Top 10 Steps To Find Your Ideal Home

Due to the fact that the current property market offers buyers a wide selection of homes to choose from, the selection process can sometimes be tough. While most buyers probably have a good idea of what they are looking for in a home, there are a few steps they should follow to help with their final selection:

1.         Make a wish list 

Write down everything you need and want in a property.

2.         Differentiate between wants and needs

Separate out items that fall into the wants category, which are the nice to haves but not essentials, from those that fall into the needs category, which are specifications that the buyer cannot compromise on.

3.         Work out affordability

Determining a price range is one of the most crucial steps in the selection process. Buyers need to figure out how much they would be able to afford on monthly costs, including bond repayments, maintenance, levies and rates, etc.

4.         Pre-qualify for a bond

Buyers will just end up wasting everyone's time by looking at homes that they cannot afford to purchase. By getting a pre-qualification on a bond, buyers will be able to determine whether or not they qualify for the necessary finance and will get an idea of the estimated amount that the financial institution would be willing to lend.

5.         Location

The emphasis on the importance of location remains as strong as ever. When looking at areas in which to purchase property,  buyers should consider what locations they need to reach regularly, how they plan to travel there and how long the journey will take.  Schools and other amenities will also play a large role in this step of the selection process for many buyers.

6.         Start the search

The internet is the ideal starting place to begin a house hunt, while local newspapers are also a good research tool for buyers. Buyers should also visit their local estate agents to ask what’s coming onto the market, or drive around their favourite areas to spot any for sale boards going up.

7.         Choose a good estate agent

It is essential for a buyer to find an expert to work with. Ask for referrals and interview various candidates in order to ensure you select an agent that is professional, experienced and ethical. It is also best to select an agent that has good knowedge of the areas in which you are thinking of buying a property.

8.         Learn the real estate market

The more knowledge a buyer has about the property market in which they are thinking of buying, the more equipped they will be to make an informed decision.

9.         Find out what is for sale

Aside from making a shortlist of the properties found online or through other channels, buyers need to match the list with all of their criteria including their accommodation requirements, price range and location. The next step is to set up appointments to view the properties on the shortlist and begin comparing them.

10.       Practice your patience

For some buyers, depending on their requirements, it may take time to find the ideal home. Buyers may look at everything for sale and not fall in love with anything. In cases like this, buyers should ask their estate agent to add them to their email list to receive notification of suitable listings as they come on the market. Patience here is key.

What Property Will Cost In The Future

The news that the prime lending rate had been cut by a further 50 basis points, bringing the rate to a thirty year low of 8.5 percent, came as a major surprise and will undoubtedly bring welcome relief to those who have been feeling the full effects of the economic downturn.

The majority of South African homeowners have had it tough over the past five years. Many have defaulted and lost their homes and others are battling to meet bond repayments. It may not seem like much, but it goes without saying that large numbers of SA homeowners will be celebrating the reduction in the monthly amounts payable on their bonds.

In actual fact, the drop in the interest rate since 2008 has had a significant impact on bond repayments. In the last four years, the repayment on a bond of R500 000 payable over a 20 year term has decreased by a staggering R2 430 per month. Similarly, on a 20 year bond of R800 000 the repayment has dropped from R10 831 to R6 943, which equates to a saving of R3 888 per month. In December 2008, the repayment required on a bond of R1-million was R13 539. Today this figure has dropped to R8 678.

The interest rate drop is not only good news for existing homeowners as the decrease is going to have a profound effect on those entering the property market for the first time. During the boom period, house prices rose dramatically. This is no longer the case and, although not stagnant, the value of property is now rising at a much slower pace. In a nutshell, there probably isn’t a better time to invest in property.

Although traditionally rate drops do not fuel sales, the fact that the rate is now so low could well boost the real estate market. The problem with this, as far as buyers are concerned, is that demand fuels house prices. Those who sit back and wait for ‘better days’ may find that by the time they do get around to investing, the rate cut doesn’t mean that much, because the average price of property has risen to such an extent that they will find it far more difficult to enter the market.

Many insist that renting property in South Africa is cheaper than buying. However, given the rate cut and subsequent savings, this may no longer be a valid argument. It pays to remember that the price of property has been rising by 11.25 percent per annum since 1966. When one takes into account the compound effect of this, it means that a house bought for R9 516.00 during the mid 60s would cost approximately R1.035-million in today’s market. By using the same formula, this effectively means that a home bought for R1-million in 2012 will be worth a staggering R66-million in 2050.

The effect of the increase in property values is also going to have a dramatic effect on the amount of rent paid by tenants. In 20 years’ time, it is estimated that the rental payable on a property valued at R1-million will be in the region of R62 394 per month. Even though salaries will rise according, this is still a terrifying thought.

The message is clear that no matter how daunting the decision may seem, sitting back and waiting for your ship to come in is just not a sensible option. Do as your parents did -  don’t aim too high and assume that your first investment is one for life; start with baby steps, buy what you can afford and, as is clearly evident, the rewards will automatically come your way.

 Article By Lea Jacobs - Private Property

JUST LISTED

ERF. 8494 - BRACKENRIDGE PRIVATE ESTATE

SOLE MANDATE
R2 750 000

A bright & airy North East facing home set in a lovely fenced garden in the secure Brackenridge Private Estate.  The home is centered around open plan living areas which lead onto a lovely     covered but sunny patio, perfect for entertaining.

Contact Graham Anley
+27 (0)82 491 0529

Start Saving Today And Secure A Better Future

While more first-time buyers are entering the property market and banks are seeing a stronger demand for home finance, those applying for finance will still need to meet the tight credit requirements, says Adrian Goslett, CEO of RE/MAX of Southern Africa.

He notes that this is the reason why those who looking to enter the property market in the next five years should start saving for a deposit as soon as possible, if they haven't already.  Goslett says that the sooner buyers start saving the better, because the larger the deposit they are able to put down, the more likely they are to obtain bond approval.  "It is very difficult for buyers to obtain 100% bonds these days and most property transactions require the buyer to have at least a 10% deposit, although in some cases as much as 30% could be required," says Goslett.  "Even if the deposit remains at the 10% mark, that is a deposit amount of R100 000 on a property that costs R1 million.  Coming up with this amount of cash at one time is a tall order for many would-be homeowners, which is why it is so important to start saving as early as possible."  Aside from the fact that most buyers will need a deposit to secure finance, this is not the only reason for buyers to have money saved up before entering the market.  Goslett says that even with a 100% bond, buyers will still require the additional funds for other costs related to purchasing a property, which include the transfer duties, attorney fees and moving costs, never mind rates and electricity account activations with council and the like.

 

Although a deposit benefits the bank in that they are at less risk when issuing finance, there are also many benefits for the home buyer as well.  One of which is that the larger the deposit, the less the total amount owed to the bank will be.  This will reduce the monthly bond repayments as well as the interest paid over the term of the loan agreement.  A reduced bond repayment also improves the buyer's affordability score, which will allow them to apply for a higher bond amount than they would qualify for without a deposit.

As banks view homeowners with a deposit as a lower risk, some may offer to reduce the interest rate on the home loan.  "Given the standard term of 20 years for a home loan, a reduction in the interest rate of only 1% can save the homeowner thousands.  In fact, it is possible for the money saved to be far more than the initial deposit amount put down by the homeowner," says Goslett.

South Africa scores very low on domestic savings when compared with the world's other emerging markets, such as China and Malaysia.  With a domestic savings rate at 52% of the national GDP, China  is among the highest in the emerging markets, while South Africa has a domestic savings rate of approximately 20% of GDP.

It is never too late to start saving for the home of your dreams, however, buyers that have started saving from their first pay cheque will have the advantage of their money having earned interest over the longer term.  "Even the smallest amount saved each month can grow into a substantial investment over time and secure your financial future due to the wonder of compound interest.  Compound interest is the interest earned on interest, which grows your money exponentially faster the longer it is left to work," says Goslett.  "This is why it is so important to start saving as early as possible and keep it up.  This could mean affording a higher value property and buying the house of your dreams sooner than expected," he concludes.

Do Thorough Research Before Undertaking Home Renovations

Renovations can add value to a property, but only if they are done in the right way, says Adrian Goslett, CEO of RE/MAX of Southern Africa.

He notes that many homeowners may undertake a home renovation that could cost them a lot of money but add very little or no value to their property when they decide to sell.  This is why it is important for homeowners to research certain aspects before venturing down the renovation path, especially if the renovation is specifically for investment and resale purposes.

Don't over-capitalise
Goslett says that one of these elements is the general value of property in the area in which the home is situated.  Although property prices can vary from street to street, most suburbs will have an average sale price.  The homeowner can risk over-capitalising if the cost of renovation vastly outweighs the profit that can be made, if the property is sold at a later stage.  Over-capitalising can actually have the opposite desired effect and devalue a property.  The value of a home is largely dictated by its location and condition, especially in comparison to other nearby properties.  This means that before they break ground, homeowners should have an idea of property value in the area and the current real estate market.

Look at market trends
"If a homeowner is thinking about renovation, especially if the renovation is costly or largely changes the structure of the home, such as making a single storey home a double storey one, it is advisable that they first look at the current property market trends in the area," says Goslett.  "Property websites and newspapers will give the homeowner some idea of the market trends and prices, however, consulting with a real estate professional specialising in that area will give the homeowner a clearer picture of the market.  An agent will know what current buyers are looking for and at what price."

Different features appeal to different buyers
Different kinds of renovations could appeal to a different demographic of buyer that is attracted to the area.  Knowing the particular area's general buyer profile and features they look for is essential to undertaking a renovation project that will add the most value.  If the predominant type of buyer in an area is a business executive wanting low maintenance and lock-up-and-go features, a swimming pool could prove to be more of a hindrance than a value adding element, while a family buyer could see this as a drawcard.

Have a budget and stick to it
Due to the fact that renovation is often an emotional decision, Goslett advises homeowners to have a set budget before starting and to try stick to it as much as possible.  As a rule of thumb, the renovation cost should not be more than 25% of the estimated value of the home.  "Setting a renovation budget will also require the  homeowner to do some research regarding the associated costs.  Certain elements may cost more than expected, so this will need to be planned for ahead of time.  A lack of financial planning could result in a poorly completed or half-finished project, either of which could affect the value of the property negatively," says Goslett.  "Some homeowners may be tempted to undertake the renovations themselves to mitigate costs.  However, this is generally not recommended practice unless the homeowner is qualified to do so.  Badly completed DIY renovations can cost fare more to rectify, than if the job was done professionally from the start."

Although purchasing property should be considered as a long-term investment, it is very seldom that a homeowner will stay in the same home for his entire life.  Goslett says that this is why it is important to carefully consider renovation plans and how they could affect the value of the home and the homeowner's financial well-being.

What's Holding You Back?

Although many buyers are eager to take advantage of the favourable market conditions such as the low interest rates and competitive market prices, some still err on the side of caution, says Adrian Goslett, CEO of RE/MAX of Southern Africa.

He notes that while the large majority of first-time homebuyers acknowledge that the market we are currently in is an ideal time to take the step toward home ownership, the biggest concern which has kept many of them on the fence is simply whether or not they will be able to afford to buy a property.  "This is a valid concern which can be laid to rest by consulting with a real estate professional or a bank," says Goslett.  "A buyer can speak to a credible mortgage originator such as BetterBond, to establish the home loan amount they would potentially qualify for first.  They will be able to list and explain all the costs involved in buying a property, and will be able to assist the buyer in calculating how much they can afford.  In this way, the buyer will have a clear picture of what price bracket to look at before starting the search for their first home, which can save a lot of time and hassle."

Goslett also says that there are a number of online mortgage calculators that will give buyers an estimate of what they can qualify for as well as the bond repayments, but says that it is important to note that there are no guarantees with regards to these results.  The banks also offer a variety of different product to suit individual requirements.  Therefore first-time buyers should be sure to investigate all the options to find the solution that is tailored to suit their specific needs.

According to Goslett, while buyers should move quickly to secure the home of their dreams, they should also not be pushed or rush into the decision.  Property pricing has once again started to rise and is expected to continue to do so in the future, so the sooner you can get your foot in the door of property ownership, the better.  "While it is important for buyers to weigh up their options carefully and research all aspects thoroughly before they commit themselves to the responsibility of owning a property, there is a chance that hesitation could lead to buyers missing out on the opportunities the current market has to offer.  The question should not be whether they can afford to enter the property market, but rather, can they afford not to," says Goslett.

Many prospective buyers are holding off a while longer to see what the market does and are remaining in a rental situation believing it to be more cost effective.  However, with the rising demand for rental property, rental prices have been on a steady increase since 2009 and are likely to continue.  If this trend does continue, the long-term cost of rental could eventually heavily outweigh the cost of buying a home.  "With property considered a long-term purchase, decisions made regarding property should be based on a long-term basis.  While some potential first-time buyers may believe waiting is the best decision for them at the moment, this may not be the best long-term decision," says Goslett.  "Each month that a potential buyer rents could potentially mean a possible lost opportunity and an increase in costs.  Owning a property will also mean that money spent on rental will now go towards paying off a tangible asset and solid investment."  Goslett says that in any market, real estate is a good investment that continues to provide a solid return on investment over the long-term.  "While the property market is cyclical in nature and goess through various stages, over a longer period, property will outperform most other investment vehicles," he says.  "Top investors including perhaps one of the world's most renowned businessmen, Warren Buffet, feel strongly about the property market and the stage it is in right now.  Buffet has been quoted saying that if he had a way of buying a couple hundred thousand single-family homes, he would load up on them."

Goslett notes that it is important for potential homebuyers to understand the pros and cons of purchasing a home and not take the decision lightly.  "However," says Goslett, "for those who have a good credit record, available cash or access to finance, now is the perfect time to invest in a property with the view to future capital appreciation," he concludes.

Hello From Plettenberg Bay

Although we have had some very inclement weather over the past month, generally our weather has been much better than either Cape Town or P.E.

We have had a busy month with several great events in Plett and Knysna.

The Oyster Festival in Knysna, runs from the 6th to the 15th of July and has brought many visitors to our area.  It is a very popular festival held annually with over 100 events.

The Tour de Plett held over the weekend of the 30th June attracted many entries with 85 competitors in the 110km road race, which was won by H.B. Kruger in a time of 2hrs, 47mins & 55sec with Anriette Schoeman taking the ladies race in 3hrs, 7mins & 48sec.  Our own Kevin Evans, took the 75km off road mountain bike race in a time of 2hrs, 59mins & 21sec with Ischen Stopforth being the first lady home in 3hrs, 33mins & 75sec.

As always the Wedge Classic drew enthusiastic surfers and supporters from around the country.  Tough competition and good waves made for a very memorable event with the main prize in the pro section going to Sacha Specker with Iain Campbell second and Jared Houston and Niklas Martin sharing third place.

Local junior Andrew Searle partnered with Jared Houston to win the synchronised event.

The 'So You Thinnk You Can Cook' competition at L.M. Restaurant is in full swing with RE/MAXs own Bruce Noble winning his heat on the 28th June.

The whales are in the Bay again!  The Southern Rights visit the bay from about June to November, and migratory humpaback whales can also be briefly seen from May and June and then, on their return trip, from about November to January.  Bryde's whales or orcas are also occasionally seen.