Powers of attorney…can this expedite the transfer process?

By Sarikha Singh

Powers of Attorney are often used in property transactions where one of the parties for example, lives overseas or is out of the country for a short period of time. Using a Power of Attorney can expedite transfer, but bear in mind that certain documents such as affidavits would still have to be signed in person, and authenticated at for example, an overseas embassy.

“Powers of attorney is normally drafted by a person who wants to make provision for someone else to manage their property and affairs. Often the intention is to cater for when they are no longer able, capable or available of doing so for themselves. They then give such authority to a family member, friend, attorney or financial adviser to do so on their behalf” says Karien Hunter, Licence Partner of Engel & Völkers Dolphin Coast.

In certain circumstances the banks would allow for the signature of loan agreements and bank documents under Power of Attorney. Powers of Attorney however lapses in the event of death or mental incapacity.

In simple terms a power of attorney is defined as:

A written document in which one person appoints another person to act as an agent on his or her behalf, thereby conferring authority on the agent to perform certain acts or functions on his or her behalf.

  • The person granting power to the agent does so in writing and in the presence of 2 witnesses.
  • Powers of attorney executed outside the Republic must follow the correct authentication processes.
  • In terms of the Deeds Registries Act 47 of 1937, a power of attorney to transfer a property, must be registered in the Deeds office.
  • The Conveyancer attending to the transfer will add the Power of attorney to his/her lodgement set.
  • The person granting the Power can do so only if he/she is over 18 years of age and have mental capacity. The agent receiving the authority to act, must also be over the age of 18.
  • Powers of attorney can only be granted in respect of actions that the grantor already have the right and capacity to carry out, and no more.

There are two kinds of powers of attorney:

  1. General Powers of Attorney

Under this Power of Attorney, the agent is given authority to act generally on behalf of someone else. A general power of attorney is wide and all-encompassing.

If a person wants the agent to sign documents or enter transactions or agreements on his or her behalf, then you a general power of attorney would be advisable. This allows the third party to authorise the transactions, agreements, or conduct various activities on behalf of the grantor and is generally used where there is a physical disability.

  1. Special Power of Attorney

Under a special power of attorney, the agent is given authority to act in specific transaction and the power to act would come to an end once such action has been performed.

Termination of the Power of Attorney

A power of attorney is generally terminated when the grantor dies or becomes incapacitated. The grantor can revoke the power of attorney at any time.

Home loan Interest Rates 101

By Veruska De Vita

Buying a house is one of the biggest decisions in life and, albeit an exciting one, it is not to be taken lightly especially when it concerns home loans, lending rates and repayments.

Here is a lowdown of everything you need to know about interest rates:

 Personal interest rate

A personal interest rate is as unique as a home and the individual who buys it. It is determined using a number of criteria and is based on the client’s risk profile. Interest rate is one of the key costs to consider when comparing home loans.

Prime lending rate, prime minus and prime plus

The prime lending rate is currently 10% and is effectively the starting point that banks use to calculate interest rates for clients. It covers the bank’s basic profit margin, which is then set higher or lower based on the applicant’s risk profile. A riskier individual would get an above-prime loan, which would be at prime plus, for example, prime plus 1% making it a lending rate of 11%. A low-risk client could get prime or lower, for example prime minus 1%, which means a lending rate of 9%.

What determines interest rates?

The prime lending rate is a marked-up version of the repo rate. The repo rate is the interest rate commercial banks pay to borrow money from the Reserve Bank. At the moment it is sitting at 6,5%.  By raising or lowering the repo rate, the Reserve Bank makes it more or less expensive for commercial banks to borrow money. This in turn affects how affordably they can lend money to consumers and this determines the prime lending rate.

The repo rate changes according to economic climate. Higher interest rates make borrowing money more expensive thus deterring people from making big investments, so there is less money circulating in the economy which slows down inflation. To kick start a sluggish economy, interest rates are lowered to encourage investment.

If the repo rate goes up, prime goes up and the amount you pay on your bond increases. If the repo rate goes down, prime goes down and those savings are passed on to you. For example, if your bond is prime plus 1% and the lending rate climbs from 10% to 10.65% then your monthly instalments on your bond increase, and vice versa if prime decreases.

A lower interest rate means more affordable monthly repayments as well as substantial savings on the total cost of your home over the lifetime of the bond. If there is a hike in interest rate however, it could significantly affect your cash flow as your bond repayments would increase.

 Fixed interest rates

Banks also provide the option of a fixed interest rate home loan structure, usually for a specific length of time of up to five years. This means that the interest rate doesn’t fluctuate during the fixed rate period, allowing you to accurately predict and plan for future payments as you will know exactly what your repayments are.

Gerrit Disbergen, Director of Engel & Völkers Financial Services says that usually, consumers fix their interest rate if they believe that the interest rate cycle is on an upward trajectory. This said, the decision to fix a home loan interest rate depends on individual circumstances and should be a carefully considered option. It is ideal for consumers who own multiple properties as the stable rates would buttress against future rate hikes. The disadvantage of this option is that it could result in the homeowner missing out on savings should the Reserve Bank decide to switch to an interest rate reduction cycle.

“At the end of the day, interest rate must work in your favour and fit in with your financial profile. Do your research and speak to a financial consultant and bond originator before deciding on a home loan option. EV Financial Services is well placed to assist you in obtaining the best interest rate for your home loan” Gerrit concluded.

Home loans – then and now

By Veruska De Vita

If you want to buy property, the good news is that banks are approving more home loans. The current stable-interest-rate lending environment coupled with slower growth in property prices means getting a bond for a home is notably more affordable now compared to 2017.

“The home loan approval rate is also the highest it has been in 10 years. One of the main reasons for this is that there is stronger competition amongst banks. This is beneficial to buyers as it means there is more opportunity to negotiating a home loan structure and lending rate that works in the your favour” says Gerrit Disberg, Director of Engel & Völkers Financial Services.

These days applying for a home loan is easier. Applications can be made through one mortgage originator who will then submit to all the major banks through their online system, no need for an individual to submit to each individual bank. In the past, the process of assessing a buyer in order to prove affordability was a painstaking and lengthy process. The method has changed significantly in the past decade.  People are making use of bond originators – originators provide a free bond application service through all the major banks on behalf of the buyer at no cost.  In essence, they are a broker between client and bank. It is the originator’s job to assist individuals to acquire the lowest possible home loan rate and to guide them through the process.

Bond origination companies are highly instrumental in the way in which the home loan origination process is handled. A good bond originator understands the landscape, they have experience and in-depth knowledge of the banks’ requirements and are familiar with lending criteria and legislation.

Why you should consider using Bond Originators

The services of a bond originator are beneficial as consumers no longer need to apply to each and every bank themselves in order to compare costs. Using an originator is the easiest, least expensive and most productive way of applying for a home loan. Only one set of forms is to be completed. Originators work electronically and banks are usually quick to process and respond to their applications.

“Primarily, an originator ensures that the buyer receives the lowest possible home loan rate, thus saving thousands of Rands over the bond repayment period. The client incurs no costs for the services, the bond originator then receives a fee from the bank once the loan application has been approved and processed” Disbergen concluded.

How to determine your return on an investment home

By Versuka de Vita

Owning properties can provide investors with steady rental income or capital appreciation when the property is sold for a profit. However, it is important to measure the return on investment (ROI) to determine the level of profitability of the property.

Before investing in a rental property, there are a number of key factors to take into account explains Craig Hutchison, CEO of Engel & Völkers Southern Africa. “Location and the future of the location is the first and foremost aspect to consider when purchasing an investment property that will result in capital appreciation. The next features to take stock of are fixtures and fittings. Are they durable and will you have high maintenance costs?”

“Thirdly,” says Hutchison, “establish if there is a demand for a particular property. Do your homework on the area and the types of properties that are in demand. It makes more strategic sense to invest in a two-bedroom unit instead of a three-bedroom house, if the demand for the former is greater.”

Lastly, Hutchison recommends that buyers look at a five-year view to invest as a minimum time frame. Ten years is preferable as this will generate a more valuable return on investment, as this should give the best capital appreciation on a well located and maintained property.

Below is an outline of how to calculate ROI

 Cash Purchase

  • If an individual purchases a property outright with no bond, the profitability or ROI is calculated as follows:
  • If a property costs R1 million and the transfer costs (conveyancing fees, transfer duty, deeds office fee and V.A.T.) are R30 000, the total investment is R1,03 million
  • Rent collection every month is R10 000.

In 12 months’ time as an example:

  • R120 000 in rental income is earned
  • However, there are expenses including maintenance, property taxes, levies and insurance which could total R24 000 per year or R2 000 every month.
  • The annual return is R96 000 (R120 000 – R24 000) for the year
  • The capital appreciation of the property after selling costs has increased by 3% equaling R30 900 (R1 060 900 – R1 030 000)

To calculate the property’s ROI:

  • Divide the annual return (R96 000 + R30 900 = R126 900) by the amount of the total investment (R1, 03 million)
  • ROI = R126 900 ÷ R1,03 million = 0.123 or 12.3%
  • ROI is 12.3%

If the property is bonded, the profitability is worked out as follows:

  • On the same property for R1 million there will be added costs, including conveyancing fees, bond initiation costs, deeds office fee and V.A.T.
  • In addition to these costs, buyers should also make provision for additional charges, which can include rates and clearance certificates and prospective taxes amongst others. These costs amount to R30 000 resulting in the total cost being R1,03 million
  • A down payment of R230 000 is made and the remaining R800 000 is bonded on a 20-year loan with a fixed interest rate of 10%
  • The monthly principal and interest payment would be R7 17
  • Add R2 000 per month to cover maintenance, property taxes, levies and insurance, which equals R9 17 in expenses every month
  • With a rental income of R10 000 the owner would make R279.83 each month (rent minus bond repayment)

One year later:

  • The investor earns R120 000 in total rental income for the year at R10 000 per month.
  • The annual return is R3,357.96 (R279.83 x 12 months)
  • The capital appreciation of the property after selling costs has increased by 3%  R30 900 (1 060 900 – 1 030 000)

 To calculate the property’s ROI:

  • Divide the annual return by the original out-of-pocket expenses (the down payment of R230 000) to determine the ROI.
  • ROI: (R3,357.96 + R30 900) ÷ R230 000 = 0.15
  • The ROI is 15%

 Things to Consider

As demonstrated in the examples above, the ROI for a rental property is different depending on whether the property is financed via a home loan or paid for in cash. It is also important to bear in mind certain variables such as if the property is vacant and there is no rental income for a number of months or maintenance costs are higher than anticipated.

Selling your home to overseas buyers

By Veruska De Vita

When it comes to selling property to overseas buyers, the world is quite literally your shiny oyster. South Africa is a sought after destination for various reasons. It has natural beauty that includes stretches of pristine beaches along the Atlantic and the Indian Oceans, the semi desert of the Karoo, the savanna of the Highveld and the Mediterranean climate of the western Cape. Yes, the Rand is volatile because the country is classified as an emerging market, but this also means that foreigners get excellent value for their Pounds, Euros and Dollars.

When sellers try to list it themselves on the internet, more often than not it is a hit and miss. Buyers and sellers must also be aware of scams. The best approach in terms of putting your property on the international market is to list it with a reputable, trusted multi-national real estate company such as Engel & Völkers. “E&V has a firm presence in 33 countries, over four continents, which gives a seller the ability to be in a potential buyer’s back yard, so to speak. The listing is in their language, they are viewing the property through a trusted real estate company and person” says Craig Hutchison, CEO Engel & Völkers Southern Africa.

In terms of buying trends the market has cooled down dramatically. With the political upheaval, the volatility of the Rand compared to other currencies and general political uncertainty has resulted in people being more cautious, especially where it concerns the Western Cape and other regions that may be affected by land expropriation.

“Foreign investors are taking a wait and see approach, especially if it’s their first foray into the country. Those who have already invested in property in South Africa are less concerned as they have visited the country, they’ve experienced the process and realised the worth of property ownership in this market,” explains Gerrit Disbergen, Director Engel & Völkers Financial Services.

Foreign investors who are buying their second property are a lot more accustomed to what is happening on the ground as opposed to relying on a variety of news sources, which currently tend to paint South Africa in a negative light.

The investment trend is directly related to the instability of the Rand. When it goes through a period of significant volatility, buyers may be more reluctant as they want to see which way it is going to go.

However, if foreign investors are willing to take a long-term view of the situation, politically and in terms of currency fluctuations, the benefits are enormous. “If you have a long-term view you get bang for your Dollar, especially if you will utilise the property and live in South Africa on a semi-permanent or permanent basis. That’s still a definite,” concludes Disbergen.

A first for South Africa – bathroom taps that combine style with water-saving technology

By Veruska de Vita

Building a brand new home or looking to do a bathroom makeover? Then carefully consider the types of taps and faucets to install. There are myriad selections to choose from and it helps to narrow it down so that your final purchase consists of fixtures that not only look fabulous, but are of exceptional quality and do much more than just ensure that your hot and cold water balance is just right.

Wendy Williams, Director of Engel & Völkers Southern Africa explains that a common thread that has been evident in bathroom design trends for 2018 is that homeowners are relying on tech, tiles and bold accents to make their bath time more engaging for the senses.

“Consumers are looking for fixtures that are not only stylish, but also functional. For faucets, this means advanced and enhanced functionality, innovative spray patterns that reduce water wastage, unique designs, self-cleaning and touch or hands-free activation. Consumers are looking to streamline without compromising quality, looks or longevity,” says Williams.

“Many buyers and investors look for homes that are already water wise or can be converted into a water-saving property with minimal additions and alterations, especially in areas such as the Western Cape. Technologically advanced, water-wise bathrooms can be a dealmaker in these instances,” continues Williams.

Water-saving functionality

Considering our country’s limited water resources, multi-national kitchen and bathroom brand Kohler has designed several solutions to avoid water wastage. A first in South Africa, their anti-drip technology reduces water wastage in showerheads. A self-levelling ball joint reduces water dripping by up to 80% when closed and the increased number of nozzles also means an enhanced showering experience.

Coupled to this is another design improvement featuring air-induction technology that infuses 2 litres of air per minute into the water droplets making them larger and warmer for a more luxurious experience. Kohler’s latest range also includes RaceTrack technology showerheads that provide an even and more consistent spray for optimal coverage, thereby reducing overspray and unnecessary wastage.

Another water saving feature, called Kohler’s Detent Technology, is an intermediate stop built into tap levers for an up to 50% water saving. This design trait means that you can use taps in intermediate and full-flow modes.

Bathroom Design

“Home owners need to think smart when it comes to bathroom design and fixtures. Bathrooms are a space for renewal, an escape from the humdrum and these non-tactile elements need to be considered. Water saving is also a reality and this needs to be incorporated so that we can still enjoy its effects,” says Heather Darby of Bathroom by Design.

“Incorporating technology to offer improved convenience to the user is one of the most prominent trends in faucet design right now. And looking into the future of bathroom design, water saving technology will become an integrated feature,” continues Darby.

Smart bathrooms are also fast emerging as a trend and Kohler will be launching a range of new products in the coming months, allowing home owners to control a number of aspects of their bathroom, with a simple command from their mobile phone.

From faucets that can deliver a specified volume of water on demand to touchless faucets in residential bathrooms, the presence of technology will only continue to grow in the coming years. This is particularly good news if the future also means water restrictions and a deliberate shift towards water conservation.

Live, work and play lifestyle in Johannesburg South

The southern suburbs of Johannesburg have undergone significant growth over the past two decades with retail and residential development, and older suburbs experiencing a resurgence. Johannesburg South is rich in history and culture and is surrounded by the natural beauty of hills and wildlife reserves. The scenic landscape is part of what makes the area so attractive, together with its proximity to Sandton and Soweto. “The South” as it is commonly known, is divided into two main parts – the older part on the north side of the N12, and the newer part on the south of the highway. Johannesburg’s southern suburbs offer a variety of property from freehold houses to sectional title apartments and townhouses. The area boasts the recently developed Meyersdal Eco Estate and Eye of Africa Golf Estate as well as residential developments aimed at the R1.5 million and below price range.

The neighbourhood has an array of malls, schools and social amenities. Furthermore, a variety of recreational activities such as cycling, golf, bird-watching and hiking are within easy reach. So too is Gold Reef City and the Johannesburg CBD, which has become a hotspot for dining out and entertainment. “Recent years have brought extensive property development to Johannesburg’s southern suburbs due to property buyers ‘rediscovering’ the neighbourhood. The area offers affordability and value for money and continues to attract young executives and families,” says Craig Hutchison, CEO of Engel & Völkers Southern Africa.

 Focus on Oakdene

Lying in the South of Johannesburg, Oakdene is nestled amongst the neighbouring suburbs of Linmeyer, Rosettenville, Glenanda and Bassonia. The area is picturesque with hills and nature reserves making up part of the unique landscape. Oakdene is close to the Johannesburg CBD, an area which has been reinvigorated and is now a popular dining and entertainment hotspot, with hip restaurants, cinemas, rooftop markets and more on offer.

The leafy, well-established suburb is a mere five kilometers from Gold Reef City and a 20 minutes’ commute to OR Tambo International Airport. Part of the City of Johannesburg Metropolitan Municipality, Oakdene is a reasonably valued, family oriented, middle-class suburb ideal for new or growing families and those in corporate positions. The market in Oakdene has definitely seen a shift in the past few years. Entry level apartments start from around R720 000 and can go upto R1,5 for more luxurious options. Whilst your freestanding properties average around R1,6 to R2 million with the top end standing at over R5 million.

 Ideal for Young Couples and Singles

Selling and buying trends show that the 18 to 35-year-old age group as well as the 36 to 49 age group are the predominant buyers and owners of residential property in Oakdene, giving the area a very particular, youth-orientated and vibrant culture. Craig explains that residents of the area have been drawn to it because of various factors that include the practical proximity to important amenities and activities, as well as affordability and developmental opportunities in the area. “People are also attracted by more abstract, but no less tangible, factors such as vibe, scenery and ambience. These elements are equally important to a sound investment, as they offer a lifestyle opportunity to mix and mingle with like-minded individuals,” Hutchison adds.

 Stanley Park Estate

Engel & Völkers is selling Stanley Park Estate, which is situated in Oakdene. The estate is positioned in a prime location with easy access to major highways and roads, namely the N12 and consequently the M1 as well as Sandton and Rivonia via the N1 Southern Bypass. Stanley Park attracts young couples as well single people entering the middle-class sectional title market and the rental market, as the estate offers excellent long-term investment prospects. The Estate includes 24-hour security, gas hobs which are extremely cost-effective and energy-saving, a clubhouse, swimming pool, braai facilities, and communal gym for the fitness fanatics and easy access to public transport. With regard to architecture, Stanley Park offers ultra-modern, stylish and first class living with breath-taking views. One, two and three bedroom apartments are on offer and each unit is equipped with a gas hobs and electrical oven, the kitchen has been especially designed to allow space for three appliances and prepaid electricity and water units have been installed. Each unit also includes DStv points, is internet fiber ready and has covered parking and ample visitor’s parking for guests.

 Affordability and lock up and go Lifestyle

With affordability considerations making sectional title properties the preferred entry point for first-time buyers and investors, demand for such properties is set to remain brisk for the imminent future. Sectional title properties offer sound capital growth and in line with this, price growth in this housing segment is still outstripping growth in freehold prices. “The demand for convenient, hassle-free sectional title units accessible to the workplace and all amenities continues and Stanley Park Estate in Oakdene fits squarely within this rising trend. It offers modern design, convenience and access to a plethora of entertainment options all ideally suited to a hip, contemporary, lock up and go lifestyle,” Hutchison concludes.

For more information, go to www.stanleypark.co.za

Midrand – Growing property investments potential

By Veruska de Vita

Gauteng has been undergoing massive infrastructure upgrades and residential development over the past two decades with Midrand being one of the key corridors earmarked to lead this growth plan. In the last two decades Midrand has enjoyed exponential growth and continues on the upward trajectory, with plenty of room and opportunity for investment. The area has grown into a residential and commercial hub with executive office parks, malls, social amenities and a diverse spectrum of residential offerings.  Underpinned by ongoing rapid commercial growth, Midrand remains an attractive area for first-time buyers and investors.

“Midrand offers a range of price points in terms of residential property and this attracts a cross-section of buyers. The strategic location of Midrand makes it a very desirable area for families wanting to buy property as well as investors looking for high yield investment opportunities. There is no doubt that the area is positioned for a positive long-term outlook,” says Sancha Olivier, Project Manager of Engel & Völkers Developer Driven Projects.

Focus on Clayville

Clayville, an area of Olifantsfontein, is in the heart of Midrand and falls under the Ekurhuleni Metropolitan Municipality. It is poised to be the next residential hub. Areas of Clayville have been staked as part of the Clayville-Tembisa Mega Housing Project, which will benefit the entire area by undertaking urban renewal, creating employment opportunities and the upgrading of infrastructure.

Clayville is a peaceful, safe and quiet suburb conveniently situated on public transport routes, with easy access to the N1 and R21. The area is surrounded by a number of convenience and regional malls including Blue Hills shopping Centre, Boulders, Carlswald Lifestyle Centre, Tembisa Phumulani Mall as well as the shopping and entertainment destination that is Mall of Africa.

In terms of positioning, the suburb is a mere 20 minutes’ drive to either Pretoria or Johannesburg CBD, 40 minutes’ away from Sandton CBD, a 15 minutes’ drive to OR Tambo International Airport and just 20 minutes from Midrand Gautrain station.

There is plenty to do around Clayville, families can take a day outing to the Stoke City Adventure Park, plan a trip to the local library and in summer enjoy a day in the sun at the Olifantsfontein communal swimming pool.

Midrand Village the perfect choice for a family or property investors

Positioned in Clayville, Midrand Village offers an excellent selection of properties for the first-time home-owner as well as investors wanting to expand their rental portfolio. Midrand Village is a private and neat 24-hour security, access controlled estate with patrolling guards for added peace of mind. It comprises 335 uniquely designed free-standing homes with modern interior finishes and spacious, walled-in gardens for extra privacy. Midrand Village is a pet-friendly estate that offers a safe environment for children and includes open park areas, a soccer field and a jungle gym.

The units vary between 2-3 bedrooms, 1-2 bathrooms, with either a covered, lock-up carport or garage. All units have functional open plan kitchens and spacious living areas, energy saving solar geysers and prepaid electricity metres. Stand sizes range from 326m2 to 1355m2.

Midrand Village offers an authentic neighbourly atmosphere and a true sense of belonging.  From a game of soccer on the communal areas to moms meeting at the jungle gym for a chat, it’s a way of life that connects like-minded residents. In the estate, the diversity of cultures creates a sense of community, safety and security which is very satisfying.

“Buyers don’t simply look for bricks and mortar, they buy lifestyle. They want a home in an area that has excellent infrastructure, amenities, schools, malls and are central in relation to business hubs. They want to be part of a community. Well-located urban properties, such as those on offer within Midrand Village, provide buyers with a desirable lifestyle and sound investment returns over the long term,” concludes Olivier.

For more information, visit www.midrandvillage.co.za

Marketing you home to the right buyer

In the competitive real estate market, agents need to have an advantage when selling property. Getting in the mind of the perfect buyer and figuring out who they are and why they would want to buy a specific home is key.

“When marketing a home focus one needs to try and determine the profile of the buyer for the specific property. In order to attract the right buyer the marketing needs to be focused and directed to that targeted audience which will result in a quicker sale, not leaving the property over exposed. We at Engel & Völkers make use of various analytics & tools in order to determine this buyer pool so that our sellers receive optimal exposure for their properties” says Craig Hutchison, CEO Engel & Völkers Southern Africa.

Sellers and agents need to establish and understand the persona of the buyer they are dealing with which will assist in determining the needs of the buyer and how they should be approached. We take a look at some buyer personas and what they entail.

Move-Down Buyers

  • High net worth professionals who are looking to downsize from their larger homes after they have retired or their children have moved out.
  • They are generally selling their luxury homes and buying smaller, pared-down homes that are easier to maintain, they’ll appreciate plenty of amenities and easy access.
  • These buyers will enjoy being in a quiet location that offers easy access to parks, trails, coffee shops and restaurants.

First-Time Buyers

  • Middle-class families who are looking for a foot in the door to home ownership based on affordability.
  • These buyers are looking for a comfortable, liveable home and are likely to be drawn to homes with large gardens that provide plenty of room for gardening and space for children to play.
  • Generally want at least two bedrooms and two full bathrooms to accommodate expanding families and room for visitors to stay.

 Move-Up Buyers

  • Professionals who want to trade their existing homes for larger, more luxurious houses due to a change in income, new baby or marriage.
  • They are looking for a home that allows them to live the lifestyle of their dreams.
  • Their must-have features include modern kitchens, luxury bathrooms and a pool and will appreciate modern, high-tech design.

 Luxury Buyers

  • High net worth individuals or international professionals who may have several homes.
  • They are happy to spend the money needed to secure a home that offers luxurious amenities such as heated floors, open floor plans, chandeliers and large bathrooms.
  • Often look at many homes before committing to a specific location and may have a long list of requirements for their new home.

Investor Buyers

  • High net worth real estate investors who specialize in buying and selling homes. These buyers often have many homes in the area and want to purchase another home to flip or rent to middle-class families or professionals.
  • When it comes to purchasing a home, these buyers are receptive, sharp and attentive, although they are generally also thrifty and savvy.
  • For an investor buyer, one of the most important traits a house can have is a good location at a decent price.

Retail Buyers

  • This is the average home buyer who is in the market to purchase a primary residence.
  • They are buyers who have access to finance or enough money saved up to purchase a property for cash.
  • An important aspect for this type of buyer will be the home’s price and their level of affordability as well as the proximity to their work and amenities such as schools, medical facilities and shopping centres.

Buy-to-let Investors

  • A property that can generate revenue while it appreciates in value over the long-term is the main concern for this buyer.
  • They are looking for a secure permanent investment that will be relatively low maintenance for instance sectional title units that require little or no renovation and can be rented out immediately to start earning income.
  • In some cases they are also looking for larger homes that can be rented to upmarket tenants or students in a commune set-up.

Rent to Own

  • Is normally a buyer who wants to buy but is not ready to do so yet.
  • This buyer typically has credit issues and will need time to fix it up in order to qualify for a loan.
  • This is also called a lease option buyer.

Fix-and-flip Investors

  • Full-time property investors looking for property that is selling substantially below the market norm in a specific area.
  • This type of investor will be looking for a property in need of renovation that they can restore and sell in a reasonably short period of time for a return on investment.
  • They are looking for the lowest prices because their rehab costs are higher than most other buyers.

Relocation Home Buyer

  • This buyer is rock solid and qualified to buy.
  • They know they only have a limited amount of time to find a property so they want to see as many houses as they can.
  • They want a professional to help find them homes, and show them as many as possible.

Young Millennial Buyer

  • These buyers do not necessarily rely on seasons and school schedules to purchase homes. For this group of buyers, the market is on at all times.
  • They are very active buyers, and most importantly millennial want suburbs that feel like a city, they are fully connected, visual and will view listings at any time of the day.
  • Most of these buyers prefer seeing homes that appeal to them on their own time.

In summary, it is of vital importance that expertise and time is spent on the pre-marketing of a property, to ensure the best results. Which type of buyer would you be?

 

Real Estate & Cryptocurrency

Although Cryptocurrency has been around for quite some time now, it is still a relatively new concept in South Africa and, to a degree, quite foreign for some. The idea of no physical money and no set currency is quite daunting. There are quite a few options as an investment, but Bitcoin is perhaps the most well-known.

Bitcoin is a currency created in 2009 by the anonymous pseudonym ‘Satoshi Nakamoto’; in short it enables you to make financial transactions free of fees and the interference of banks. You can already use Bitcoin to buy everything from pizza to a manicure as well as a payment option on Takealot. But could virtual currencies become a standard trading resource to purchase real estate?

What is Bitcoin?

In short, Bitcoin has two key traits that define it: it is digital and it is seen as an alternative currency. Designed to be user friendly, there’s no need to have advanced technical knowledge to get a handle on how Bitcoin works. To get started with using it you simply install a Bitcoin wallet on your mobile phone or laptop. You’ll be given an address similar to an email, which you can use to send or receive money.

Potential impacts on the property market: Where could it come into play?

Cryptocurrency will have numerous implications on the property market both positive and negative.  “Will we soon be taking advantage of this emerging trend with clients buying property through Bitcoin, and will Bitcoin be seen as a potential replacement for paper- and coin-based money in the near future? If the answer is yes, then blockchain technology, which is the basis of cryptocurrency, and smart contracts will revolutionise the real estate industry,” says Craig Hutchison, CEO Engel & Völkers Southern Africa.

 Transaction time

One of the most obvious ways that Bitcoin is bound to have an impact on real estate is by providing new platforms for sales. Individual properties could have their own digital identity with a documented and verifiable chain of ownership. As the blockchain is decentralised, this information would be open, accessible and fully transparent. By passing the bank, buyers and sellers could potentially connect in real time, speeding up the process for transactions significantly.  “The electronic deeds system which is being implemented is the first step in this process” Craig added.

Transactional costs

With new online platforms, buyers and sellers can store their information securely and it would be instantly verifiable, which cuts out prolonged discussions with banks and lawyers and thereby saves money. Saving on transaction fees, Bitcoin lowers the transaction costs of transferring money from one party to another. Cryptocurrency will also make properties easier to sell to overseas buyers as it enables a legal transfer of property ownership using digital ledger technology.

Agent commission

As the trend increases to buy property with Bitcoin, real estate agencies and area agents who work predominantly with foreign buyers, will soon have to start thinking about accepting commission payments in the digital currency Bitcoin.

 Security

The blockchain still has a long way to go before it becomes a significant real estate market disruptor. Nonetheless, with encrypted data and a high level of security it could quickly become useful, particularly for transferring the large sums involved in luxury real estate. Blockchain technology creates a decentralised digital public record of transactions that is secure, anonymous and tamper-proof. This underlying technology is regarded by some major financial institutions as bullet-proof. The blockchain can be used to prevent fraud by creating a private, fully certifiable digital ID. This offers a more current and reliable proof of funds than a bank’s letter. Digital IDs secured by the blockchain’s digital ledger can be used for deed transfers, mortgage payments, or other financial scenarios.

 Tax

The exponential rise in the price of Bitcoin poses a threat to the South African Revenue Services’ (SARS) revenue collection efforts as it is largely dependent on traders’ own truthful declaration of profits. Financial institutions like banks are required to provide SARS with information on the investments of their clients for verification purposes, but in a crypto environment where such information is lacking, SARS may have to trust that a taxpayer made honest declarations with regard to crypto gains. SARS has said that it has plans to provide clarity on the tax implications.

Investing in property through Bitcoin

The Pros:

  • Sellers can receive direct bank deposit (takes 15 minutes to a day depending on network congestion) directly into his/her bank account from anywhere in the world, from any laptop or mobile device.
  • All transactions are private as Bitcoins are not linked to any names or addresses or any other private identifying information; it offers anonymity for both parties throughout the property transaction.
  • The ability to “hide” funds into assets.
  • There are no fees with Bitcoin. There is also no “margin” to convert the currency from one currency to another for international transactions as long as the seller can accept Bitcoins.
  • No third party is necessary once the self-enforcing smart mortgage contract is cryptographically signed.

The Cons:

  • Bitcoin’s are very volatile – value fluctuates every day.
  • Any and all activities related to the acquisition, trading or use of virtual currencies are performed at the user’s sole and independent risk and have no recourse to the bank.
  • Though each Bitcoin transaction is recorded in a public log, names of buyers and sellers are never revealed – only their wallet IDs. While that keeps Bitcoin users’ transactions private, it also lets them buy or sell anything without easily tracing it back to them.
  • Bitcoin transactions are not reversible. To reverse a transaction due to any litigation, you need both parties to be compliant.
  • You can’t buy a house with a mortgage bond with Bitcoin – all payments need to be made in full.

Will the bubble burst? 
Some dispute that it is too unstable to be seen as a currency and warn that a crash is inevitable. There have been numerous occasions where Bitcoin has seemed to be in a dilemma, however every time that warning bells have gone off because the bubble is about to burst , the currency has faltered for a few days and then bounced back even higher. As it stands at the moment the general consensus is: as long as investors are willing to buy, there will be a market.

Despite the uncertainty of the Bitcoin market, tech-savvy property investors are willing to take a risk on the cryptocurrency. As with all things, before diving into investment projects and wondering whether to invest, do your homework thoroughly and look at the entire picture.