2018

Sole, Joint, or Open Mandate?

As a property seller, you will want to make the right listing decision in order to sell for the most the market will pay.  So just which is the best way to list?  A sole mandate with one company, a joint mandate with 2 or 3 companies, or an open mandate with many companies?

 

Let’s first establish how you sell for the most money.

 

Your property needs to be strongly marketed to attract the most, and the best buyers.  That means it needs to have a strong marketing plan that covers more than just property website listings.  It must include print – as print marketing attracts buyers not limited to a specific area or price range.  It must include marketing to a database of qualified buyers, as well as showhouses and social media marketing.

 

Strong marketing yields strong buyer enquiry.  This is when marketing strategies are required to place the buyers in a position where they compete against each other for your property.  That’s the only condition under which they will make their very best offer.  And that’s when you sell for the most the market will pay.

 

Having established how you sell for the most money, let’s now consider the different listing options.  Sellers who list on an open mandate will list with many companies on a non-exclusive basis.  Agents will do the very minimum when it comes to marketing, as any significant marketing investment carries too much risk.  When an agent receives an offer they will do their very best to get you to accept it – and the focus becomes their commission, not your selling price.  Very seldom does a property sell for maximum market value when listed by open mandate.

 

Some sellers believe that a joint mandate, between 2 or 3 companies, will yield the best result.  The reality is that a joint mandate agency won’t invest what is required in the marketing of your property.  They will be motivated to achieve a sale, but not at the best price – at their price.  In other words, when an agent receives an offer they will motivate you to accept it, not because it’s the best offer, but because it’s their offer.

 

If you’re a seller who wants, not just any sale, but the best sale, then a sole mandate listing is the best way to achieve this.  Select one agency that commits to a written marketing plan and executes their marketing strategies.  They will be focused on achieving you the best sale.  Your sole mandate agent will often bring you multiple offers as he is able to get buyers to compete and make their best offer.

 

You simply cannot achieve this on an open or a joint mandate.

 

Simply put – when you list on an open or joint mandate you are placing the agents in a position where they are working for themselves, not for you.  Their commission becomes the primary focus.  When listing on a sole mandate your agent works to get you the very best result.

 

Steve Caradoc-Davies
Principal, Harcourts Platinum

 

Director Harcourts South Africa

April 05, 2018

5 Ways Your Property Manager Can Save You Money

If you’re both an investor and a landlord, chances are you have a good working knowledge of managing your own property. So, why would you consider taking on a property manager to look after your investment property for you? Well, apart from saving you a heap of time, a property manager can actually save you cash in these five ways…

1. They can save you money on general maintenance and repairs

Property managers generally have a range of connections in the home repair and maintenance business that are willing to offer their services at a reduced price for continued business. That means you would benefit from the existing relationships your property manager already has.

2. They can handle rent and debt collection

Rental properties should make money, not work! As an owner-landlord, keeping track of rent paid on your investment properties can be a strenuous task, not to mention cost you valuable time and money chasing arrears.

A property manager can handle rent collection for you, ensuring rent is paid on time and in full, before being deposited straight into your account. They can also handle the arrears process, together with an attorney, if your rent is late.

3. They can minimize the risk you’ll lose money through bad tenants

It’s always the risk you run when renting out your property, the possibility of having ‘bad tenants’. But bad tenants aren’t just a nuisance, they’re also a drain on cash and a threat to your financial stability. Tenants can potentially cause damage to your property that their bond amount won’t entirely cover, and if you need to take them to court over damages, unpaid rent or other disputes, this itself can be a very costly process.

That’s why it pays to have a property manager who has a thorough vetting and screening process for any potential tenants, weeding out any risky tenants before it’s too late.

Property managers research employment and past rental history, financial affordability, ITC score and credit history, and references from previous landlords.

4. They can make sure you don’t get caught out with legislation

Property managers must know property legislation inside and out, which takes the risk out of owning an investment property for you.

Property managers are licensed, meaning they are required to continually improve their knowledge on insurance requirements, legislative changes, and landlord-tenant law to ensure all clients and their properties are well protected.

5. They can help you with wealth creation

As a busy owner-landlord, there is a lot to consider when it comes to maximizing the return on your property portfolio. They will know how to optimize the return on your investment and what strategies to employ to minimize vacancies. They also have the skills to negotiate an optimum rental rate.

At the end of the day, a professional property manager could save you a huge amount of time, stress and money!

Steve Caradoc-Davies
Director, Harcourts Platinum

March 29, 2018

Do “For Sale” Boards and Showhouses Make a Difference?

When marketing property it’s not uncommon to get resistance from some sellers when it comes to using “For Sale” boards and Showhouses.  Some sellers are concerned that Showhouses will just attract nosy neighbours instead of genuine buyers.  They are may also be reluctant to let their neighbours and friends know they are on the market and so resist For Sale boards.  So are these marketing tools really necessary?

 

Before answering the question, it’s important to appreciate the strategy around getting the most in the market for a property.  The only condition under which a buyer will pay their maximum for a property is when they know they are competing against other buyers for it.  Fear of loss moves them to make their best offer.

 

That being the case it’s absolutely critical that a property gets the best possible exposure to attract the best and the most buyers.  Successful estate agencies know that marketing needs to include all the available marketing methods.  Some of these are print, websites, and marketing to buyer databases.

 

Do we want your neighbours to know you are listed?  Absolutely!  Your neighbours may be renting and would consider purchasing in the area.  Or they may have friends and family who like the area.  Hiding your listing from anyone means you are unlikely to sell for maximum.

 

For Sale boards are an extremely valuable method of attracting buyers.  The board tells people that a property is for sale.  We’ve pioneered the Photo Board over the last few years at Harcourts, with phenomenal success.  A Photo Board highlights a feature of the property not visible from the street – such as the view, or entertainment area.

 

In addition, the board lists the accommodation features and a QR code that a buyer can scan and go straight to the website listing.  When a buyer enquires off a Photo Board the enquiry is exceptionally strong.

 

What of Showhouses?  It’s true that just sticking up a few boards and hoping the right buyer stumbles across the property is generally ineffective.  But when a Showhouse is properly marketed in the newspaper, in a specific time slot, there is a significant increase in the number of quality attendees.  Harcourts has been advertising all Showhouses in the weekly newspapers for a number of years and the results are staggering.

 

Showhouse attendance is also increased when buyers are specifically invited to the showhouse.  This is done through email marketing to a database of qualified buyers.

 

Our research at Harcourts shows that 1 in 4 sales’ comes as a result of our For Sale boards or Showhouses.  So if you want to sell for the most the market will pay can you really afford to exclude For Sale boards or Showhouses from your marketing plan?

 

Steve Caradoc-Davies

Principal of Harcourts Platinum, and Director of Harcourts South Africa

Email your real estate question to steve.cd@harcourts.co.za.

March 22, 2018 - New Hathersage Show House!

Hathersage Private Estate Releases new Showhouse

Heathersage Private Estate, a luxury development brought to you by Combined Developers, is situated on the historic Hathersage Farm, a stone’s throw from Radloff Park.

 

This boutique secure estate, consisting of only 28 homes, has one of the best locations in Somerset West. Close to outstanding schools such a Somerset House, Beaumont Primary, and Parel Vallei High School, just a stroll away from Lourensford River and the activities of Radloff Park, its position is hard to beat.

 

A new showhouse has just been completed and released for public viewing. It showcases the architecture, the qualify finishes, and the lifestyle that only a limited number of purchasers can enjoy.

 

The sole mandate selling agents, Harcourts Platinum, are thrilled with the finished product. "The new showhouse gives buyers the ability to experience the look and feel of the quality product we have on offer at Hathersage Private Estate. It's much easier to make a purchase decision when you experience a product rather than buying off plan", says Steve Caradoc-Davies, principal of Harcourts Platinum.

 

Pricing of homes at Hathersage Private Estate starts at R 2,955,000 incl. VAT (price valid until 1 April). There are a number of plan options to choose from, and purchasers can choose from a range of developer finishes. Single and double storey options are available, and the estate offers gated security, giving you peace of mind.

 

Further enquiries can be made to Jason Hutton (073 489 8489) or Brian Mathews (076 561 9286), or visit the website www.hathersagemeadows.harcourts.co.za.

 

March 22, 2018

Sellers Who Meet the Market Sell for More

Every seller wants and is entitled to sell for maximum market value. Your property is one of your most significant assets and you deserve to maximize its’ value. In the process of trying to sell for the most money, there is a dangerous pitfall that could cost a seller a great deal of money, should they fall into it.

 

The challenge is always knowing what price to list your property at. Most sellers will call in a few estate agents to give them an indication of the current market value. Sadly, not all agents will give the seller an accurate appraisal. Why? Because, for some agents, the only way to get you to list with them is to overprice your property – thus tricking you into listing with them.

 

It’s dishonest business practice, and it’s condemned in the Estate Agents Code of Conduct – but we see it happen all the time. We call it “buying your listing”. Why is it such a dangerous pitfall?

 

When a property is overpriced it sits on the market for an extended period of time. It attracts the wrong buyers – buyers who are looking for a property that is worth more. Sellers often ask why buyers don’t just make an offer. But if they’re the wrong buyers, not even looking for this kind of property – why would they make an offer.

 

We’ve all seen properties that have sat on the market for months, even years. They eventually sell for much less than the market value.

 

So how do sellers avoid this trap and still sell for maximum market value? The first step is to get the agents who appraise your property to show their comparative market analysis. It has to be backed up by facts. The facts will be other comparative homes that have recently sold, as well as other comparable properties that are currently for sale.

 

Try to see your property through the eyes of the buyer. This means taking your emotional “wish-price” off the table. Once you have determined a realistic market value then list it within 5% of this price. Why? Because buyers respond to market value. They will shop in a price band 5% above what they can afford. This way you attract the correct buyers.

 

Ensure that your listing agent gives you feedback from every buyer that views your property. The comments from the buyers on the value of your home are the key to you ensuring you are listed at the correct price. Buyers know within 5 minutes of walking through your property what it’s worth – just the same as you did when you bought it.

 

If the feedback is that your price is too high then adjust it as quickly as you can to the indicated market value. When you do this you appeal to more buyers. The stronger your buyer enquiry the greater the buyer competition is. And that’s when they offer you their maximum.

 

Steve Caradoc-Davies
Principal, Harcourts Platinum

Director Harcourts South Africa

 

 

March 15, 2018

Last Chance to Save on VAT

We suspected it was coming, and it did. The VAT increase was thankfully only 1% – and effective 1 April 2018 the new rate will apply. So just what does that mean when it comes to property transactions?

The biggest impact will be felt when purchasing a property from a VAT vendor – such as when purchasing directly from a developer. On all contracts signed from 1 April 2018 onwards, VAT at 15% will apply. It’s an easy calculation to make. So, when purchasing a property at R 2 million, it will cost an extra R 20 000 in VAT.

In many cases, the extra VAT amount shouldn’t impact so severely on the transaction that it’s no longer a viable option. But it does mean you have to factor in the extra cost. In most cases, the extra will be added to your mortgage bond – so you will feel it with a small monthly increase in instalment.

Extra taxes are never really something we get excited about – but with every cloud comes a silver lining – even if only for a few moments. The silver lining in this instance is that all sales that are concluded by way of duly completed offers to purchase that are dated prior to 1 April 2018 will attract VAT at the current rate of 14%.

This is the case even if the suspensive conditions are fulfilled after 31 March 2018 – as the conditions, when fulfilled, will be deemed to have been fulfilled retrospectively as of the date the sale was concluded.

So, if you are contemplating purchasing a property where VAT is included in the selling price – don’t delay! Make your purchasing decision now and ensure the offer to purchase is signed and accepted before the end of March 2018.

VAT will unfortunately also impact normal residential sales where the estate agent is a VAT vendor. On every sale where the agent’s commission attracts VAT, the rate will now increase to 15%. Sadly, the information we have is that this will apply to all commissions as of the date of registration or invoice, not the date of sale.

In other words, if the sale was concluded in February 2018 and transfer is in May 2018, VAT on the commission is at 15% where the commission clause states a rate or rand amount plus VAT. In most cases this is not a large number – but it’s still important for sellers to factor this into their calculations.

With a few days left until the end of March, there is still an opportunity to purchase a development property and save on the higher VAT. We’ve seen that buyers are keen to save the extra costs with a run on development sales since the budget speech last month.

The good news is that there is some exceptional value on offer from developers, with a range of attractive options to choose from. So, if you’ve been sitting on the fence, there’s nothing like a gentle nudge from the Receiver to get you to commit to the purchase.

Steve Caradoc-Davies
Principal, Harcourts Platinum
Director Harcourts South Africa

March 1, 2018

Buyers – How to Compete in a Multiple Offer Situation

When there is strong demand for a property it’s not unusual for buyers to have to compete against other buyers for a property. In such a case, just what can you do to strengthen your offer? And what important factors do you need to bear in mind?

 

Let’s start with the concept of multiple offers. It’s the estate agents job to market a property and attract as much interest from qualified buyers as possible. If a property is correctly priced and the marketing is strong, then buyers will respond and indicate their desire to make a written offer.

 

The estate agent needs to act in a professional and transparent way so to all interested parties. A “horse-trading” scenario will need to be avoided – and all offers would need to be handled in a confidential manner. It’s not uncommon for the agent, with the consent of the seller, to put the property into a “For Sale By Tender” situation.

 

In a case like this, all interested buyers are asked to make offers by a certain date, and to leave the offers open for a specified time – perhaps 2 or 3 days. The seller then looks at all the offers and accepts the best one. Alternatively, the estate agent would just disclose that there are other competing offers and then the buyers make their best offer.

 

As a buyer, always ask if there are other competing written offers. When competing you will only have one chance to make your very best offer – so don’t waste that chance!

 

When making your best offer there are 3 aspects to consider: The price you offer, the terms of the offer, and the timing of the offer. All 3 aspects will have value to the seller. Naturally, the price you offer is important – so once you have worked out what you can afford, taking into account the finance you qualify for any cash you have, then offer your maximum.

 

Next, look at the terms of your offer. Can you pay a large deposit? What is the lowest loan-to-value bond you could take? An offer subject to a 70% bond is much stronger than an offer subject to a 100% bond. Can you remove any special conditions? Can you pay a higher occupational rental? All of these factors have a bearing on the strength of your offer.

 

Lastly, consider the timing. Ask the agent what the sellers’ preference is on when they want to move out and give transfer. Where possible, try to fit in with the sellers timing. This will significantly strengthen your chances of success.

 

When competing for a property you may not get a chance to negotiate a counter-offer with a seller. So submit your absolute best offer and give the seller a day or 2 to consider it. Paying slightly over what you had intended will seem less relevant later when you consider the years of enjoyment in your dream home.

 

Steve Caradoc-Davies
Principal, Harcourts Platinum

February 22, 2018

Understand the Contract You Sign

When you enter into any agreement it’s important to have full knowledge of what you’re committing to.  This is especially the case when it comes to the purchase or rental of a property.  When you sign a contract you are binding yourself to a legal agreement when you will have certain rights and obligations. 

 

The first rule is to read the contract thoroughly.  Under the Consumer Protection Act, the contract needs to be in plain language that the average person can understand.  If it’s not, then insist on an explanation of any clause where you’re not sure of the meaning.

 

Next, make sure you fully understand what the costs are that you are committing to.  These will include a purchase price or rental amount.  Also be sure to understand the additional costs.  What are the transfer duties, bond costs, and attorney fees?  For a rental, what are your lease or administration costs?  What is the deposit you need to pay, and by when must it be paid?

 

If you’re needing finance be sure to include the amount of finance you need.  There will be an obligation on you to have the finance approved by a certain date - so make sure you have all your supporting documentation ready and that you apply as soon as you can.

 

There will also be important clauses that relate to when you actually take occupation or possession of a property.  Understand the timing, and what needs to be done before you move in.

 

In most contracts, there will be a breach clause that states what will happen if you are in breach of the agreement.  Be sure to understand fully what the consequences are if you are in breach and what you stand to lose.

 

When it comes to the sale or purchase of a property, it’s vital to know if there are any exclusions or inclusions.  It is increasingly common to find out that a property may have alterations made to it without the municipality approving the plans.  If you’re the buyer, ask to see the plans.  You need to be aware if there are no approved plans as the onus will pass to you on transfer to comply with municipal regulations.

 

When it comes to property rental, most of the disagreements between outgoing tenants and the landlord (or their agent) relate to damage to the property.  An inspection should have been carried out when you moved in.  If there is damage that you have caused you will be liable to have this rectified at your cost.  So anticipate this and have the work done in good time so as not to delay the repayment of your deposit.

 

Where there is a need for special conditions to be added ensure that they are correctly drafted to cover exactly what the intention is.  A badly worded clause can lead to confusion, disputes, and additional costs for someone to absorb.

 

Once you fully understand what you are committing to then sign the contract and move swiftly to ensure you comply with your obligations.

 

Steve Caradoc-Davies
Principal, Harcourts Platinum

February 15, 2018

Purchase Your Development Property Before VAT Increases

With the budget speech looming on 22 February, there is much speculation about when increases we can expect.  The harsh reality is that government has to increase revenue.   Where they will get it from remains to be seen, but it’s unlikely that personal and company tax will be increased.

 

Experts are predicting that the most obvious source of additional revenue is for government to increase VAT – and it’s anticipated that this will increase by 2% from 14% to 16%.

 

Whilst that’s not great news for the consumer, it is accepted that it’s the fairest way to spread the burden.  Increasing the VAT by 2% is anticipated to generate an additional R 48 billion, according to recent news reports.  So what does this mean for the property purchaser?

 

If you’re considering purchasing a development property directly from a developer, which will include VAT instead of transfer duty, it means the cost of your purchase will increase by 2%.  That’s not an insignificant amount of money.  On a property of R 2 million that means an extra R 40 000, for no additional value.

 

If VAT is increased it remains to be seen from which date it will become effective.  There is a possibility that there could be some notice given.  There is, however, no assurance as to how long that notice period might be, if at all.

 

If you’ve been contemplating the purchase of a property where VAT is included in the price, it means that now is the time to buy!  The legal option that we’ve obtained suggests that VAT will be applicable at the rate at the time the sales contract is concluded.

 

So, if your offer to purchase is concluded prior to the effective date of a VAT increase, all indications are that you won’t be impacted by an increase in VAT. Developers do cover themselves in the event that the government makes a change to the rate of VAT retrospective by including a clause stating that any increase in the rate is to be borne by the purchaser.   However, as stated above, legal opinion confirms this is highly unlikely.

 

What is your next step if you’ve been holding off on your decision?  With only days before the budget speech, it means you should be shopping for a suitable development property now.  

 

The good news for purchasers is that now is a great time to apply for home loan finance.  The banks still have a good appetite for home loans and are more competitive on their interest rates than they’ve been in many years.  What they will want from you is a deposit of sorts.  The higher your deposit, the better your interest rate in most cases.


 
Saving 2% on your purchase is a really good reason to make a decision now.  It remains to be seen if there will be further increases in transfer duty, which applies to property transactions without VAT.  Should this increase as well it’s usually effective immediately.  Make your decision now to avoid the extra wasted costs.   

 

Steve Caradoc-Davies
Principal, Harcourts Platinum

 

 

February 08, 2018

Sellers, Choose Your Transferring Attorney

It is usually the right of the seller to nominate the attorney who will handle the transfer of their property and all the associated legal matters – and for good reason.  Of course, that doesn’t make it illegal for the purchaser to nominate the attorney.  However, the seller does expose himself to significant risk should he allow anyone other than his nominated attorney to effect the transfer.

 

 In some cases, a purchaser may insist that his attorney be appointed.  This is usually motivated based on the fact that their attorney had agreed a lower fee to handle the transfer.  In other instances, there may be a linked sale – where the purchaser has a property that is being sold – and it is suggested that it’s easier for one attorney to deal with both matters.

 

 Should a seller consider allowing the purchaser's attorney to handle the transfer? In our experience, a seller should avoid this if at all possible. 

 

 When the seller appoints the attorney, then the conveyancer acts for the seller to ensure the contract is adhered to.  Both seller and buyer have obligations in a contract of sale – and the attorney needs to ensure that all parties fulfil these obligations.

 

 When the attorney is appointed by the purchaser, and there is a dispute or non-performance by the purchaser, it becomes very difficult for the attorney to act against their client.  We’ve often been told that, in such a situation, they have a conflict of interest. 

 

 In reality what this means for the seller is that he has to then consult his own attorney and incur costs in doing so.  To further complicate matters, if the deposit is held by the transferring attorney who acts for the purchaser, the seller will have difficulty claiming damages against the deposit.  In such a case the transferring attorney will hold the deposit pending the result of a court case or settlement.

 

 The situation gets even worse for a seller when the purchaser takes occupation prior to transfer.  We’ve often seen purchasers move into a property and then claim the seller has concealed defects.  They insist they are rectified at the sellers’ cost – even when the seller is not at fault. 

 

 In such a situation the seller is left with the option of either complying with the purchaser's demands or taking legal steps to ensure the purchaser performs.   This results in delays and additional costs for the seller.

 

 There is a counter-argument that the buyer has little protection in the event that the sellers’ conveyancer is used.  However, the conveyancer has a legal obligation to ensure the seller also complies with the contract.  In the event that the seller fails to do so, and the purchaser can prove such, the conveyancer has to protect the purchasers’ legal rights.

 

 In our experience, where the estate agent has ensured the seller discloses relevant defects, and the contract is clear on the obligations or all parties, the potential for disputes can be minimized.  

 

Steve Caradoc-Davies

Principal, Harcourts Platinum

2017, December 14

Real Estate Outlook for 2018

What a year 2017 was! Exactly a year ago I wrote on what to expect in 2017 – and the general message was that it would be a year of stability, not growth. That’s exactly what we’ve seen. Property values have remained mostly stable as buyer demand has declined.

 

The decline in buyer demand has little to do with the desirability of our local property, and more to do with the economic pressures that buyers are feeling, and their inability to pay the prices that would have sustained the 12-15% property value growth of 2016.

 

We’ve been fortunate to be spared the additional stress of higher interest rates – but the real inflation rate and increased cost of living have seen a decline in the amount of disposable income.

 

In addition to the economic pressures, the political shenanigans of 2017 have been a cause for concern. As the average citizen has followed the political developments in disbelief, many have adopted a “wait and see” attitude. And there certainly is a lot to look out for, especially over the next few weeks.

 

The reality though, is that irrespective of what happens politically in the short term, most buyers will realize that life carries on. If your circumstances dictate that you need to buy a different property, or move to a different location, then that’s what you’ll need to do – despite the political scene.

 

So what will we see in 2018? We expect that in the first 3-6 months of the year the market will improve slightly as buyers make the purchasing decision they’ve been delaying. Sellers will need to be realistically priced to sell ahead of others – and overpriced properties simply won’t move.

 

Banks will remain hungry to approve home loans where buyers put down a reasonable deposit. Cash buyers will continue to choose property as an investment safe-haven – and at Harcourts we’re seeing the highest percentage of cash buyers for decades – at well over 50%.

 

Secure estates will continue to be popular for the obvious security benefits they provide. There will still be excellent purchasing opportunities in developments where you buy now but pay later – thereby benefitting from the increased market value before you actually pay.

 

There will be a strong market to purchase older properties, both inside and outside gated estates – and upgrade them. Erinvale Golf Estate is a perfect example where buyers can see the potential if they have the courage to deal with the renovation.

 

South Africans are resilient. We’ll find a way to deal with the political and economic challenges. And our local property market will ready itself for its’ next level of growth once we’re finished with this period of consolidation. As always, real estate remains a safe long-to-medium-term investment. If you need to sell or purchase property then meet the market and conclude the transaction. In every market, there are always great opportunities for buyers and sellers alike.

 

Hoping 2018 is even better than 2017. As with everything in life – it’s what we make of it! Safe Holidays.

 

Steve Caradoc-Davies

Principal of Harcourts Platinum

Director of Harcourts South Africa

 

2017, December 7

Purchasing Off Plan

You’ve seen your dream home – the only problem is it isn’t built yet. Is it ever a good idea to buy off plan? The short answer is yes – there are many advantages to buying property before it’s been built. The trick, as with purchasing property of any type, is due diligence - and when buying off plan that means some investigation into the detail.

 

Some of the positives of buying off plan are that you can often get the property you want in a good location within a development, and at a lower price when you get in early. Prices can often rise as a development nears completion, especially if it is proving popular.


By buying early you are securing a property in the market and can benefit from any market price increases over the period of construction.  In some cases, we’ve seen this as high as 16-20% growth by the time the property is completed.

 

The potential negative is that you don’t end up with the property you thought you were buying.  There is the risk that it’s built and finished to a different standard than you expected. There is always the possibility that the market may drop between the time you purchase and the time the property is completed.

 

Here are some things to think about before committing to purchase an off-plan development property:


Check your sources. Once you’ve found a suitable development property, do some homework on the developer. What projects have they been involved in previously? How successful have they been? Do they have a track record of happy customers or a litany of complaints? 


Be visionary. If you can, visit the development site and figure out where your chosen property fits. How much sun and natural light is it likely to get and at what times of the day? How much outdoor space and privacy will you have? What will the views be like? Make sure you have a clear picture of how big the property and all the interiors will be. Don’t rely purely on plans, artist impressions and show homes.


The devil is in the detail. You need to go over the purchase agreement thoroughly. Most disputes arise because buyers are disappointed the finished property is not up to their expectations. Make sure the contract covers everything the developer is responsible for.  You should be clear on how much the developer is permitted to deviate from the original plan during construction and what your rights are.

 

Contracts can also include a sunset clause which allows buyers a way out should the project completion be excessively delayed. However, buyers should also be aware that these clauses have, on occasion, been used by developers to cancel contracts.  

 

If you have questions, be sure to ask them so that you know exactly what you’re purchasing.  When you go in with “your eyes open” purchasing off plan can be very rewarding, both personally and financially.

 

Steve Caradoc-Davies
Principal of Harcourts Platinum
Director of Harcourts South Africa