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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.”

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