Why you should insist that your buyer has been pre-approved

At this point in the South African property market cycle, it is particularly important for home sellers to work with agents who will only bring them offers from pre-approved buyers.

The reason, says Berry Everitt, MD of the Chas Everitt International property group, is that while there is plenty of buyer demand at the moment due to low home prices and low interest rates, many properties are still being “sold” three and even four times until a buyer can be found who does actually qualify for a home loan.

“This is a cause of unnecessary anxiety and possible financial stress for home sellers, and can largely be eliminated if your agent makes sure that a potential buyer has been pre-approved before writing an offer to purchase.

“It is also important for all parties to understand that pre-approval, often with the assistance of a mortgage originator, is not the same thing as pre-qualification.”

Writing in the Property Signposts newsletter, he explains that when buyers are pre-qualified for a home loan, it just means that they have been given an estimate of how much they should be able to borrow, based on basic information they have provided to a lender about their income, finances and credit record.

“The lender may not even pull a credit report during this quick evaluation and it does not take the buyers’ individual financial situation into account, so the main benefit is to the buyer, who now has a general idea of what price range of homes he or she should be looking at.”

Pre-approval, on the other hand, carries a lot of weight in the real estate industry, says Everitt. “In order to obtain pre-approval for a loan, the potential borrower must provide the lender with all sorts of detailed information and documentation including bank statements, salary slips and tax returns. The bank will also carefully check the applicant’s credit history, ability to pay a deposit if required and, in terms of the National Credit Act, his or her ability to really afford any monthly home loan payments without hardship.

“Once this process has been completed, the successful applicant will receive a letter from the lender confirming that he or she has been approved to buy a home for a certain amount.

“And while that obviously benefits the buyer once again, it is also of tremendous benefit to the home seller. Receiving an offer from a buyer who has been pre-approved in this way provides welcome assurance that he or she does actually have the financial resources, and backing, to go through with the transaction.”

Chas Everitt flag now flying in Polokwane

Two top agents have joined forces to launch the Chas Everitt International branch in Polokwane, the bustling capital of Limpopo.

They are Lynn Paul and Vincent Raphulu (see picture), both of whom spent several years working for other “big name” estate agency groups but recently decided to acquire the Chas Everitt Notebook® licence for Polokwane and work for themselves.

“The Notebook business model is perfect for start-up operations like ours,” says Vincent. “It is affordable but at the same time gives us access to the business support systems and marketing channels of a major national real estate company so we can guarantee that our clients’ properties get the widest possible exposure to potential buyers.

“And we really feel that with this sort of backing we will soon make a major impact on the Polokwane market.”

This market, he says, is increasingly active, especially in the R500 000 to R1m price range, which is currently attracting large number of first-time buyers.

“Some of these buyers are relocating here from the surrounding rural areas, but most are government employees who have been renting but have now decided to buy their own homes. And the majority of these buyers receive State housing subsidies, which makes it easier for them to get home loans.”

Relatively high rentals are driving many of the current sales in Polokwane, says Lynne, because there is a shortage of rental stock in some sectors, “but there is also a growing awareness that now is a good time to buy property – before prices and interest rates start to climb once more.

“In addition, Polokwane is thriving, employment opportunities are increasing and the population is growing, so that even new developments coming onto the market here are selling our quickly. It is thus a great time to open a new estate agency here.”

Chas Everitt International head of franchising Barry Davies says the Notebook® concept was specifically devised to enable top agents and independent principals to operate under the strong national brand and gain access to the Chas Everitt business systems, websites, marketing material and training courses at a much reduced entry and operating cost.

“It is most appropriate for those working in single suburbs, rural areas and smaller towns and cities where the sales volumes may not be large enough to justify the cost of establishing and maintaining a full franchise branch, but property sellers still deserve top-notch service and the benefits arising from our national and global marketing strength as a group.”

Chas Everitt earn “preferred agency” status for Boschenmeer Golf Estate

 The home owners’ association (HOA) of the prestigious Boschenmeer golf estate near Paarl has appointed the onsite Chas Everitt International office as its single “preferred agency” for the next two years.

“This is a real feather in our cap,” says Chas Everitt International MD Berry Everitt. “Boschenmeer is one of the top golf estates in the country and we are very proud of what has been achieved by Reon and Jaco Van der Merwe, owners of our Notebook® licence for the estate.”

Reon van der Merwe, a 25-year veteran of the real estate industry, is a specialist in marketing golf and lifestyle estates who decided a couple of years ago to focus exclusively on Boschenmeer and established his Chas Everitt office on the estate, which is in the winelands of the beautiful Paarl/ Franschhoek valley and bisected by the Berg River.

He explains that the preferred status awarded by the HOA gives his agency exclusive rights to sales leads passed on by the HOA, and also means that it is the only company allowed to erect sale boards at the gates, distribute marketing material in the estate and advertise on the Boschenmeer website.

“It also covers homes to let on the estate and we are also very excited at the prospect of adding some of the exceptional homes here to our rental portfolio.”

Boschenmeer, which is 140ha in extent and boasts a 27-hole golf course designed by David Frost, contains some 520 homes, separated into different nodes to suit different lifestyle requirements.

Incorporating elements of Tuscan, Victorian and Cape Dutch styles, these homes range from two-bedroom townhouses to spacious family houses and impressive mansions, many of them offering spectacular views of the Drakenstein mountains as well as the fairways.

Home prices start at around R1,4m and facilities on the estate include a high-tech golf academy and driving range, a state-of-the-art club house, a pool and floodlit tennis courts as well as conference facilities. Security is excellent, and the estate is within easy reach of Cape Town as well as the many excellent schools in Paarl.

Contact: Reon van der Merwe on 021-863 0099 / 082 896 2747 or visit www.chaseveritt.co.za

Top Johannesburg estate agency joins Chas Everitt

Johannesburg Southern suburbs real estate maestro, Jacques Bronkhorst, has elected to convert his long standing and top-performing agency to the Chas Everitt International brand.

A former winner of the national Property Professional of the Year award (2005), Jacques first made his name in Johannesburg’s new south through his own high-profile agency, Pulse Realty, which he started in 2002, before deciding to join another national group in 2007.

“And now it’s time to move on and grow again,” he says, “and my team and I are really excited about becoming part of Chas Everitt International . This group has a great national infrastructure in place and provides outstanding support to its franchisees, agents and clients. It is also way out in front when it comes to the application of new real estate technologies and in particular the use of online marketing.”

Berry Everitt, group MD of Chas Everitt International, responds: “We are absolutely thrilled to have Jacques on board as a new franchisee, as we have admired his talent, determination and achievements for many years. His agency is undoubtedly one of the market leaders in the southern suburbs and we have no doubt it will be a valuable addition to the group.

“More importantly, Jacques shares the family values expressed in our vision and mission, and through him, our brand will be expanded into this area with the utmost integrity.”

In addition to the new branding, there will be a few other changes at the agency in the next few weeks, including the return of Greg Simpson as manager. “Greg was here at the start of things, when we were still Pulse Realty, and in the past few years has added outstanding real estate training skills to his portfolio, so it will be great to have him back and it will enable me to spend much more time doing what I really enjoy, which is selling homes,” Jacques notes.

The agency, resplendent in its new signage, will however continue to serve real estate buyers and sellers right across the new south and in Alberton, including areas such as Glenvista, Bassonia, Mulbarton, Meyersdal, Brackenhurst and Brackendowns.

This is an active market at the moment, says Jacques, with sectional title units popular among first-time buyers starting from about R550 000, cluster homes available at prices from R1,3m and large suburban homes selling in the R1,5m to R1,7m range.

“It is still difficult for many buyers to access finance, and a significant percentage of sellers do still need to rethink their asking prices, but both buyer enquiries and sales numbers are on the increase and we are confident that with the backing of our new franchisor, 2012 will prove to be a very successful year.”

Get your Property on the ‘Net” to maximise your chance of selling

If your agent does not advertise your home widely on the Internet, you are quite simply losing out on the best chance you have of selling it.

“This is very clear,” says Berry Everitt, MD of the Chas Everitt International property group, “from the latest statistics released by the US National Association of Realtors (NAR) following its 2011 survey of more than 80 000 homebuyers.

“The results showed that while prospective homebuyers used multiple sources of information in their search for a property, far and away the most used sources were the Internet (88%) and estate agents (87%).

“What is more, the majority of home seekers (35%) went to the Internet as a first step in the search process, visiting property portals more than individual real estate company websites. Only 21% contacted an estate agent first, while 8% began by driving around their preferred areas looking for home for sale.”

Even more telling, he says, is the fact that 40% of the homebuyers surveyed by the NAR said they had found the home they actually ended up purchasing on the Internet, while 35% said they had found their property through an agent. Thus only 25% found their homes by other means.

“And although such exact statistics are not yet available for SA, we believe the preference for Internet searches is very similar, although print advertising does still have an important role to play here because easy and regular access to the Internet is somewhat less widespread among prospective buyers.”

Meanwhile, a just-released study by the Mortgage Bankers Association (MBA) shows to what extent buyers are still driving the market, despite a lack of access to finance.

Entitled “The Great Recession and Attitudes Towards Homebuying”, the study reveals that almost 80% of US households think that now is a good time to buy property, even though the country is battling high unemployment and slow economic growth, Everitt notes. Home sellers, on the other hand, are very negative about the market, with only 7% believing that this is a good time to sell.

“The study also shows that the positive sentiment towards home buying is particularly strong among young, well-educated households and attributable mostly to low home prices and low home loan interest rates. And once again, we believe we have a very similar situation in SA, with lots of demand evident and a significant increase in sales only being curtailed at the moment by the difficulties many prospective buyers are experiencing in obtaining home loans.

“This suggests that sales will spike as soon as SA consumers have completed the process of cleaning up their credit records and cutting their debt loads, which many have already been doing diligently for the past few years.”

“Pooling together to purchase property

Interest rates are low. Prices are low. Affordability is up, So why aren’t consumers and investors snapping up properties at a rate of knots?

“Quite simply, because most of them haven’t got the cash to pay the sizeable deposits the banks still require in most cases before they will approve a home loan – let alone enough to buy properties outright,” says Berry Everitt, MD of the Chas Everitt International property group.

.“However, there is a way to take advantage of the current buyers’ market in which cash is king and that is to pool resources by forming an investment group with a few friends or colleagues.”

Writing in the Property Signposts newsletter, he says that with a group of 10 people, for example, you could each contribute R12 000 to make up a 20% deposit on a R600 000 home (on which there is no transfer duty) and obtain a R480 000 bond.

“The monthly repayment on this, at current interest rates, would be around R4320 a month, and your group should be able to let the property to cover at least this.

“And gearing the purchase in this way would mean that if the value went up just 3% (R18 000) in the first year, you would each stand to make a 15% ‘return’ on your initial investment of R12 000, minus your share of the municipal rates, any levies, and upkeep.”

Everitt points out that there aren’t many places where you could safely invest your money to do better than that, but says you do need to make sure to have an attorney draw up a formal agreement for the group, and to enlist the help of a knowledgeable estate agent to find suitable properties to buy.

For more information visit http://www.chaseveritt.co.za

Bigger property deposits means bigger benefits

Many people are irked by the fact that 100% home loans are no longer freely available, but on the other hand it must be said that the bigger the cash deposit that potential homebuyers can make, the more benefit they will derive, even when interest rates are low.

 

That’s the word from Berry Everitt, MD of the Chas Everitt International property group, who notes that the latest statistics indicate that the average deposit now required by the banks has fallen from an average of around 18% a year ago to about 12%.

 

“This does of course make it easier for new buyers to get into the market, in the sense that they no longer need to have as much cash saved up and can buy now while prices are still low. However, the long-term implications may actually not be as positive, because no matter what the purchase price, a smaller deposit means a bigger loan, which means, firstly, that the borrower must earn more in order to qualify, and secondly, that the minimum monthly repayments will be higher.

 

“This, in turn, will restrict the borrower’s ability to pay the loan off faster and save a large amount of interest – a situation that may be exacerbated by the fact that the banks often charge higher rates of interest on low-deposit loans.”

 

Taking the example of a home costing R800 000, he says a 12% deposit would equate to a loan of R704 000 and a minimum monthly repayment of just over R6300, at the current prime interest rate of 9%.

 

“The buyer who pays an 18% deposit, however, will require a loan of just R656 000, and face a minimum monthly repayment of under R6000. He may well then be in a position to pay an additional R300 a month off his loan capital, which would enable him to pay off his home two years earlier and generate interest savings of about R108 000 – or more than twice the additional amount of deposit cash paid (R48 000).

 

“In short, it always pays to put down the biggest deposit you can muster, even when interest rates are low and there is an urgency to get into the market.”

 

Article Source: Chas Everitt Press Releases http://www.chaseveritt.co.za/html/press.html

 

Many property purchasing decisions linked to children’s needs

The most obvious result, says Berry Everitt, MD of the Chas Everitt International Property group, is of course the growing preference among those who can afford them for homes in gated estates and communities where children can safely play outdoors.

“Another is the rising demand for apartments and townhouses in complexes that have their own playgrounds, pools and perhaps even a crèche. And even in the suburban context, parents are increasingly looking for homes that are not only close to good schools but will also accommodate the need for their children to spend more of their leisure or play time at home.”

Writing in the Chas Everitt Property Signposts newsletter, he says some features that are likely to appeal to these parents include a safe back garden, spacious, sunny bedrooms, and an extra play space or “media room” where children can have their computers and play their own music without disturbing the rest of the household.

“And in cases where both parents of young children work away from home, additional accommodation for an au pair or a nanny is also a plus.”

Meanwhile, says Everitt, many families have to deal with the fact that grown children now tend to stay at home longer than before. “It is often simply unaffordable for them to live elsewhere while they study, or in rental accommodation while they save up for homes of their own.

“Consequently, homebuyers with teenagers now often choose homes with an eye to accommodating these young people at a later stage in a self-contained suite or garden cottage.”

Article Source: Chas Everitt Press Releases http://www.chaseveritt.co.za/html/press.html

Make a “hot” sale this summer

Sparkling sunshine and a neat and tidy garden are super property sales aids, but you’ll need more than that to please potential buyers in the summer holiday season – many of whom would probably rather be relaxing with a long cool drink than tramping around in the heat looking at homes for sale.

Here’s a few summer property selling tips from our top estate agents:

Manicure your lawn.
Grass grows faster in summer so you’ll need to mow more often – and keep it watered so it stays lovely and green. Nothing says summer – or boosts curb appeal – like a lush, velvety lawn, especially if it also contains a strategically placed deck chair or two in a shady spot.

“Keep your cool”.
If you have air-conditioning, turn it up to a comfortable level during showings so that your home will be a “refuge” from the heat outside. If you don’t have air-conditioning, open windows and get the air circulating with ceiling or stand fans to create a pleasantly cool atmosphere.

Get rid of nasty odours.
Heat brings out the worst of any smells in a home so it’s a good idea to have carpets professionally cleaned before your home goes on show and to really blitz notoriously odiferous areas like bathrooms, kitchens, laundries and teenagers’ bedrooms. It is much more important to get your home smelling fresh and clean in summer than to bake muffins or brew coffee.

“Let there be Light”.
Remove and replace any heavy curtains or dark window treatments. During showings, roll up or open any blinds to their maximum and keep lighter curtains well tied back. People are naturally drawn towards windows, so you should also get rid of any windowsill clutter and make sure that the panes are sparkling clean and the view beyond is enticing.

Go with the flow of summer.
Today’s property buyers are looking for extended living areas and summer is the best time to open up the sliding doors and show off outdoor spaces like decks and patios, complete with sparkling pool or water feature, attractive garden furniture and a table set for an al fresco holiday meal. Built-in braais or fire-pits, pool bars, lapas and gazebos are also great features that can really help sell your home in the hot season, but if you like entertaining, be very sure to clear up any party mess before potential buyers arrive.

Article Source: Chas Everitt Signpost December 2011  [http://www.chaseveritt.co.za/1211_1.shp]

 

Low bond to income ratio spells good times for homebuyers

It may seem hard to believe, but the average home price in SA today is more than three times what it was 10 years ago – despite all that has happened since the sub-prime crisis of 2008 plunged the world into a financial slump.

However, thanks to lower interest rates now than in 2001, you don’t need to earn three times as much – or more – to buy the average home.

“And that just goes to show,” says Berry Everitt, MD of the Chas Everitt International property group, “not only that it pays to invest in property for the long term, but also what a great purchasing opportunity prospective buyers have at the moment.”

The latest statistics from Absa, he notes, put the current average price of a small home (80sqm to 140sqm) at R754 000 – or more than three times the average price of R222 000 (also recorded by Absa) at the end of 2001.

The comparative pricing for medium-size houses (141sqm to 220sqm) is just over R1m now, on average, compared with the R289 000 recorded in 2001, while the average price for large homes (221sqm to 400sqm) has jumped from R408 000 in 2001 to the current R1,45m.

“So across the board,” says Everitt, “home prices have almost quadrupled in the past 10 years. And yet the current average monthly home loan repayment (on an 80% loan over 20 years) has not tripled or quadrupled from the R3000 a month recorded in 2001, but is only R8100.

“The difference is of course in the home loan interest rate, which averaged 13,8% in 2001 but has stayed steady at 9% this year – and has also helped to reduce the average home loan repayment, as a percentage of the average household disposable income, to its lowest level in more than 10 years.”

The decline in this ratio is an extremely important development, he says, because it makes it easier for buyers at all levels to meet the income qualification levels for home loans and will no doubt stimulate demand in the coming year.

“All things being equal, it should also prompt an increase in loan approvals, especially if wages and salaries continue to increase faster than home prices. In fact I would go so far as to say this represents the real turning point of the market, and that prospective buyers should hurry now if they don’t want to miss out on the next 10 years of value growth.”