Category Archives: Buying property

Information, articles and news that is relevant to buying property in South Africa.

Homeloan deposits…any ideas?

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With the banks new tougher lending criteria and no change in sight most of us are looking for ways to finance or save for a deposit that will allow us to purchase property. Whether you are wealthy or just an average South African hoping to get into the property market it is alot tougher these days and may get even more so over the coming months and years depending on who you believe.

Some analysts reckon the market will recover by the end of 2009 and get a big boost next year with the advent of the 2010 Soccer World Cup and others believe it will take a further 4 to 5 years for any significant improvement to be visible. Whenever the recovery occurs most agree it is now a buyers market and those who can buy should do so. That brings us back to the question of how to finance a deposit that can be up to 25% of your prospective homes value.

We could save every cent we have available and still only be able to gather together enough money for a deposit in a few years time. By then the market may have shifted again and seen house prices skyrocket, isn’t there a faster legal way to finance a homeloan deposit?

If any of our readers have been able to finance a homeloan deposit in a way besides saving for years let us know how you did it.

Time to check out the property auctions.

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Most of us are by now aware of the prevalence of distressed selling at the moment. While it is very sad that the people who own the homes often have no choice but to sell because of their financial situation there are some great investment opportunities out there because of it.

Distressed selling is now even being seen in areas such as Franschoek,Clifton and Camps Bay, areas which were previously unaffected. Most of the properties sold at auction these days are to be considered bargains because of the poor growth in the market as of late and the fact that buyers are in short supply.

Many homeowners already had relatively large bonds and then also refinanced at some point generating even more debt for themselves. While most are hoping for a recovery in the market before the end of the year it may take a substantially longer time because of the global financial meltdown and the uncertainty it has brought with it. So we may see further increases in distressed sales and many more people turning to the rental market.

Investors who are in a position to purchase property at the moment would do themselves a great disservice if they don’t check out their local property auctions.

Buy or rent your home:tips on how to decide.

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Are you having trouble trying to decide on whether to rent a property or buy one, this can be frustrating to think about as there are positive sides to both arguments depending on your current circumstances. The following tips are given to try and help you in the decision making process. Answer the questions relating to them as objectively as possible and you will benefit yourself tremendously.

  1. The expenses you will be responsible for. When you rent a property the main expense you will be responsible for is paying your rent to the landlord on time. However when you buy a property you are not only responsible for paying the bond you are also responsible for the rates and taxes, levies and other charges relating to the maintenance of your property. Objectively assess exactly how many expenses you want to be responsible for and this will make your decision easier.
  2. How much of a commitment do you want to make to the property? When you receive a loan to purchase a home you are often bound to a 30 year commitment, financial and  otherwise. You can’t just vacate the property at a moments notice by simply breaking your lease. The bank will hold you responsible for payment until the property is sold. When renting you are bound to what is usually a 12 month lease agreement and all you need to do is make sure you pay your rent pay on time. Decide on how much of a commitment you are ready for.
  3. What will your monthly payment be? Renting will almost invariably be cheaper than paying off a bond every month, but at the end of paying off the bond you will have a great asset instead of helping someone else pay off their bond by renting. Work out your finances carefully and see exactly what you can afford to pay.
  4. Creating personal wealth. Do you wish to increase your personal wealth and perhaps build a property portfolio that you can enjoy and leave to future generations? Or are you not concerned with building wealth and happy with your life as it is?  Buying property has proven to be one of the soundest investments over the centuries, while renting gives you no investment advantage or growth in wealth over the long term. Decide what you want in the long term and start planning for it now.

Whatever decision you arrive at make sure you get the opinion of experts who are qualified to give you financial advice. Buying a property is a serious commitment but missing out on a potentially great investment because of poor advice is something most people will regret forever. Choose your advisers carefully.

What do our readers think? Is renting a property from someone else always a waste of money?

Negotiation tactics for the property investor.

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When trying to get the best deal possible we need to be fully equipped and when it comes to buying property one of your greatest tools is the ability to negotiate. If you are not confident when dealing with your business opposition you are likely to be walked all over and will end up coming second best.

Here are some great negotiating tactics:
1.Better offer: indicate a better offer from another party.
2.Better than that: Just say ‘You’ll have to do better than that…’
3.Biased choice: Offering choices that already include your preferences.
4.Bluff: Tell white lies that may influence their choice.
5.Cards on the table: You could use the honest approach to your advantage, let them know exactly where you stand.
6.Change the negotiator: Allow someone else to take over the negotiations, they may think of things you didn’t.
7.Check the facts: Have as much information as possible, you may find out something useful.
8.Deadlines: They may start feeling pressurised and make a hasty decision that is to your advantage.
9.Dry well: Let them see you are tapped out and have nothing more to offer.
10.Empty pockets: Plead poverty, let them believe you have reached your limit.
11.Flattery: This is the oldest trick in the book, but they may concede a few points if they like you.
12.Highball: Sellers–start high and you can always go down.
13.Hire an expert: Experts are a great asset when negotiating, whether they are builders or professional negotiators.
14.Incremental conversion: Get one person convinced and allow them to help you to convince the rest.
15.Information: Use survey results, financial projections and other information to show them you are more qualified to   negotiate.
16.Lowball: Buyers–start low and you can always go up.
These are just some of the tactics available to you. Experienced property investors will know when to use the different approaches, the more inexperienced will learn by watching others and getting advice from professionals like estate agents.

Everytime you negotiate a deal you gain some more experience and confidence. Without the confidence to use these tactics they are all useless. Remember you are the only one who has your best interests at heart and you need to make sure the people you employ to do a job are listening to what you want.

Buy-back agreements encourage creative negotiations.

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It is time for South African property investors to start thinking out of the box a bit and find new ways to make deals work better for them. Get creative and consider setting up a sell/buy-back agreement with your seller/buyer.

It could work for both you as a seller and you as a buyer. The basic idea is that the two parties sign an agreement that states that if a certain event occurs within a certain period of time the property will them be bought/sold back to the original owner for a specified price.

As a buyer you could get the seller to sign a buy-back agreement that states that if you are transferred to another province or city within 6 months of the purchase of the property the seller will have to repurchase the property at a price you have both agreed to.

As a seller you could try and get the buyer to agree to a sell-back agreement stating that he will sell the property back to you if , for example, your situation changes and you move back to the city the property is in.

There are many things that could be to your advantage and if you try and use a little foresight you could really come out a winner. As long as everything is legal and both parties are in agreement you could get a chance at owning your dream home again or protect yourself from getting stuck with a property you can’t use for an extended period of time.

As long as all parties involved are fully aware from the beginning of the consequences of the agreement it is a fair proposition. Get advice on the subject of sell/buy-back agreements from a qualified legal professional who has experience in setting up sale agreements and other property related legal agreements.

This could be just what you are looking for if you are trying to do everything to keep the home you love and have merely run out of time, it could be an opportunity at a second chance if your circumstances should change.

Are you an annoying neighbour?

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I am sure we have all been there, you move in to your new home start settling in and after a few months you realise what a huge mistake you have made, you have moved in next door to the neighbours from hell.

Now we all know about noisy neighbours, those people who feel it is well within their rights to play the loudest, most obnoxious, often out of date music as loud as they possibly can until 3 am. We have all been there and many of us have lodged complaints against such people only to have it happen again the following weekend.

But what of that sneaky neighbour who appears to be ideal put quickly becomes more of a pain than any noisy neighbour could be. I am of course referring to the “complain about every little thing” neighbour. These are people who pull out their ‘rules of conduct’ manual that the homeowners association abides by at every infraction.

I had one such neighbour a number of years ago, he was an older gentleman who spent the day at home and found every opportunity to lodge a complaint. We had complaints ranging from leaving for work too early in the morning and making a noise all the way through to talking too loudly in our living room. Utterly ridiculous complaints.

The same neighbour complained regularly about a man across the road who owned a Harley Davidson who was supposedly disturbing the peace just by leaving for work. As I was often at home to observe the Harley leaving I realised that while it was pretty noisy it was noisy for all of 7 seconds as it pulled out and drove away. It was not as though the gentleman was revving the engine for hours on end, he was merely using the vehicle.

Needless to say many of the things my neighbour complained about were not in the ‘rules of conduct’ or against the law and he eventually made life so uncomfortable for us that looked forward to the day we moved. What I am unsure of even to this day is what we could have done to protect our rights of enjoyment of our property.

Should we have laid a complaint of harassment with the police? Eventually it did feel as though we were all being harassed by one guy who had nothing better to do than make irrational complaints about things that happen in everyday life that he was apparently incapable of dealing with.

In conclusion, make sure you want to live in the neighbourhood you are looking at buying in. Are there alot of young people in the area that are likely to play loud music, are there alot of home mechanics making a noise early on a Saturday morning or would you really prefer to live in a house with a long driveway where your house is a kilometre away from the street noise?

Often it is easier to make your choice more carefully than to try and change the majority of your neighbours.

What do you think? Should we complain at every opportunity?

Property market suffers under tough lending criteria.

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Banks are reportedly denying 61.2% of bond applications. This is another setback for the already struggling South African property market.

Interest rate increases over the last few years made buying a home more costly than ever before which resulted in a slow down  in the property market across the entire country. Homeowners suffering under elevated interest rates were then unable to find buyers for their properties partly because of the high interest and partly because of the introduction of the National Credit Act (NCA).

The NCA was implemented to offer more protection to lenders and borrowers by imposing stricter lending criteria so that borrowers did not incur more debt than they could afford to pay back and so that the banks had more assurance of payment.

Perhaps an unforeseen consequence of this decision was the increasing pressure it would put on the property market.

Many people are calling for a relaxation of the lending criteria in view of current market conditions, they are hoping it will stimulate some much needed growth in a sector that has in the past enjoyed a reputation for being a wise investment.

However it does not seem as though the lending institutions are going to budge on their tough criteria because of the threat of major joblosses due to the global financial turmoil. Maybe once South Africa has a clearer picture of whether or not we are definitely in a recession they will re-think their policies.

What do you think? Will the banks relax their criteria soon?

The basics of living in a sectional title.

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There are a number of things to take into account when you buy a sectional title property. Most of the points listed below are there to protect you but also to ensure that everyone is treated fairly. Living in very close proximity to many other people, usually with just a wall between you, comes with a certain amount of stress but can also be an advantage when it comes to the security of your property.

  • The complex will have a set of rules, sometimes called house rules, that inform you of what is and is not allowed. It will cover topics like whether or not pets are allowed to live in the complex and whether or not washing may be hung out to dry on balconies. Some complexes have very strict rules regarding many things others will have a more basic list. Be aware of the house rules before you buy as it would be a shame to have to get rid of your cat if he is not allowed to live there.
  • The body corporate is a legal entity that is made up of all the owners in the complex. The body corporate will manage certain aspects of the property, like communal areas.
  • You, as an owner, will also have to pay a monthly levy to the complex on top of paying your bond. This money is used to maintain, improve and service communal areas of the property or things that benefit everyone, like the washing lines or gardens. If you or any other owner is in arrears with their levy payment it could lead to the bankrupting of the complex, therefore legal action can be taken against a person who is in arrears. Before you buy ensure you know exactly how much of a levy you will be paying and what it will be used for.
  • Communal areas are the areas of the complex that are available to be used by everyone. They are things like the outer walls, the roof, the braai area and swimming pool. Before you make any plans to alter your sectional title property make sure you know which parts are communal and which are not. You might be surprised.

Remember to visit the property at different times of the day before you buy it. This will clue you in as to what happens on a normal day. Are there noisy teenagers downstairs that blast their music out the windows every Saturday night? Are your immediate next door neighbours prone to loud fighting? If possible ask around the complex about any problem tenants they know of and then figure out how much these people will affect you.

Many people live very happily in a communal environment and with the expense of buying any property these days we may see far more people in the future living in complexes out of necessity. As long as you are aware of what you are getting yourself into, financially and otherwise, you will probably be quite happy.

Sectional title news.

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Sectional title owners need to be aware that as of 1 July 2009 they will have to pay their rates directly to the municipality, not through the body corporate as was previously allowed.

This is because the Municipal Property Rates Act No 6 of 2004 will come into full effect from 1 July. Some may welcome the switch but many sectional title owners will be unhappy about paying directly to the municipality.

The biggest concern they have is that they may end up paying far higher rates because each unit will now be individually assessed and rated. Many homeowners saw major increases  a few years ago when municipal rates started being based on the market value of their property. Many people will simply not be able to afford a rates increase at this stage and we may see a few extra sectional title units coming on the market after the 1 July deadline if the rates do end up going up.

Not paying your municipal rates is also a far more serious offence than people may be aware of. The municipality may instigate the forced sale of a property to recover any monies owed to them if the owner is in arrears. This would be a very unpleasant experience for any homeowner and one that should be avoided at all costs. So keep up with paying those bills.

Another thing that needs to be kept in mind is that municipal rates take precedence over the bond or mortgage of the home. This means the property can be sold out from under the bank if the unit is in arrears with the municipality.

If you are the owner of a sectional title unit that has yet to switch over to paying  rates directly to the municipality be aware that there is a deadline and start making provisions for a possible rates increase. It will serve you better to be prepared than to have a nasty surprise when the deadline passes.

What do you think? Will sectional title unit rates definitely increase with the change in billing?

Update your decor for a quicker sale.

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Nobody wants to imagine themselves living in a very dated home. Homes that still have posters hanging in them dating from 1987 that you only ever still see on the walls of less reputable hair salons.

It is important to update your home from time to time as it can affect a buyers view of the property. It is also important to note however that one should never get carried away with a trend and end up painting walls poison yellow just because it was fashionable. Some decor trends are hard to get rid of once you tire of them.

That said it is your home so for the time you live there make it your own, just make sure any decor changes are reversible so that others can imagine themselves making your old home their new home.

Here are a couple of decor ideas that should should stand the test of time quite well.

Colour is the best weapon in your arsenal, if you choose your colour palette right you will open up a world of possibilities for yourself  that take little effort to achieve. As you may imagine something neutral is usually your best bet. But neutral doesn’t have to mean bland beige, in 2009 there are a range of great colours available to you.

There is a vast array of neutral tones out there ranging from a slight rose tone all the way through to very pale green. The choice is yours and once you choose your base colour you can add fashionable highlights in golden greens, citrons, blue-greens,  blue-purple, oranges, wine, berry, tomato reds and earthy browns.

The trend of the season seems to be leaning toward an earthy feel that will include bronze trims and accessories. If you are on the more adventurous side you could choose to paint burnt orange accent wall and build your decor pieces around a Moroccan theme. Inspiration can be drawn from mosaic patterns, cultural design and eclectic combinations.

The biggest cultural influence of the season seems to be the Middle East, China and India. This is expressed most obviously in colour combinations traditional to these areas.

Imagine yourself relaxing in your beautiful Chinese inspired living room that all started with painting your wall a soothing pale green. All you have to remember is to keep your base colour the most neutral thing in the room and then to have fun with accessories.

Whatever your personal taste may be remember that everyone has a different opinion of what good taste is. Enjoy your home and your personal style while you are living there but when selling your home make it as easy as possible for buyers to imagine their own furniture inside.