Hello From Plett

Unbelievable as it may seem, we have come to the end of another year.  January seems to have been only a month or two ago. 

At this time of the year, Plett is abuzz with anticipation.  The Matrics arrive at the end of November, full of joie de vivre and ready to party, in celebration of the end of their school careers.  They are loud and happy and kick our Summer Season off with a bang.

We are happy to report an increase in the number of sales this year.  Buyers seem to have realized that if they don’t take advantage of the lower prices, in the hope that they are still going to drop further, they will miss the boat and will really regret the lost opportunity.  Sellers, too, seem to have begun to heed Estate Agents who have been telling them that buyers have a large selection of properties to choose from, and that if their home is not priced correctly, their chances of selling are greatly reduced. 

Plett has shaken off the winter blues, after a particularly grueling and cold winter, and we are all basking in the most glorious sunshine.  Our town is looking great with shopkeepers receiving their holiday stock, gardens being spruced up, and new homes being completed. 

We are gearing up for local elections early in December.  The results are important for all of us and it is critical that we all get behind our chosen candidates, to address issues which require attention.  

As the school year winds up and businesses close for the year, we welcome our visitors, old and new, regular and first time Plett holiday makers.  We wish you all a wonderful holiday, a welcome break from work and a peaceful Festive season with family and good friends.   Tread lightly on our beautiful town.  Re-energize and leave with wonderful new memories.

A Fast Track To Savings

Homeowners on a tight budget can still pay off their bond faster.  A small increase on a homeowner's monthly bond repayment can make a big difference in the quantity of time it takes to pay it off, said Adrian Goslett, CEO of RE/MAX of Southern Africa.

For example, on a 20-year bond of R500 000 at an interest of 11%, the monthly bond repayment will be in the region of R5 160.  If the homeowner pays just R300 extra into their bond every month, they will save over R144 000 and cut the term of their bond by almost four years, said Goslett.

"This may be just a small step, but it can fast track a homeowner's path to financial freedom," Goslett said.  If a homeowner is financially stretched to the limit and cannot afford to pay additional money into their bond, they could rather focus on finding ways to reduce the payable interest.  He notes that on a bond of R1-million, a reduction of as little as 0,5% on the interest rate can result in a saving of over R76 000 for a 20-year home loan.

In some cases switching from one financial institution to another could reduce the interest rate.  "Keep in mind, homeowners that do consider this option could face paying bond cancellation and penalty fees, which will severely reduce any benefit or profit achieved from obtaining the lower rate," Goslett warned.

According to Goslett, if a homeowner does obtain a lower interest rate through switching banks or a general interest rate cut, they should still keep their monthly repayments at the same amount.  Banks will usually automatically reduce monthly payments according to the prime interest rates fluctuation.  Homeowners can, however, have the repayment stabilised.  Maintaining the original bond repayment at the reduced interest rate will mean that they are getting the benefit of paying extra into their home loan every month, without having to find additional money in the budget. 

Homeowners can make further savings on their home loan interest if they have an access bond where they can transfer extra lump sums of money into the loan account Goslett said.  The interest rate payable on the home loan account is calculated daily based on the outstanding balance.  This means that if a homeowner has access to the home loan account and is able to transfer cash into the account when they have it, they can reduce the amount of daily interest charged for the period that the money is in the account.  Even if the money is only in the account for a short while until the homeowner requires it and needs to withdraw it again, the interest over that period will still be less.  "The savings on the daily interest amount might seem small, but it will add up over the term of the loan," added Goslett.

Tips to Maximise Your Home's Profit Potential

For most people buying a home will be the largest financial investment they will ever make.  It is possibly going to be their greatest return on investment over the long term.  It is also perhaps one of the few investments that the owner can enjoy and make use of while it appreciates in value.  For these reasons it is important for homeowners to put a lot of time and consideration into the inevitable possibility that they will one day sell their home, says Adrian Goslett, CEO of RE/MAX of Southern Africa.  "While it does happen, very few buyers will purchase a home and stay in that same property for the rest of their lives.  Although property is a long-term investment, a buyer should always buy a home with the consideration that in reality they will eventually sell it.  What ever the time frame, the process of buying and selling should remain the same, with the primary objective being to maximise the return on the investment at the realisation of the sale," says Mr. Goslett.

He says that in the current market, sellers who want to achieve the highest possible return on their investment will need to follow a certain formula that combines three main elements.  These elements include fair market value, an excellent marketing plan and a well presented and prepared home.  The important of a home that is priced within the correct bracket cannot be overstated, says Mr. Goslett.

Many sellers make the mistake of overpricing their property to give them room to negotiate with prospective buyers.  While this may have worked during the boom period, it does not work in a recovering market that favours buyers.  Overpricing will merely chase potential buyers away.  Statistically speaking, property sold within the first month of being on the market will sell for the seller's asking price, provided the home is marketed a fair market value.  Thereafter the chance of the property being sold for the initial asking price becomes progressively less likely, with statistics indicating that houses that have been on the market for 24 weeks or more sold for as much as 10% less than the original asking price.

Homeowners must also ensure that their home is well maintained and cared for while they live there so that when they decide to sell, the home is ready and looking its best without needing costly upgrades just before sale.  Mr. Goslett says that homeowners who keep their home updated and organised throughout the years will improve the way they live in their homes and ultimately add to the home's value.

'TWO ROOMS THAT HELP SELL A HOME 

ARE THE KITCHEN AND BATHROOM'

"First impressions and aesthetic appeal are important when it comes to a property's resale value."  The outside of the property will be just as important as the inside, so sellers should make sure that their home has curb appeal by maintaining their lawn and landscaping.  A newly painted home will have a fresh look that will add to the value and interest of the property.  Always keep paint colours neutral and current," he says.

"Two rooms in particular that help sell a home are the kitchen and bathroom.  They do not necessarily have to be high-end or luxurious.  Just updated, clean and well designed enough.  The investment made in these areas of the home can definitely translate into the difference between a speedy and profitable sale, as opposed to a listing that languishes on the market."

In closing, Mr. Goslett says that if a seller follows these guidelines, they will have the best possible chance of realising their home's resale potential.  "Property remains a sold asset class that continues to perform well over the longer term.  "However, homeowners do have to play their part to ensure that that property reaches its full potential," he says.

Safety First

SAFETY FIRST
For many home buyers in South Africa, security has become the number one priority when deciding to purchase a home.

South African home buyers are among the most security conscious people in the world due to the fact that so many have been affected by crime in some way.  This is why property within secure estates and property with state-of-the-art security systems are generally sought-after and have a greater return on investment.  Homeowners can add value to their homes by upgrading their security, as well as have the peace of mind of knowing that the occupants in their home are safer.

Following a survey conducted with various security companies below are a few ways homeowners can increase the security of their homes and deter criminals:

Physical protection is best
Physical protection and barriers such as palisade-style fencing or good quality electric fencing have no match when it comes to deterring would-be burglars.  It is important to remember that an electric fence around the perimeter makes the front gate the weak spot, so it is advisable that the gate is alarmed as well.  Motion beams or outdoor passives are a great backup to good physical security.  They provide early detection and an alarm should the physical barriers fail.

Don't be an easy target
The longer it takes to break into your home, the less likely it is that this will happen.  Avoid anything that can make your home an easier target.  Keep bushes and foliage trimmed back so that there are no hiding places for intruders and keep entrance areas well lit.  Be careful not to leave garage doors unlocked or open to advertise the contents stored within.  Get a guard-dog that has been trained to bark at any disturbance and talk to the children about the importance of identifying who is trying to gain access to the home.

Don't ignore the intercom
If gate buzzer or intercom rings at any hour of the day or night - do not ignore it.  Some criminals use this as a method to check whether occupants of the property are home.  If it is ignored, an armed intruder make take that as an invitation to proceed to enter.  If the intercom does not work, remove or repair it as soon as possible.

Never advertise being away
Most criminals want to avoid a confrontational situation so they would rather break into a home while the occupants are not there.  Signs such as uncollected post can make the property more vulnerable to burglary.  Homeowners who don't already have timers should consider installing ones for the lights both inside and outside the home and leave a car where it is safe but visible from the outside.

Don't keep keys in usual places
A new trend among certain syndicates of housekeepers is to take your vehicle in addition to your household belongings.  To combat this, keys and their spares should be kept out of all the usual places.  Keeping them on key hooks and on counters and desks is a no-no.  Homeowners who are going away on holiday need to make sure that keys are hidden safely away.

Be involved
Join your local community policing forum and get fellow residents together to form a neighbourhood watch with shared time schedules.

Although their is no fool-proof way of ensuring that your home and occupants will be protected at all times, being prepared and taking the necessary precautions is a step in the right direction.

Fine Print In An Offer To Purchase

The offer to purchase a house could be the most important document you ever sign.  It will set out everything from when the property ownership should change hands to exactly what will be included in the deal, whether it's a couch or a cat.

Carol Reynolds, area principal for Durban North and La Lucia for Pam Golding Properties, said an offer to purchase must include who the seller and buyer are, a description of the property and the price that has been agreed, including any commissions.  It should be stipulated how the buyer plans to finance the purchase - a bond or cash - when occupation will take place, and occupational rental, if any.  This is usually 0.5% of the purchase price a month.

Once the dates are settled, other key clauses include the voetstoots clause, the breach clause, and the obligations of the buyer and seller.  The seller's obligations include ensuring that the building plans have been passed, and getting beetle, electrical and gas compliance certificates.  The buyer's obligations are to comply with the time periods stipulated for payment and to ensure that there are no unnecessary delays.  Buyers need to pay transfer costs before title deeds change hands.  These costs are in addition to the purchase price.  "First-time buyers are often unaware that they need to pay these costs prior to transfer and they cannot rely on their bond to pay for them," said Reynolds. 

If the buyer has to get a bond approved, there should be a clause in the offer to make the entire agreement conditional on getting a bond.  "The sale becomes conclusive immediately upon the bank issuing a final grant quotation, regardless of whether the buyer is happy with the interest rate involved or not.  The buyer cannot cancel the sale on the grounds that the terms of the bond grant are not acceptable to him or her," Reynolds warned.  Often buyers will need to sell their property first.  "Offers tath are conditional upon the buyer selling a property are not conclusive until the buyer has secured an unconditional sale on their property.  All bond and other conditions in the purchaser's sale need to be met in order for the second sale to be fulfilled," Reynolds said.

This may mean the seller remains open to offers from other potential buyers.  If they get another offer, the first buyer can be put on notice and given a week or two to either sell their house or waive the condition.  It is better for buyers to try to sell their homes before house-hunting so they can "offer a clean deal to the seller," said Reynolds.

The clause pertaining to fixtures and fitting can often be highly contentious.  Sellers should specify exactly which fittings are to be excluded from the sale.  "If all aspects of the sale have been covered and written into the document, there will be very little room for either the buyer or seller to negate anything at a later stage.  For example, certain curtains or furniture may have been specifically manufactured for that particular home, so it would make sense for the seller to include those items.  "As a general rule, anything that is nailed, glued or screwed down stays and everything else can go," said Adrian Goslett, CEO of RE/MAX Southern Africa.

The most contentious clause is the voetstoots clause.  "This clause menas that the purchaser buys the property 'as is' in its current condition as a 'second-hand' property, thereby protecting the seller fro mpatent and latent defects," Reynolds said.  But sellers cannot rely on this clause to protect against defects that are known to them and which they are hoping may be overlooked by the purchaser. 

Sellers have to disclose all known defects.  If they try to conceal these defects, the purchaser will have a claim against the seller for fraudulent non-disclosure, Reynolds said.  The seller must inform the estate agent of any defects before the agent begins to market the property.  A critical final consideration is to ensure that the correct and authorised signatories have signed the agreement.  "If the parties are married in community of property, then both spouses need to sign," said Reynolds.

USEFUL TIPS FOR BUYERS FROM ADRIAN GOSLETT - RE/MAX OF SOUTHERN AFRICA 

• BE absolutely happy before you conclude the offer.  Once it has been signed and accepted by the seller you will be contractually obligated to that transaction.  Read each section carefully and make sure you fully understand what the document is saying.  If you are unsure of any clause in the document, ask your agent to clarify it.  You could even get a lawyer to read it and give advice where necessary; and
• Once the document has been signed, all negotiations have been concluded and any relevant cooling-off period has passed, your deposit should be placed into an interest-bearing account until transfer of ownership is complete.  The interest on this account will be for the benefit of you, the buyer, when it is released once the sale goes through.

Pull Up Your Credit Socks Before Trying To Apply For A Bond

FINANCIAL institutions have relaxed their lending criteria to some degree and have shown a greater appetite for risk this year, with the percentage of bond approvals growing monthly.

However, homeowners will still face relatively strict lending standards compared with the boom period - now and in the foreseeable future, says Adrian Goslett, chief executive of RE/MAX of Southern Africa.  He says buyers who want to improve their chances of bond approval will need to work on their credit fitness and improve their credit rating score.  "Banks generally look at how a prospective homebuyers has conducted their account over the past six months...  It is important that during this period no late payments have been made as this will negatively affect the applicant's credit assessment," says Goslett.

It is for this reason that he says if there are any unjust negatives on the homebuyer's account or credit score, they should query them and have them rectified.  "Consumers are able to obtain a free annual credit report from each of the respective credit bureaus, which they should do to stay informed about their credit rating," he says.

"Firstly it will give them their credit score and an idea of where they stand, and secondly it will allow them to see if the information provided to the credit bureau is correct.  "Potential homebuyers should lodge an objection against incorrect information such as late payments, collections that are not theirs or any items that have been paid on time and in full and do not reflect as such.  "It is important that the home buyer focuses on correcting the larger and more recent issues first.  if the buyer has a judgment against their name and the five-year data retention period has lapsed, they should have it rescinded as soon as possible because a judgment has a higher weighting than any other negative listing, and removing it will increase their credit rating." 

According to Goslett, the law states that consumers are entitled to the credit they can afford.  This means that if the homebuyer has any existing credit facility they are not using, such as clothing store cards, it will be taken into account when the financial institution is determining affordability.  He advises that where possible, these unused accounts should be closed. 

"The fewer different credit facilities you have the better.  However, this does not mean that homebuyers should consolidate all their credit but rather aim to reduce lines of credit, as the fewer they have the better.  "Credit cards and other forms of revolving credit could also reflect badly on a potential homebuyer because it indicates that they are in need of credit regularly.  If it is not possible to close these accounts, then it is important that they are managed correctly."

Goslett notes that paying down revolving credit is generally more beneficial than paying down other types of loans.  He says cards close to their limits should be paid down first to ensure a speedier credit improvement due to the gap widening between the limit and the balance on the card.  As a rule of thumb, always leave a 30 percent or higher gap between what you owe and the card's limit - lenders will look for this minimum gap. 

"If a homebuyer is applying for finance with their spouse or someone else who is standing as security, they should also ensure they have a favourable credit record as this will affect the approval process and have a bearing on the good impression the homebuyer is trying to create," advises Goslett. "It is vital that homebuyers take steps to ensure their credit record is in good standing to gain lender approval, especially if they are only months away from a purchase."

Depressed Property Market Good For Investors

Many of the world's key cities report strong residential property growth this year, although some markets remain under pressure due to the general flat economic climate.  Overall, home prices declined year-on-year in 2012 in the majority of international markets.  Depressed market conditions have, however, opened up major opportunities for savvy global property investors.

That is according to Vinnie Tracey, president of RE/MAX LLC, based in Denver, Colorado, America.  Tracey said that even though the American housing market hit bottom at the beginning of this year, for several months now, home sales and prices have been continuing to rise higher than the levels seen in 2011.  "It won't be a perfect 'V' shaped recovery, but the worst is behind us and, barring unexpected economic news, we should do better in 2012 than 2011.  We expect that 2013 will be even better."

Peter Gilmour, chairman of RE/MAX Southern Africa, says further recovery of the South African market has taken place this year.  "While challenging conditions have prevailed during the first half of 2012, RE/MAX of Southern Africa has seen a marked increase in the number of property sales achieved per agent."  RE/MAX Southern Africa reported a 12% increase on registered sales in the first half of 2012 compared to the first half of 2011, which far outstrips the national average of less than 5%.  Looking to Europe, which has possibly felt some of the worst effects of the global recession on property, Tracey notes that most of Europe has experienced fairly stable housing market, but economic problems have created troubled markets in places like Greece, Italy, Spain and Portugal.  "It will take longer for these locations to recover, with their housing prices still falling by double digit percentages.  RE/MAX has just entered the Chinese market and we see a great future there," said Tracey.  "The market has experienced a recent boom and is now correcting a bit, but foreign investment continues to be substantial."

The new RE/MAX franchise rights for China which include the Mainland, Hong Kong and Macau, have raised the overall RE/MAX country count to more than 85 - a larger global footprint than any other international franchise real estate company.  Looking at the new market trends emerging in America and globally in the aftermath of the recession, Tracey says that although lending standards have remained very strict in America, mortgage rates are at historic lows, and investors and foreign buyers have stepped in to help the recovery.  "Many are paying in cash, which is somewhat unique for the America market," he says.  "In many cities, there is now a shortage of inventory, and if not corrected, could lead to lower sales in future months."

Gilmour says South Africa is trading under similar conditions with a marked increase in activity in the property market due to a stronger demand from buyers and the fact that financial institutions have a greater appetite for risk.

The drop in interest rates to a 39-year low has also had a positive effect.  "The increased demand for property during 2012, as more buyers are able to meet the criteria required for bond approval, means that while there are still opportunities in the market in general, some regions have reported a shortage of certain types of properties that are available."

Tracey notes that distressed property sales in America remain between a third and half of all sales, while higher priced home sales are still a bit slow.  "As the market recovers and lending loosens, upper-end homes will start to sell and median prices will rise accordingly."

Similarly in South Africa, Gilmour says that while distressed properties are not expected to hit the 50% mark, the number of distressed homeowners will more than likely increase during 2012. "Times have been tough, and they are bound to get tougher yet," says Gilmour.  "Homeowners will continue to struggle to meet their financial requirements, and more homes are due to come onto the distressed property market this year as a result."

He believes that the distressed property situation will correct rapidly from the beginning of 2013, assisted by steady price increases in the lower price ranges and a resolve from homeowners to reduce their levels of debt.

The South African property market should remain on its current path of consistent improvement over the next 12 to 18 months, however, factors such as the high household debt-to-disposable-income ratio coupled with the fact that South Africans have a poor savings culture are holding the market back.
      

HOT STAT: RE/MAX RANKED TOP IN REAL ESTATE

GLOBAL estate franchiser RE/MAX is the highest ranking real estate organisation in the 2012 Franchise Times Top 200.  The survey is based on worldwide sales and RE/MAX has held the top position for four years in a row.  In the 12th annual Top 200 survey published in the October edition of Franchise Times magazine, RE/MAX ranked 16th a month all franchises.  Some of the top ranked franchises identified in the survey include McDonald's, Hertz, and Hyatt Hotels.

RE/MAX said it enjoys significant growth, adding that it recently announced that it will soon open in China.  In Southern Africa, sales are up 77% compared with the previous year, said Adrian Goslett, CEO of RE/MAX, Southern Africa.