It really is a buyers’ market
ROCK BOTTOM The extent to which the conditions in the South African residential sector are now in favour of buyers has not as yet been fully appreciated by many people trying to sell homes, says Tony Clarke, MD of Rawson Properties. “Twelve months ago in the Rawson Group we were finding that the difference between the asking and the achieved prices was on average 15% down on the asking price. An analysis of the latest figures shows that the difference is now 22%. This really is a buyers’ market — we have not seen so big a differential for 30 years.” He says properties are now on average taking four to five months to sell. A year ago the time-lag between their coming on the market and being sold was six to eight weeks. Not only is there ample low-priced stock available, but today’s prequalified bondholders are astute and are hunting for bargains. In addition, the market had been skewed by the large number of repossessed and distressed properties now for sale. “As many homeowners of repossessed units were on 90% to 108% bonds, and as the banks are often willing to settle for 10% below the bond value — not the house value — the actual decrease on the home value can be 30% or even more.”
All is not lost for self employed applicants
KEEP TRYING New statistics released by ooba show that self-employed South Africans are finding it increasingly difficult to have their home loan applications approved compared with their employed counterparts. The statistics show that 57,9% of self-employed applicants had their bond declined in the 2009/10 financial year, an increase of 2,4% compared with 2008/09. This compares with a 3,5% fall in the decline ratio for employed applicants in 2009/10 to 48,1%, from a 51,5% decline ratio the previous year. Saul Geffen, CEO of ooba, says that self-employed applicants tend to be viewed as a higher risk than employed applicants due to the perceived instability in income of these individuals, particularly in these challenging economic times. Geffen says that by using a bond originator, applicants can make simultaneous submissions to many lenders, which saves time and avoids duplication of documentation. “It is important that applicants are not disheartened by a decline decision and persevere with other banks.”
Keep your cool when lenders ask questions
HONESTY POLICY More financial institutions rely on automated credit-scoring systems when making lending decisions, but even these sophisticated systems can have trouble processing certain parts of your credit history, and it’s then that you’re likely to get a call asking for an explanation. “But this is no reason to panic about not getting the loan and certainly no time to get defensive and hot under the collar,” says Berry Everitt, CEO of the Chas Everitt International property group. “You may well have been very good about keeping your credit rating up by never borrowing more than you could afford and always paying your bills. But it is also quite possible that in the past few years you have made some payments late and that these are showing up on your record. It is important to understand that what credit bureaus and banks regard as late payments are those made more than 30 days after the due date on the account, and that most will require an explanation for such incidents, even if they seem minor to you.” The best course in these circumstances is always to tell the truth. Everitt says those with big credit problems in their past, such as bankruptcy or home repossession, should be totally honest and provide a full, detailed and documented explanation to their bank or originator. There is still a good chance of getting a loan if they can show their circumstances have changed for the better.
How to sell property long-distance
SELLING TIPS The sluggish property market may present problems when you have to move to another area before your existing house is sold. It is more difficult to sell your home long-distance, explains Richard Gray, CEO of the Harcourts Africa property group. There are a number of things sellers can do to improve the chances of selling quickly.
■ Try not to leave the property empty. A home that looks lived-in is more attractive to potential buyers.
■ If you do have to leave the home empty, carefully inspect finishes and repaint or install new carpets if necessary.
■ Leave burglar alarms in place. Let your rapid response company know that the property is vacant and supply your new contact numbers.
■ Arrange for a garden service to keep the lawn cut and garden tidy.
■ Cancel all deliveries such as newspapers, and arrange with your estate agent to collect any straggling post delivered to the old address.
■ Review your insurance policy to make sure that the property will remain covered even if you are not in residence.
■ Stay in close contact with your estate agent and get regular updates of how many people viewed the property and what comments they made. Address any criticisms as soon as possible.
Builder can refuse to leave a site until paid
STAYING PUT If he fails to receive payment, a builder can exercise his so-called builder’s lien by refusing to vacate the premises until he has received the payment due to him, says Andy McPherson, of Smith Tabata Buchanan Boyes. “A builder’s lien gives a builder the right to retain possession of property (the building site and what is built thereon) belonging to another (usually the property owner) until the outstanding payment has been made.” McPherson says that recently the Eastern Cape High Court was asked to adjudicate on a scenario in which a subcontractor stopped work and refused to leave the building site, retaining security guards on the site during the day, because of a dispute with the main contractor in respect of outstanding payments. The main contractor appointed new contractors to continue with the work. The initial subcontractor thereupon approached the court and argued that the appointment of the new contractors in his place constituted spoliation of his (up until that time) undisturbed possession of the sites while exercising his right of lien. He accordingly sought an order reinstating him in undisturbed possession of the premises. “The court granted the order and confirmed that not only the main contractor, but also a subcontractor, may exercise such a lien.”