Since May 2009 it has become compulsory for homeowners to be in possession of a valid Electrical Certificate of Compliance (ECOC). This document verifies that the electrical work and installations that have been completed on a property are up to the regulations required by the South African National Standards and are safe.
Why is an electrical certificate so important for a homeowner? Adrian Goslett, CEO of RE/MAX of Southern Africa, says that aside from the fact that the certificate is proof that the electrical installation is safe, the law requires a homeowner to be in possessions of an ECOC, as do home insurance companies. "If a property incurs any damage as a result of an electrical fault, the insurance company will require the homeowner to provide them with a valid electrical certificate. Failure to produce the document could result in the insurance company repudiating the claim," says Goslett.
Prior to the legislative change during 2009, and ECOC remained valid indefinitely and could be transferred without limitation, unless changes were made to the electrical installations. Essentially this meant that the seller could provide the buyer with same ECOC that was provided to them when they purchased the home, regardless of how long ago that was.
Goslett notes that these days, during the sale process of a property, the conveyancer would need to obtain the original ECOC from the seller before registration takes place. This means that the seller must get a certified electrician to inspect the electrical installations, if the ECOC in the seller's possession is older than two years or if any changes have been made to the electrical installations during this time. The original compliance certificate must eventually be retained by the buyer after it has been presented to the conveyancing attorneys, as legislation requires a property owner to produce a valid certificate of compliance on request to an inspector.
According to Goslett, it is the responsibility of the homeowner to check whether the electrician doing any electrical installation on their property is registered with the relevant authorities and has a wireman's license or is working under the direct supervision of an electrician with a wireman's license. If they do not have the necessary qualifications, they will be unable to provide an electrical compliance certificate on the work that they do. "The homeowner must also request to see the contractor's registration card and accreditation certificate. This is particularly important in light of the fact that electricians do not have to guarantee the electrical system is in working order, but only that it is safe, and the new requirement that a test certificate must accompany the ECOC," says Goslett.
He notes that once the ECOC has been transferred into the name of the new homeowner, any alterations made by the new owner to the electrical installation through renovation of the property, for example, will not be covered under that certificate and a separate certificate will be required to cover the additional installations. Goslett says that alternatively, the entire installation can be checked one the additional work has been complete and an entirely new certificate can be issued covering all the electrical work. "As a rule of thumb it is good maintenance practice to have the property re-inspected for wear and tear every two years, regardless of whether the owner is intending to sell the property or not. This will ensure that the wiring in the home remains safe during the period the homeowner occupies the residence," he says.
In the instance where the property is rented out, Goslett says that the owner is required to possess a valid ECOC for the electrical installation in that property and provide the tenant with a copy for their records. "According to the law, no property may be rented out without the landlord having a valid compliance certificate and rental agents are required to see the ECOC before they can assist with finding a tenant for the property," he concludes.
Friday 28 December 2012
TAKING ADVANTAGE OF THE CURRENT REAL ESTATE MARKET
There is no doubt that today's real estate environment is primed for buyers looking to take advantage of the recovering phase of the market cycle, says Adrian Goslett, CEO of RE/MAX of Southern Africa. The current market has brought about a price correction over the past few years along with low interest rate levels that were last seen four decades ago.
"However," says Goslett, "when it comes to entering the world of real estate investment, it is vital that potential buyers arm themselves with the correct tools to make informed and wise purchase decisions."
There are a number of aspects that property buyers need to keep in mind when they want to make the most of their investment options. Goslett offers some advice and tips for property buyers to consider:
Knowledge is power
It is an age-old adage that we have heard over and over again, and for good reason. If you think education is expensive, try ignorance. Goslett says that the key to any property investment in any market is to do the necessary research and never invest in something that you don't fully understand. He notes that in order to get the most out of a property investment, buyers should look at all aspects such as location, possible additional costs that they could potentially incur if they want to renovate the property and investigate the maintenance costs. He says that essentially, to make the best investment in the current market conditions, buyers need to know the true value of the property. This can be done by comparing the rate per square meter of properties of the same standard in the same area to help pinpoint the best value. Having knowledge will empower an investor to discern between a good buy and a bad one.
Seek advice from professionals
An experienced, reputable real estate agent with working knowledge of an area will be the best person to seek advice from regarding purchasing property in the suburb. Estate agents have a wealth of knowledge regarding the market along with access to a variety of statistics and property tools that enable them to correctly determine fair market value.
Use technology
Rapid advancement in technology has meant that vast masses of information are readily available at the click of a button. Goslett says that the internet can be a remarkable tool for property buyers to search for the property in various areas without having to leave the comfort of their own home or office. There is a large amount of information on almost every town or city online, which includes types of properties and pricing. Using the internet and property search portals will save the buyer precious amounts of time and money.
Only consider the facts
It is important for buyers to disregard the other, intangible factors and only base their decision on the facts. Goslett says that buyers will need to base their choices on figures that they know, rather than feelings they may have regarding a certain investment. He notes that not everyone sees things in the same way. "While it might be important for you to have a view, there is no guarantee that prospective buyers will value it as highly as you do when you resell the house," he says.
Focus on motivated sellers
Property buyers should ask sellers their reason for selling the property, as this will give the buyer an indication as to how eager the seller is to move. If the seller is relocating and has put down an offer on another property, they will be more likely to negotiate on the asking price.
Work with people you trust
A house is an expensive investment with great potential for building wealth if undertaken correctly, so getting the truth now can save you a lot of money in the future. Goslett says that this is why it is important for property buyers to work with people that they can trust.
"It is important to remember that property investments are cyclical, which means they will go through both highs and lows. It is for this reason that property should be viewed as a long term investment with property buyers only looking to see the true value of their investment after a period of five years at least," concludes Goslett.
"However," says Goslett, "when it comes to entering the world of real estate investment, it is vital that potential buyers arm themselves with the correct tools to make informed and wise purchase decisions."
There are a number of aspects that property buyers need to keep in mind when they want to make the most of their investment options. Goslett offers some advice and tips for property buyers to consider:
Knowledge is power
It is an age-old adage that we have heard over and over again, and for good reason. If you think education is expensive, try ignorance. Goslett says that the key to any property investment in any market is to do the necessary research and never invest in something that you don't fully understand. He notes that in order to get the most out of a property investment, buyers should look at all aspects such as location, possible additional costs that they could potentially incur if they want to renovate the property and investigate the maintenance costs. He says that essentially, to make the best investment in the current market conditions, buyers need to know the true value of the property. This can be done by comparing the rate per square meter of properties of the same standard in the same area to help pinpoint the best value. Having knowledge will empower an investor to discern between a good buy and a bad one.
Seek advice from professionals
An experienced, reputable real estate agent with working knowledge of an area will be the best person to seek advice from regarding purchasing property in the suburb. Estate agents have a wealth of knowledge regarding the market along with access to a variety of statistics and property tools that enable them to correctly determine fair market value.
Use technology
Rapid advancement in technology has meant that vast masses of information are readily available at the click of a button. Goslett says that the internet can be a remarkable tool for property buyers to search for the property in various areas without having to leave the comfort of their own home or office. There is a large amount of information on almost every town or city online, which includes types of properties and pricing. Using the internet and property search portals will save the buyer precious amounts of time and money.
Only consider the facts
It is important for buyers to disregard the other, intangible factors and only base their decision on the facts. Goslett says that buyers will need to base their choices on figures that they know, rather than feelings they may have regarding a certain investment. He notes that not everyone sees things in the same way. "While it might be important for you to have a view, there is no guarantee that prospective buyers will value it as highly as you do when you resell the house," he says.
Focus on motivated sellers
Property buyers should ask sellers their reason for selling the property, as this will give the buyer an indication as to how eager the seller is to move. If the seller is relocating and has put down an offer on another property, they will be more likely to negotiate on the asking price.
Work with people you trust
A house is an expensive investment with great potential for building wealth if undertaken correctly, so getting the truth now can save you a lot of money in the future. Goslett says that this is why it is important for property buyers to work with people that they can trust.
"It is important to remember that property investments are cyclical, which means they will go through both highs and lows. It is for this reason that property should be viewed as a long term investment with property buyers only looking to see the true value of their investment after a period of five years at least," concludes Goslett.
WHAT KIND OF BUYER WOULD YOUR HOME APPEAL TO?
When it comes to selling property in today's highly competitive real estate market sellers will need to have an edge to stand out from the crowd, says Adrian Goslett, CEO of RE/MAX of Southern Africa. The key, he says, is for sellers and their estate agents to make a distinction between the types of buyers they are targeting to order to market the property in the most appropriate way.
Goslett notes that establishing the type of buyer they are dealing with will assist in determining the buyer's needs and how they should be approached. He says that different features of a particular home will appeal to different kinds of buyers, depending on their criteria and type of property they are looking for. Goslett explains that generally property buyers will fall into one of four main categories:
Retail buyers
Although this type of buyer can be subdivided into smaller groups such as family buyers, young working couples, first-time or retired buyers, this is the average home buyer who is in the market to purchase a primary residence. They are buyers who have access to finance or enough money saved up to purchase a property cash. As the large majority of these buyers will require financing, an important aspect for this type of buyer will be the home's price and their level of affordability. Features that will be important to them will be proximity to their place of work and amenities such as schools, medical facilities and shopping centre's.
Buy-to-let investors
A property that can generate revenue while it appreciates in value over the long term is the main concern for this buyer. They are generally looking for a secure long-term investment that will be relatively low maintenance. Goslett says that these buyers are normally looking for sectional title units that require little or no renovation and can be rented out immediately to start earning income. In some cases they are also looking for larger homes that can be rented to upmarket tenants or students in a commune set-up.
Fix-and-flip investors
Fix-and-flip investors are normally full-time property investors looking for properties that are selling substantially below the market norm in a specific area. This type of investor will be looking for a property in need of renovation that they can restore and sell in a reasonably short period of time for a return on investment.
Hybrid buyers
According to Goslett, these buyers are not full-time property investors but they have 100% cash or a large deposit and good credit records. These buyers normally wait for the property market to fall or for a really good deal to come along before they make an investment. They generally prefer properties that don't require renovations and can be leased out as soon as possible.
Goslett says that although it is important for sellers to know the type of buyer they are dealing with, it is equally important that the seller is serious about selling their home and is open to negotiation. "With the market currently favouring buyers, sellers will need to be willing to negotiate. If a seller is merely putting their property on the market to see what they can get and they are not willing to budge on their asking price, it will be very difficult for them to sell their home, especially if their price is not market related," he says.
"A successful sales transaction occurs when the criteria of a buyer is matched by a property on sale from a serious seller. An experienced agent from a reputable real estate company can help to connect the right buyer with the right property and facilitate the sales process to ensure it is a hassle free experience," Goslett concludes.
Goslett notes that establishing the type of buyer they are dealing with will assist in determining the buyer's needs and how they should be approached. He says that different features of a particular home will appeal to different kinds of buyers, depending on their criteria and type of property they are looking for. Goslett explains that generally property buyers will fall into one of four main categories:
Retail buyers
Although this type of buyer can be subdivided into smaller groups such as family buyers, young working couples, first-time or retired buyers, this is the average home buyer who is in the market to purchase a primary residence. They are buyers who have access to finance or enough money saved up to purchase a property cash. As the large majority of these buyers will require financing, an important aspect for this type of buyer will be the home's price and their level of affordability. Features that will be important to them will be proximity to their place of work and amenities such as schools, medical facilities and shopping centre's.
Buy-to-let investors
A property that can generate revenue while it appreciates in value over the long term is the main concern for this buyer. They are generally looking for a secure long-term investment that will be relatively low maintenance. Goslett says that these buyers are normally looking for sectional title units that require little or no renovation and can be rented out immediately to start earning income. In some cases they are also looking for larger homes that can be rented to upmarket tenants or students in a commune set-up.
Fix-and-flip investors
Fix-and-flip investors are normally full-time property investors looking for properties that are selling substantially below the market norm in a specific area. This type of investor will be looking for a property in need of renovation that they can restore and sell in a reasonably short period of time for a return on investment.
Hybrid buyers
According to Goslett, these buyers are not full-time property investors but they have 100% cash or a large deposit and good credit records. These buyers normally wait for the property market to fall or for a really good deal to come along before they make an investment. They generally prefer properties that don't require renovations and can be leased out as soon as possible.
Goslett says that although it is important for sellers to know the type of buyer they are dealing with, it is equally important that the seller is serious about selling their home and is open to negotiation. "With the market currently favouring buyers, sellers will need to be willing to negotiate. If a seller is merely putting their property on the market to see what they can get and they are not willing to budge on their asking price, it will be very difficult for them to sell their home, especially if their price is not market related," he says.
"A successful sales transaction occurs when the criteria of a buyer is matched by a property on sale from a serious seller. An experienced agent from a reputable real estate company can help to connect the right buyer with the right property and facilitate the sales process to ensure it is a hassle free experience," Goslett concludes.
2013: THE YEAR OF TRANSFORMATION
Adrian Goslett, CEO of RE/MAX of Southern Africa, looks at the property sector moving forward in the era of transformation during 2013.
Despite the prevailing challenging economic circumstances experienced in the property market, 2012 has been a good year for RE/MAX of Southern Africa, says Adrian Goslett, CEO of RE/MAX of Southern Africa. He points out that during 2012 RE/MAX of Southern Africa has seen a marked increase in the number of property sales achieved per agent.
"During the first half of this year RE/MAX of Southern Africa saw a 12% increase in sales when compared to the same period of 2011. In addition, more than 25 new franchises opened in the Southern African region - which includes South Africa, Namibia, Botswana, Swaziland, Lesotho, Mozambique, Zimbabwe, Zambia, Angola, Mauritius and the Seychelles - up to the end of October 2012. The brand is continuing to grow its footprint that encompasses 170 office locations and over 1800 experienced estate agents," he says.
Locally RE/MAX agents account for approximately 6% of total agent numbers and for approximately 15% of all sales transactions. "The average number of years of real estate experience within the RE/MAX of Southern Africa group is over 10 years, and our average agent commission earnings up 31% in 2012, compared to the 2010 figures," says Goslett.
He notes that much like last year, 2012 can be called a success for RE/MAX of Southern Africa and its agents and it is expected that the company will continue to flout industry norms in 2013.
So what factors will influence the property market and those within the industry moving forward into 2013 the most? Goslett looks at a few elements that will influence the trading environment that property professionals find themselves in:
Access to finance:
Over the past year the rand value of the gross debtors' book for mortgages has shown an increase as has the number of applicants applying for bond finance. Goslett says that this is due to the fact that South Africa's financial institutions have marginally relaxed their lending criteria to the point where close on 51% of all home loan applications are approved.
Goslett points out that high debt-to-income ratios and a poor savings culture are the major reasons why many South African homebuyers have struggled to obtain finance. South Africa only has a domestic savings rate of around 20% of GDP, compared to other emerging markets like China which has a domestic savings rate of around 50% of GDP. "High debt and poor savings reflect negatively on affordability levels, which has held back the market and slowed down recovery. For this to change in 2013, South African consumers will need to focus on clearing their debt and starting a savings programme to ensure their ability to secure home loan finance in the future," said Goslett.
He adds that due to the limited access to finance, the rental market will continue to grow rapidly, which will assist investors who have a buy-to-let portfolio.
Deposits required:
While financial institutions will continue to have a greater appetite for risk, 100% bonds will still be few and far between in 2013. Statistics suggest that over the last 12 months only four out of every 10 bonds granted are for 100% of the purchase price. This means that six out of every 10 successful applicants have had to pay deposits to secure a property. The average deposit requirement for repeat buyers has risen to around 20% of the home's purchase price, in other words, buyers are required to have a fifth of the purchase price in cash. For the first-time buyers, who account for approximately 35% to 40% of the home loans granted each month, the average deposit required is around 12% of the purchase price.
Transformation in the industry:
A few years ago estate agent training and qualification were at the forefront of the industry and there was a stronger focus on the professionalism of the industry players with many agents achieving the necessary NQF levels required. Once again, 2013 will see the property industry transform, this time in the form of a revamped Estate Agency Affairs Board (EAAB). Goslett says that Tokyo Sexwale and the Department of Human Settlements are taking a proactive approach to resolving the issues within the industry and the EAAB with the focus on professionalism and transparency.
One of the goals of the EAAB will be to ensure that the property industry is more representative of all races and genders, with an emphasis on attracting the youth into the industry. The number of estate agents in South Africa has dropped from 80 000 in 2008 to approximately half that figure or less as a result of the global economic recession.
Goslett notes that real estate businesses that promote and encourage transformation will continue to thrive and gain support across the South African market spectrum. RE/MAX of Southern Africa has, for a number of years, been highly rated as a BBBEE organization.
Technology:
With the constant evolution of technological advancement, technology will continue to play a vital role in the property industry in terms of marketing strategy and interaction between real estate professionals and their clients. The trend of searching for property online will continue to gain momentum and more and more buyers will find their dream home through online property search portals.
Fair market value:
In 2013, property pricing and the perceived value of property will continue to be an important factor to the success of a sale. Statistically, if a property is priced correctly it will be sold within the first four weeks of being on the market and generally it will sell at the asking price. "Although sellers are the ones that set their asking price, property pricing within a certain market is largely determined by what a buyer is willing to pay for that property," says Goslett.
According to ABSA, the first ten months of 2012 saw house prices marginally down by around 0.6% year-on-year, while the FNB house price index revealed a house price growth rate of around 6.6% in August this year. The index's average price of homes transacted was R865 900. Goslett says that although house price growth has subsequently improved slightly, RE/MAX expects that trading conditions and the house price growth will remain relatively low during 2013 and follow a similar path to what we have seen during 2012.
"With property market activity and constantly increasing, so much so that certain areas are reporting stock shortages of certain types of property, 2013 is bond to a year of change with transformation coming to the fore of the property sector," Goslett concludes.
Despite the prevailing challenging economic circumstances experienced in the property market, 2012 has been a good year for RE/MAX of Southern Africa, says Adrian Goslett, CEO of RE/MAX of Southern Africa. He points out that during 2012 RE/MAX of Southern Africa has seen a marked increase in the number of property sales achieved per agent.
"During the first half of this year RE/MAX of Southern Africa saw a 12% increase in sales when compared to the same period of 2011. In addition, more than 25 new franchises opened in the Southern African region - which includes South Africa, Namibia, Botswana, Swaziland, Lesotho, Mozambique, Zimbabwe, Zambia, Angola, Mauritius and the Seychelles - up to the end of October 2012. The brand is continuing to grow its footprint that encompasses 170 office locations and over 1800 experienced estate agents," he says.
Locally RE/MAX agents account for approximately 6% of total agent numbers and for approximately 15% of all sales transactions. "The average number of years of real estate experience within the RE/MAX of Southern Africa group is over 10 years, and our average agent commission earnings up 31% in 2012, compared to the 2010 figures," says Goslett.
He notes that much like last year, 2012 can be called a success for RE/MAX of Southern Africa and its agents and it is expected that the company will continue to flout industry norms in 2013.
So what factors will influence the property market and those within the industry moving forward into 2013 the most? Goslett looks at a few elements that will influence the trading environment that property professionals find themselves in:
Access to finance:
Over the past year the rand value of the gross debtors' book for mortgages has shown an increase as has the number of applicants applying for bond finance. Goslett says that this is due to the fact that South Africa's financial institutions have marginally relaxed their lending criteria to the point where close on 51% of all home loan applications are approved.
Goslett points out that high debt-to-income ratios and a poor savings culture are the major reasons why many South African homebuyers have struggled to obtain finance. South Africa only has a domestic savings rate of around 20% of GDP, compared to other emerging markets like China which has a domestic savings rate of around 50% of GDP. "High debt and poor savings reflect negatively on affordability levels, which has held back the market and slowed down recovery. For this to change in 2013, South African consumers will need to focus on clearing their debt and starting a savings programme to ensure their ability to secure home loan finance in the future," said Goslett.
He adds that due to the limited access to finance, the rental market will continue to grow rapidly, which will assist investors who have a buy-to-let portfolio.
Deposits required:
While financial institutions will continue to have a greater appetite for risk, 100% bonds will still be few and far between in 2013. Statistics suggest that over the last 12 months only four out of every 10 bonds granted are for 100% of the purchase price. This means that six out of every 10 successful applicants have had to pay deposits to secure a property. The average deposit requirement for repeat buyers has risen to around 20% of the home's purchase price, in other words, buyers are required to have a fifth of the purchase price in cash. For the first-time buyers, who account for approximately 35% to 40% of the home loans granted each month, the average deposit required is around 12% of the purchase price.
Transformation in the industry:
A few years ago estate agent training and qualification were at the forefront of the industry and there was a stronger focus on the professionalism of the industry players with many agents achieving the necessary NQF levels required. Once again, 2013 will see the property industry transform, this time in the form of a revamped Estate Agency Affairs Board (EAAB). Goslett says that Tokyo Sexwale and the Department of Human Settlements are taking a proactive approach to resolving the issues within the industry and the EAAB with the focus on professionalism and transparency.
One of the goals of the EAAB will be to ensure that the property industry is more representative of all races and genders, with an emphasis on attracting the youth into the industry. The number of estate agents in South Africa has dropped from 80 000 in 2008 to approximately half that figure or less as a result of the global economic recession.
Goslett notes that real estate businesses that promote and encourage transformation will continue to thrive and gain support across the South African market spectrum. RE/MAX of Southern Africa has, for a number of years, been highly rated as a BBBEE organization.
Technology:
With the constant evolution of technological advancement, technology will continue to play a vital role in the property industry in terms of marketing strategy and interaction between real estate professionals and their clients. The trend of searching for property online will continue to gain momentum and more and more buyers will find their dream home through online property search portals.
Fair market value:
In 2013, property pricing and the perceived value of property will continue to be an important factor to the success of a sale. Statistically, if a property is priced correctly it will be sold within the first four weeks of being on the market and generally it will sell at the asking price. "Although sellers are the ones that set their asking price, property pricing within a certain market is largely determined by what a buyer is willing to pay for that property," says Goslett.
According to ABSA, the first ten months of 2012 saw house prices marginally down by around 0.6% year-on-year, while the FNB house price index revealed a house price growth rate of around 6.6% in August this year. The index's average price of homes transacted was R865 900. Goslett says that although house price growth has subsequently improved slightly, RE/MAX expects that trading conditions and the house price growth will remain relatively low during 2013 and follow a similar path to what we have seen during 2012.
"With property market activity and constantly increasing, so much so that certain areas are reporting stock shortages of certain types of property, 2013 is bond to a year of change with transformation coming to the fore of the property sector," Goslett concludes.
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