How to survive in tough times

The current property market can rightly be described as an arena where only the fittest survive.

Estate agency is no longer a simple matter of introducing buyers and sellers and letting the transaction take its course. Property consumers need and indeed insist on a variety of value-added professional services as the market becomes increasingly sophisticated.

Agents who want to stay the course should therefore sharpen their skills to stay ahead in very difficult market conditions. Continuous training is indicated to enable professional agents to differentiate their services from run-of-the-mill operations.

To this end, Aida is investing in training of our agents and is currently offering free training in ATS levels 1, 2 and 3 to ensure high levels of expertise throughout our network. It is an indication of our agents’ commitment that the courses have been oversubscribed and keenly attended.

These courses will serve as a sound foundation for further work towards attaining the NQF-4 level real estate certificate, the compulsory new qualification that all practicing estate agents must obtain.

Agents should also avail themselves of training offered at the Development Institute and Training Academy of Southern Africa (Ditasa), the property industry’s premier training institution.

Ditasa’s training is aimed at transforming the residential real estate market by establishing new levels of excellence and quality with specific reference to segments of the market previously associated with a lack of skills and infrastructure.

It is not an overstatement to say that a high level of professionalism across all sectors of the industry is indispensable for a successful future – and the key is training and more training.

 

Early settlements of bond - 90 day penalty interest

All agents should take note of the following information.

At the time of registering a bond, a client agreed with the particular financial institution to effect payment over an agreed period of time. When selling such bonded property, the bond will be cancelled on day of registration of the transfer.

However, would the bond holder wish to pay the full outstanding balance of the loan in one amount prior to the due date the bond holder is required to give the bank 90 days notice in writing of their intention to cancel the bond. This is to avoid an early termination charge.

The early termination fee is not a penalty imposed by the bank, but a recovery charge for the lost of interest income, which is specifically provided for in Legislation.

The process to determine finance charges that will be debited to your home loan account works as follow:

First of all there are two types of bonds according to the National Credit Act., Large Agreements ( value more then R 250 000.00 ) and Small or intermediate agreements ( Less then R 250 000.00 )

Large agreements ( More than R 250 000.00 )

• 90 days interest is calculated on the outstanding balance at day of notice;

• The provisional figure is added to the outstanding balance together with other allowances such as insurance and admin fees etc;

• On final cancellation, the unexpired portion of 90 days interest will be charged and debited to the bond account, and will be due by the bond holder;

Small agreements ( Less than R 250 000.00 )

There are no early settlement charges payable on a Loan where the capital amount is less then R 250 000.00

Our Advice to all Aida agents is the following:

• Enquire whether a bond is registered over the property to be sold;

• If there is a bond registered over the property for more then R 250 000.00
  Provide the seller with the “Notice of Intention to cancel the bond form”;

• After the client has completed the form, fax the form to the bank and call the bank to confirm that they have received the notice;

The Notice of Intention to cancel the bond form will be incorporated into the sellers pack in due course.

At this stage you are most welcome to contact Ross & Jacobsz on (012) 322 7007 ref: Renée Ferreira / Wouter de Vos and we will provide you with the form.

I do not believe that the agent can be held responsible by the seller if he did not inform him about his obligation to give the bank the necessary notice.

It is however a marketing tool that will ensure that Aida’s service and the service provided by their agents separate them from their competition.

If you have any queries or if we could be of any assistance to you please don’t hesitate to contact us.

Kind Regards
Ross & Jacobsz

J W DE VOS

 

Property markets

The FNB CPF Residential Building Cost Index – Second Quarter 2008
6 August 2008

Residential building cost inflation dips despite evidence of rising input cost inflation, a reflection of a very weak market.

FNB Commercial Property Finance’s (CPF) Residential Building Cost Index for the second quarter of 2008, constructed by Industry insight, indicates a mild slowdown in residential building cost inflation, after a mild rise in the first quarter.
The index reflects the average building cost per square metre, as charged by building contractors when winning tenders in the formal residential property sector. It excludes affordable and so-called “RDP” housing. The average building cost per square metre was measuredat R5,877 for the second quarter. Year-on-year, building cost inflation measured 6.3% for the second quarter, down from a revised 8.2% in the previous quarter. The inflation rate in the first quarter is a far cry from the 38.8% recorded at the last peak in the third quarter of 2006, reflective of very weak residential demand and low contractor pricing power. A mild uptick in the inflation rate in the first quarter raised the suspicion that rising input cost inflation was to start to have an impact, but the second quarter decline suggests that very weak residential demand may be offsetting this.

 

On a monthly basis we have seen a rise in the year-on-year inflation rate of the producer price index (PPI) for building materials from 7.9% in January to 12.3% in June, while we know that petrol and diesel price inflation rates rose sharply.
However, countering steady increases in certain input costs is steadily declining building activity in the residential market. For the first 5 months of 2008, the number of residential square metres completed fell by -10.7% while the number of square metres of plans passed fell by -21.5%. Such building sector slumps must be expected to exert significant pressure on contractor pricing power, making it difficult to pass on input cost changes to the end user.

Commercial building cost inflation appears more robust, reflecting a market less impacted by the negative economic forces

In contrast to the residential market, the commercial property market has held up substantially better during the recent period of economic deterioration and rising interest rates. As such, passing on of input costs by contractors should be somewhat easier than in the residential case. This appears to show in the FNB CPF Commercial Property Building Cost Index, whose inflation rate rose for the second consecutive quarter from 14.5% year-on-year in the first quarter to 19.8% in the second quarter.

 

Building activity in the first 5 months of the year has been more robust in the commercial property sector, with shopping centre completions up year-on-year by 19.5% (square metres) and plans passed by 68.5%. For office space the 5-month growth rate in square metres completed was 24.1% and plans passed 12.1%. Industrial space building activity has been the weak link, registering negative growth in square metres
completed for first 5 months of 2008 to the tune of -17.4% year-on-year, and plans passed down by -0.3%. Of the contracts awarded in the building cost index sample, the average per square metre cost of retail space was R7,506, for office space it was R6,848, and for industrial space R4,020.

Comment

On the residential side, the low rate of building cost inflation is believed to be reflective of very weak demand for residential property, as opposed to input cost inflation which may have been rising over the course of the year. Very weak contractor pricing power and significant input cost inflation is a recipe for a sharp slowdown in building activity. In addition, despite residential building cost inflation going through a low patch as of late, such inflation rates are still believed to be faster than the rate of price inflation on existing houses. This would imply that the differential between the price of new versus existing houses is increasing, i.e. new houses becoming
relatively more expensive than existing houses. This serves to further curtail the demand for new houses. The combination of the above leads to the belief that for 2008 as a whole we could see a decline in building completions beyond -20%, with further decline in 2009, only turning positive in 2010.

John Loos
Property Strategist:
011-6490125
john.loos@fnb.co.za

 

Gauteng investors active in Wilderness

GARDEN ROUTE (July 25) - In spite of a tougher market, Gauteng investors are still attracted by the wild beauty of the Garden Route – and particularly the quiet charm of Wilderness, according to Kallie Botes of the local Aida office.

Botes emphasizes in a company media release that upcountry buyers are targeting holiday homes in Wilderness, where there is a wide range of properties available at prices starting from around R1,6m and averaging about R2,5m.

He adds that the market as a whole is quieter due to rising interest rates and stricter lending criteria, which are keeping many prospective buyers on the fence while they assess their financial affairs and the impact further interest rate hikes could have on affordability.

“The upside is that we have good stock available, which affords buyers a wider choice in terms of price as well as variety, and this is what is attracting investors from Gauteng and other inland provinces.”

He says Wilderness remains one of the most beautiful coastal towns on the Garden Route, which accounts for the interest. “Wilderness still offers a peaceful atmosphere and its unspoilt nature accounts for much of its attraction.

“In contrast to the usual commercial offerings of many coastal towns, Wilderness has only a mini market for basic necessities and small street markets on Friday evenings and Sunday mornings. However, there is a good selection of restaurants.

 

How to save thousands on your home loan

Your home loan probably has a lifespan, of 20 years. Do you really want to be saddled with it for that period? It’s easy to dream, it’s a different matter to plan and then put that plan into action.
Just imagine if you could clear your loan in 10 years or, better still, five years

Just how much extra would you need to pay each month?

Take an average home loan of R200 000 at an interest rate of 15% over a period of twenty years. Your first installment will attract interest of exactly R2 500. Add your monthly home-owner’s insurance premium of, for example R200, and you have a starting debt of R2 700.
If you decided to pay an extra R2 400 , your installment would be R5100 per month. If you can afford this, you would be home-loan free in five years.
Here’s how it works. You may have noticed that the extra R2 400 is 1.2% of the original capital debt of R200 000. That’s the percentage you have to pay over and above the interest due on the total debt to clear any home loan in five years. If it is only R100 00, then it is an extra R1200 per month. If it’s R300 000, it will be R3 600.
You only need to work out what 1.2% of the total debt is once you start the programme. Add to that your monthly debts and your home loan is paid off in five years.

“You don’t have to take 20 years to pay off your home loan. Get it over and done with!”

What if interest rates increase or decrease? Her, another simple formula will help your calculations. If the interest rate rises 1% on a home loan of R200 000, incase your installment by R167 per month. R200 000 X 1%= R2000 per year, divided by 12= R 167 per month. In the same way, if the interest rates should decrease by 1%, you can reduce your installment by this amount.

The motivation to own a bond-free home

If you are determined to clear your home loan, follow these principles and watch it disappear. It will require a lot of self-discipline, and may mean a change in lifestyle and sacrificing luxury items. But it’s worth it.

Arrange a meeting with your bank today and share the plan with them, they will also provide the figures that will show you the massive savings you will make before and after the plan is implemented-or any permutations of it.
Do it now!

Fact file

You can settle your home loan account within only five years

Your bond R200 000 AT 15%		Your re-payment per month
R2500	Your term of payment	240 months
R2500	ADD R100	= R 2600 = 17 years
R2500	ADD R150	= R 2650 = 15 years
R2500	ADD R200	= R 2700 = 10 years
R2500	ADD R500	= R 3000 = 8 years
R2500	ADD R2500	= R 5000 = 5 years

 

Quiet Bela-Bela ripe for investors

Tougher market conditions are suppressing property prices in Bela-Bela in the Waterberg and creating good opportunities for investors.

“The whole Waterberg district is usually attractive to buyers because of the climate in general and the hot water springs in Bela-Bela particularly, but at the moment they are lying low,” says Corne van Rensburg, manager of the Aida Warmbaths office.

“They have adopted a wait-and-see attitude because of rising interest rates, inflation and fuel prices – and of course the National Credit Act has also put a damper on speculation.

“Most buying activity at the moment is among first-time buyers and retirees who relocate here and slackening demand has led to copious stock, including that in several security estates launched during the recent boom.

“Sellers are as a result achieving prices that are on average 10 to 15% lower than asking prices while some over-extended owners are selling and turning to rental accommodation.

“The result is two-fold: the rental market is booming and pressure on selling prices is creating good opportunities for investors with cash or who qualify for bonds. But this opportunity is unlikely to last very long since demand for rental units is pushing up rentals and we expect that people looking for accommodation might soon find buying a better proposition than renting.”

Van Rensburg says there are already indications that the marketing is getting ready to turn and that investors looking for bargains may have just a small window of opportunity. “The market is starting to show signs of recovery and we expect that it will start to stabilise from this month (subs: July 2008) onwards.”

House prices currently start at around R850 000 for fixer-uppers while resales of units in older security estates range between R850 000 and R1m. Building packages in new estates start at around R950 000 while established family homes in town cost around R1,2m. Luxury homes carry asking prices of up to R5m.

Process of buying a home

Purchasing a home and registering a bond can be quite confusing. However with Bond Choice, your consultant will simplify the process, keeping you informed throughout the property transfer and will be on hand to give you professional advice until the day you move into your new home.

Here are some pointers that describe the house buying process and your involvement in it, as well as give you insight into some of the behind the scenes activities.

Assess your financial position

As buying a property can be the biggest purchase you make in your lifetime, assess your financial position first and make sure you are ready for this commitment.

See how much you can afford

It's very important to know exactly what you can afford before you start house hunting. Bond Choice can offer you a free affordability assessment. We will also explain all the costs involved in buying a home, including up-front payments, monthly repayments and any other costs that may occur as a part of the property transaction. Follow the guide on the Cost of Financing a Home page to obtain an understanding of the costs involved in buying a home. It is important as the new National Credit Act wants to ensure you do not overspend and we can assist with a basic guideline on how to calculate the loan amount you can afford to repay monthly.

Choose an agent and view properties

Register with a few agents to ensure you are exposed to a variety of properties in your chosen area. Visit a number of homes before you make a decision. A Bond Choice consultant can assist you in finding a suitable agent in your area and will explain the different ownership options to you.

Sign an “Offer to Purchase”

Once you have decided on a property and signed an Offer to Purchase and the seller has accepted the offer and signed the document, the offer becomes binding by law and the transfer process can begin. There is however a cooling off period of 5 days for properties which are sold for less than R250 000, to allow you a grace period to review the property and the costs involved.

Obtain finance through Bond Choice

Your Bond Choice consultant will submit your application and the relevant FICA documents to one or more banks, which will assess the value of the property as well as your financial position. The bank will apply the credit assessment criteria as required by the National Credit Act and the financial risk criteria as stipulated in the bank's terms and conditions for lending.

Your Bond Choice consultant will then advise you of the offers they have obtained for interest rate and available loan amount, and will give you an informed recommendation.

Pay your deposit

Once you have chosen a bank, you will then (in most cases) be expected to pay your deposit to the attorneys dealing with the registration of your bond.

The property transfer begins

The bank will grant the loan and instruct the attorneys to start with the registration of the bond and transfer of the property into your name, as well as the cancellation of the seller's bond. They will also obtain the title deeds and the transfer and tax clearance certificates. Registration, transfer and cancellation take place simultaneously and require the services of up to three different specialised attorneys.

Transfer documents signed and fees paid

The attorneys will complete the necessary administration. You and the seller will need to sign the transfer documents. At this time you will be expected to pay the transfer costs, registration fees and an estimated share of the rates.

Registration documents are lodged at the Deeds Office. This is where the property will be registered in your name. Congratulations, the property now belongs to you!

Home loan comes into effect

Once you have received notification of the registration, your bank will pay the seller, or their bank, and your home loan will come into effect. The bank will notify you of this in writing and inform you when your first monthly instalment is due.

Taking occupation

You may take occupation as per the date agreed on your sales agreement. If you are already occupying the property, you will no longer have to pay occupational rent.

Who is involved in the purchase of a property?

• You (the buyer)
• The seller
• The estate agent
• The transferring attorney (also known as the con veyancer) - appointed by the seller
• The bond attorney - appointed by the bank granting the bond
• The cancelling attorney - appointed by the seller's bank, to cancel their bond

How can you speed things up?

• Get pre-approval for your home loan
• Provide all requested personal and financial information
• Pay your deposit, if any, as well as bond and transfer costs on time
• Sign all documents when requested

We are currently in the process of expanding the AÏDA footprint nationwide and you can play a major role in THE AÏDA FRANCHISE DRIVE. I attach a generic advertisement that can either be printed or forwarded by e-mail to any person you know who might be interested in purchasing a franchise in the areas where AÏDA has no representation.

We are presently focusing on the Johannesburg area (Sandton, Randburg, Rivonia), the Kwazulu Natal area (from Port Shepstone to Durban, from Durban further north up the coast as well as the Kwazulu Natal inland), Clairemont, Muizenberg, Pinelands, Franschhoek, Fish Hoek, Port Elizabeth, East London. Please do not hesitate to give this information to anyone outside of these areas as well.

An introductory commission will be paid to the person who provides me with a lead resulting in a successful franchise sale. The introductory commission will only be paid once the franchise agreement has been signed and the franchise fees has been paid.

Become part of the franchise drive and lets broaden the AÏDA footprint together.

Should you need any further information, please do not hesitate to contact me.

Regards Ester Odendaal
Franchise Development Manager

Comrades 2008

The 2008 Comrades marathon, uphill from Durban to Pietermaritzburg was held on Sunday 15 June in rather sunny and warm conditions, hence the fact that less athletes completed the race than in previous years. Just on 11 200 athletes entered for this great event.

Aida had a refreshment table (table 19) 37 kilometres from the start and a contingent of 85 represented Aida consisting of franchisees, managers, agents, families, friends and business partners from the KZN offices who assisted and contributed towards a wonderful day and successful event.

The ANF Head Office were represented by the CEO, Young Carr, the FSC for the region Me Gerda Bothma, Ops Manager Johan Boonzaier and Marketing Assistant Me. Antionet Potgieter.

The area was “painted red” through stunning branding material( banners, a- frames, gazebo’s, feathers etc.) and of course, the clothing, proudly presenting Aida’s 50th celebration. Everyone worked TOGETHER as a team in support of the athletes, bearing in mind that this is the most inclusive event of it’s kind in South Africa.
Aida was also the ONLY Real Estate Company to participate and were proud to be associated with this 83rd Comrades event, and as stated, celebrating 50 years of Real Estate Excellence to add to the glamour.
Approximately 350 000 spectators lined up along the route and 6000 volunteers helped with this major operation.
ANF wish to thank everyone for their contribution and participation and rest assured, we will be there next year again.

East Rand Mall Property Expo

Aida Boksburg hosted its annual property expo at the very popular East Rand Mall shopping complex. The Property expo was a success resulting: 3 sales, numerous referrals and 10 listings. Which our team is busy converting into sales. One cannot underestimate the power of top of the mind awake ness, and our clients were extremely impressed at the effort that went into giving their homes maximum exposure.

A big THANK YOU to Aida Pretoria as well as ANF for assisting us with stands and marketing material.

Aida supports the Letsitele kaskar - 26 July 2008

Aida sponsored one of their local Highschool's, Ben Vorster as a team for the popular Letsitele Kaskar which is held every year at the Eiland Resort. The Kaskar raises funds for the NG Church in Letsitele and has become known as an exciting event to look forward to every year in July.

Schools, businesses and even farms participate in the kaskar - they sponsor a team which consists of 40 people. The team is divided into 20 girls and 20 boys who make teams of 3 athletes. 2 must run and push the kaskar and 1 must steer. They do this is relays on a huge track which is jam-packed full of sponsors, spectators and supporters. The races are recorded on computer and is conducted very much the same as the Formula 1 Grand prix! Races take place in accordance of age and it is a very exciting affair. More than 40 teams participated on the day which raised many funds for the Church. This was the 9th Kaskar held.

Aida gave their Ben Vorster team lucky packets and handed out refreshing waters on the day. All in all the day was a huge success and Aida Tzaneen and Phalaborwa are proud to support the community for events such as these.

GO AIDA!!

Aida Tzaneen Bloodbank

Aida Tzaneen was challenged to donate blood by the
Round Table and were up for the challenge! They donated 9 pints
of blood and challenged a well known company in Tzaneen to do better.
Aida Tzaneen is often involved with community based projects and lends a helping hand whenever possible.