What happens to a Sale Agreement in the event of death?

Buying or selling real estate isn’t as easy as it is portrayed sometimes, especially if there is a death of a party during the transaction which can make it awkward, tricky and inconvenient. Just because you enter into a contract to either buy or sell does not mean the deal will go through. “We are fortunate enough to have the expertise & knowledge within our group to assist in shedding some light on what would happen in the event of such a case” says Craig Hutchison, CEO of Engel & Völkers Southern Africa.

 

Karien Hunter, a practising attorney from Engel & Völkers KZN Dolphin Coast have given us her expert guidance:

 

Sale Agreement remains valid

Agreements concluded prior to the death of either party to a sale agreement in circumstances where transfer has not as yet taken place, remain valid and enforceable.

The death of a party would however cause inevitable delays and in some instances it would no longer be practically possible to proceed with transfer, for example where a Purchaser had bought a property with mortgage finance from a bank as the bank would probably withdraw the bond as there would no longer be an income to support the payment of the bond.

However, on a cash transaction, the estate would be obliged to proceed with transfer and pay the purchase price, alternatively, come to an agreement with the Seller for the consensual cancellation of the sale.

 

Delays with the transfer of the property

In the event of the death of a Seller, the Power of Attorney signed by the Seller in favour of the conveyancers to effect transfer falls away and the conveyancers now require the signature of the Executor to such Power of Attorney to proceed with transfer. This applies even where documents have already been lodged at the Deeds Office and documents would have to be withdrawn from the Deeds Office in these circumstances. The Power of Attorney must be also endorsed by the Master of the High Court which can cause further delays.

 

The Master’s office will only endorse the Power of Attorney once it has satisfied itself that all its requirements have been met and that there is no impediment to the transfer of the property – for example, where an estate is insolvent.

What happens upon the sale of a property by an Executor after death?

  • An Executor can only sell and transfer a property with the consent of the heirs to the estate, unless the property is sold to meet the debts of the estate.
  • The Master’s office will likewise have to endorse the Power of Attorney to transfer the property which will be submitted to the Deeds Office.
  • The Master’s office will only do so once it is satisfied that the heirs have consented to the sale of the property and provided that the proposed transfer is in accordance with the liquidation and distribution account which has lain for inspection, with no objection.

 

With reference to the above it is clear that care should be taken upon the sale and transfer of a property where a deceased estate is involved, and that parties to a sale agreement are advised of the inevitable delays in complying with the provisions of the Administration of Estates Act and the Deeds Registry Act.

Insuring your most valuable assets

Owning a home comes with plenty of other considerations which one might not always be top of mind, one of which is insurance. Homeowners must always ensure that they are correctly covered; knowing what is covered and what isn’t can save you a lot of money and heartache in the future.

 

“Your home should be a place where you can always relax and being adequately insured will give you peace of mind for when life happens. From the structure itself to the valuables inside, being adequately insured will ensure that you are not burdened with the financial loss whilst going through the emotional stress of unexpected” advises Craig Hutchison, CEO Engel & Völkers Southern Africa.

 

It can be daunting choosing the right cover, whether you’re moving or want to renew your policy; here are some basics that everyone should consider:

 

Difference between Home Content & Building Insurance

Home contents insurance covers all the items in your house that you would take with you if you were to move.

Includes:

  • Cover for loss or damage to household goods and personal possessions
  • Cover for loss or damage caused by fire, lightning, power surge, explosion, malicious damage, storms, bursting or over-flowing of geysers, equipment or pipes, break-in and theft
  • Cover for food that deteriorates because of a power failure or if your freezer breaks down
  • Cover for stolen washing and/or garden furniture
  • Cover in the event of you and/or your spouse’s death if caused by fire or break in at your home
  • Cover for your domestic employees’ or guests’ belongings (only if there is proof of damage caused by a break-in)

 

Building insurance covers you for environmental and accidental damage that might happen to the physical structure of your house and outbuildings.

Includes:

  • Loss or damage caused by fire, lightning, explosion, earthquakes, the bursting or overflowing of geysers, equipment or pipes and storm or flood
  • Damage caused by animals, vehicles and falling trees
  • Malicious or intentional damage
  • Break-in or theft – if that break-in or theft causes damage to the actual building
  • Rent you lose if your tenant has to vacate the building as a result of damage by anything covered by the policy

 

The value a home is insured for does not reflect the market value of the property, but represents the amount it will cost to rebuild the entire house following destruction.

 

Home & Building Insurance options

There are many options available and every policy is different, it all depends on your specific need, property and personal criteria. According to Attie Blaauw, head of Personal Lines Underwriting at Santam these are the most popular options available for both home and building Insurance:

 

  • Fire
  • Subsidence & Landslip
  • Explosion
  • Lightning
  • Flood
  • Sea surge
  • Water/snow
  • Storm/wind
  • Hail
  • Earthquake
  • Burglary/theft
  • Malicious damage
  • Power surge
  • Accidental damage

 

 

What to look for when choosing Home & Building Insurance?

Know what’s covered:  It sounds simple but many people don’t know what is actually covered by their policy.

 

Beware of the upselling mortgage broker: Many banks and building societies encourage borrowers to take out home insurance that is tied in with their mortgage but you may find you are paying more than if you researched the market and insured through a broker. It is always worth looking for the policy that suits you best and provides the best value.

 

Estimates: Always ensure that you have accurate estimates for both the re-build cost of your home and the replacement cost of all the contents you had in mind when taking out the policy.

 

Keep an eye on annual increases: Most home insurance policies will increase every year on the basis that re-build costs are also increasing, always keep an eye on these increases.

 

True value underestimating: The true value of your home’s contents is a common mistake. Overlooking a few of those recent purchases could mean that some items may not be covered under your current policy. Always keep an up to date valuation of your possessions to ensure you have everything covered.

 

A list of what is covered must be drawn up and checked: Some policies offer more benefits than others, so it pays to check ‘who pays for what’.

 

The home must be insured for the full replacement value: This is not the same as the market value. The value of the land on which the house stands is excluded from the calculation of the replacement value of the actual building of the house.

 

What does Home & Building Insurance NOT cover?

Colin Mchunu, Senior Manager, Alexander Forbes Insurance advises you to check the exclusions as they differ from insurer to insurer. Every insurance company is a little different and what is included or excluded on your policy depends on their rules as well as the type of policy you have. It’s important to be aware of all exclusions on the policy and to prepare yourself by purchasing additional coverage to fill the gaps where needed.

 

Instances in which a claim may be rejected:

  • Damage caused by pets such as soiling, scratching, tearing, denting or defacing of the property.
  • Should you run a bed and breakfast from home; the appliances in the rooms are excluded from household cover.
  • Not all theft claims are covered unless forcible or violent entry on the property is visible.
  • If there is an indication of poor property maintenance resulting in damage that could have been avoided, namely termites, insect damage, bird or rodent damage, rust, rot, mould, and general wear and tear are not covered.
  • If there is damage to the property caused by roots and weeds.
  • Chipping of sanitary ware, wall or floor tiles or paving is not covered.
  • If there was a lack of sufficient security in place at the time of your claim.
  • If your home was left unoccupied for a significantly long period of time.
  • If your home should suffer a power outage, things like food spoilage are not covered under a standard policy.

 

Are you required to have Home & Building Insurance if you own a home?

Your mortgage lender would have made it a condition of the mortgage terms that your home has adequate building insurance covering your property’s structure and permanent fixtures. That’s not likely to be the case when it comes to contents insurance.  If you no longer have a mortgage and your property is owned outright, there’s no legal obligation to have either home buildings or home contents insurance.

Factors to consider to determine if you getting best premium

According to Colin, Alexander Forbes Insurance controllable factors that may influence an insurer’s quote are:-

  • previous claims you have made
  • superior security protections in place
  • voluntary additional excess you may choose

What factors can affect Home & Building Insurance premiums?

  • Value at risk
  • Location of risk
  • No claim bonus
  • Excess applicable
  • Security measures
  • Construction of building and extent of cover

 

“Your home is an extension of you, and considering the investment made on the property purchase, it is important to ensure home and contents are sufficiently covered in order to avoid costly surprises in the event of loss or damage” Craig concluded

Fireplaces making life a bit warmer

Winter is upon us and when considering ways to heat up your home, one obvious thought would be to add or restore an indoor fireplace. In light of the cost of electricity, homeowners are starting to consider the fireplace as a must have piece of heating furniture which provides a cosy ambience, comfortable gathering place for family and friends and adds value to a home.

 

“As with any home improvement, it is a good idea to take a moment to think about exactly what you are trying to achieve with your indoor fireplace.  Consider the structure that you already have, the amount of heating that you want to achieve and, of course, the design of your home” advises Craig Hutchison, CEO of Engel & Völkers Southern Africa.

 

According to Hilly Nachman, owner of The Fire Place Studio there is never a bad time to install a fireplace, whether you are building or renovating, upgrading an existing installation or just installing from scratch. “Most people tend to wait till it gets cold and then are in a hurry to get it installed, so there is a fairly long lead time in mid-winter of 3-5 weeks”.

 

Choosing the right design and product is key to ensuring your fireplace is a positive component rather than an underutilised element in your home. There are various types of indoor fireplaces you can purchase; we compare the pros and the cons of some.

 

Wood Burning Fireplace

A traditional wood burning hearth typically made of stone or brick, is what most people think of when they picture a fireplace. There are a number of options in this category, and they can differ in terms of how easy they are to install, how much heat they put out and how cost-efficient they will be for you to operate. If you do not already have a fireplace in your home, it will require a fair amount of construction work to put in both the opening itself and the chimney for proper ventilation.

Pros:

  • Valued for its aesthetic – you can’t beat the look and sound of a wood fire
  • They create a cosy, rustic atmosphere in any space
  • Most people like the smoky scent they give off

Cons:

  • Expensive to install and to maintain
  • High maintenance
  • Spit out burning embers, so screens are needed to ensure safe use

 

Gas Burning Fireplace

A popular alternative to traditional wood burning fireplaces. Opt for a free-standing gas fireplace that utilizes a pipe which enables you to install your fireplace in any room.  Direct-vented models require a chimney for ventilation either a pre-existing chimney or a new chimney can be constructed.

Pros:

  • Create more heat at a lower cost
  • Require less construction or reconstruction to install
  • Burn natural gas instead of wood and are easy to use

Cons:

  • Despite burning clear, they still pose the slight risk of emitting contaminants
  • Need a line installed between fireplace and fuel source
  • May not offer the same feel as wood burning versions

 

Ethanol Burning Fireplace

Fireplaces that burn ethanol have become the current trend for their ease in installation as well as their contemporary design.  Most contain a burner that can be filled with the bioethanol fuel for easy repeated use.

Pros:

  • They are more environmentally friendly and odourless
  • Require minimal installation
  • Can adjust the temperature and are easy to turn on and off

Cons:

  • Provide less heat than gas fireplaces, won’t heat your entire home
  • Require refilling

 

Electric Fireplace

Easy to incorporate into a space and are quickly catching on as the most popular fuel type available. They create warmth by heating interior coils with electricity. Most models come with an internal fan to better distribute heat throughout your home. Given that there is no real flame inside an electric fireplace, they employ a “fake” flame to give them a lifelike look and feel.

Pros:

  • Most cost effective option to install
  • Enable you to turn the heating function on or off while maintaining a fireplace-like ambiance
  • Low maintenance and safest option for a home with kids and pets

Cons:

  • Less attractive and does not give that authentic fire feel
  • Energy consumption is high and will increase your electricity bill
  • Are not permanent fixtures so they are not likely to add value to your home

 

Table top Fireplace

These come in different sizes, enabling you to make use of them in a variety of settings.

Pros:

  • Easily portable, often usable both indoors and outdoors
  • Simple, easy and safe to use
  • Relatively cost-effective

Cons:

  • Heat output is lacking so should be used only as supplemental heat sources
  • Last only for a few hours
  • Need to make sure the tin cans are fully intact to prevent a hazard from happening

 

Wall-Mounted Fireplace

There are two subtypes of wall-mounted fireplaces, those that need to be connected to a chimney and those that don’t. The type you get depends on what type of fuel you use. Many people use a wall-mounted fireplace as the focal point of their room.

Pros:

  • Saves space, common option for those with small homes or apartments
  • Self-contained wall-mounted fireplaces can even be moved from room to room as needed.
  • Less mess as they run on either gas or electricity

Cons:

  • Less heat
  • Often looks faux depending on the manufacturer of the unit
  • No added value – is portable, it will not add value to the home

 

Wood Stove Fireplace

Modern stoves come in steel as well as cast iron. There are many, many different styles of fireplace to choose from, ranging from traditional style stoves all the way to contemporary double sided fireplaces heat radiates from all surfaces of the fireplace rather than large volumes of air escaping the chimney like with an open fireplace.

Pros:

  • Very safe, have a glass door that traps the flames inside. This ensures a higher level of safety when the fire is in use.
  • Fuel efficient,  extremely eco-friendly as far as efficiency goes
  • There is little to no maintenance or effort required

Cons:

  • Need a dry place to store wood
  • The upfront, capital cost of building a sizeable wood energy facility can be high
  • When wood burns it releases hazardous gasses (e.g., nitrogen oxide and carbon monoxide) and soot.

 

Trends for fireplaces for 2018

Dave Tunbridge, Sales Manager at Fireplace Warehouse says that Fireplaces have really evolved over the years with the new products now being more environmentally friendly and efficient. Today’s fireplace design allows you to use less fuel for more heat and emit lower emissions into the atmosphere. Another design trend is that one does not need to have a black fireplace anymore as some units are available in different colours. Most clients are looking for modern or retro design units nowadays with the wall mounted type being one of the most popular selling units at the moment.

Andrew Balding, Managing Director at Morso agrees that the trend seems to be that fireplaces have a modern “white” finish.  White is regularly referred to as the most complementary colour that can be added to any room or decor. It’s simple and clean nature ensures cohesion and synergy with the rest of your furnishings, varying from traditional to contemporary.

Engel & Völkers Southern Africa celebrate at their Annual White affair

The team at Engel & Völkers Southern Africa knows how to work hard as well as how to let their hair down and celebrate their success. This year’s Annual Rewards and Recognition (R&R) function was held in the beautiful Stellenbosch Winelands amongst the Vineyards.

 

On 20 April over 150 Real Estate Agents, Licence Partners and Assistants, came together in Stellenbosch for their rewards function, with this year’s theme depicted the company ethos with elegance and in their corporate colour of white. The R&R is a special evening where the team from the E&V Master Licence recognise the achievements of the most successful employees of the past year. It also creates a platform where guests can enjoy the networking amongst their peers, and teams can come together and strengthen their relationships within their shops.

 

The eventful day started off with the Licence Partner conference at the Devonvale Wine & Golf Estate, providing a wonderful setting for the 40 participants in attendance. The main topic of the agenda was recruitment. “Visibility and recruitment will be key to unlock success in 2018, with the help of EV Training Academy, the focus will be shifted from quantity to absolute quality in recruits” stated Lara Machado, Head of SA Academy & Operations Manager of Engel & Völkers Southern Africa.

 

Simone Soltau, Head of International Franchise & Business Performance, representing the Hamburg Engel & Völkers headquarters also attended and shared her knowledge on the topic. Real estate property brokerage is often overlooked as a credible and lucrative career, which is changing rapidly as Engel & Völkers is at the forefront of driving this change through their international system and training programme.

 

As the sun started to set over the vineyards the time came for all the Licence Partners, Agents and Assistants to be recognized, acknowledged and celebrated at the Rewards & Recognition Function at the beautiful Landtscap venue, a modern location set amid the Cape Winelands.

 

As the guests made their way along the red carpet, they were welcomed by the AffodizzyActs violinist who set the mood for the evening. Guests gathered on the deck where they were able to enjoy the not only delicious, but stunningly bottled Carol Boyes wines and Craft beer sponsored by SARRPS IT Services, while mingling and admiring the panoramic views. While waiting for the main festivities to begin the MC van der Berg Attorney Oyster King and Sushi Queen kept guests entrained, serving bites of pure delight.

 

As soon as everybody arrived, it was time to settle down as starters were served whilst guests were welcomed and given a run through of the evening’s proceedings, after which everyone could roam and network at their leisure with some more surprises underway with a cigar tray from Private Property and a chocolatier from MacRobert Attorneys doing the rounds.

 

Once dinner services completed, it was time to start the formalities of the evening.  Awards were given in the categories such as “Money Maker of the Year”, “Team Leader of the Year”, “Brand Ambassador”, “CI Shop of the Year” and “Agent of the Year” for each region. Greg Crowder from Private Property also presented the Private Property Individual Online Excellence award to Jürgen Schreck from Potchefstroom, and the Centurion Office walked away as the Top Supporting Office.

 

“We congratulate all the winners, and know that their successes are a great inspiration to the rest of the agents, I am extremely proud of the achievements of everyone within the Engel & Völkers Southern Africa family,” proudly noted Craig Hutchison, CEO Engel & Völkers Southern Africa.

 

As the awards section drew to a close, it was time for the celebrations and party to begin. It got off to a spectacular start with a fibre optic whip dance act, followed by DJ Nic made possible by Mortgage Max, who created the perfect atmosphere for all those wishing to have some fun on the dance floor, which proceeded till the early hours of the morning.

 

Engel & Völkers Southern Africa wishes to thank you to all their partners who formed part of the event for their kind contributions, making an evening such as this possible.

From paperclip to howeowner

Did you know that one man managed to trade his way from a paperclip to a homeowner – here is how:

1. On July 14, 2005, he went to Vancouver and traded the paperclip for a fish-shaped pen.
2. He then traded the pen the same day for a hand-sculpted doorknob from Seattle, Washington.
3. On July 25, 2005, he traveled to Amherst, Massachusetts, with a friend to trade the doorknob for a Coleman camp stove (with fuel).
4. On September 24, 2005, he went to California, and traded the camp stove for a Honda generator.
5. On November 16, 2005, he made a second (and successful) attempt (after having the generator confiscated by the New York City Fire Department) in Maspeth, Queens, to trade the generator for an “instant party”: an empty keg, an IOU for filling the keg with the beer of the holder’s choice, and a neon Budweiser sign.
6. On December 8, 2005, he traded the “instant party” to Quebec comedian and radio personality Michel Barrette for one Ski-doo snowmobile.
7. Within a week of that, he traded the snowmobile for a two-person trip to Yahk, British Columbia, in February 2006.
8. On or about January 7, 2006, he traded the second spot on the Yahk trip for a box truck.
9. On or about February 22, 2006, he traded the cube van for a recording contract with Metalworks in Mississauga, Ontario.
10. On or about April 11, 2006, he traded the recording contract to Jody Gnant for a year’s rent in Phoenix, Arizona.
11. On or about April 26, 2006, he traded the one year’s rent in Phoenix, Arizona, for one afternoon with Alice Cooper.
12. On or about May 26, 2006, he traded the one afternoon with Alice Cooper for a KISS motorized snow globe.
13. On or about June 2, 2006, he traded the KISS motorized snow globe to Corbin Bernsen for a role in the film Donna on Demand.

Solar Power in your home

Solar energy has exploded over the last decade with the cost of solar panels decreasing, making solar more affordable than ever.  Many homeowners have already invested in this to make their homes more environmentally friendly and sustainable, but if you are still investigating the options available to you, this article could assist you in taking that final step towards sustainable living.

 

“Whether you go completely off-grid or simply supplement your household energy intake with a smaller system it will already be the start to increasing your property value. The primary investment of solar power is often enough to scare one off, however the payback period of your investment, and  future rewards, make solar power affordable to most homeowners” comments Craig Hutchison, CEO Engel & Völkers Southern Africa.

 

 

What is solar power?

Solar power is the conversion of energy from sunlight into electricity, either directly using photovoltaic (PV), indirectly using concentrated solar power, or a combination of both. It’s renewable, and can be used in a variety of ways to sustainably fuel homes, producing hot water and electricity.

 

Why consider solar power?

Solar systems require very little maintenance and you could end up saving up to 60% -80% on your electricity bill, depending on the size of your home and what kind of solar energy system you install. Whether you build a new energy efficient house or upgrade your existing one, solar technology will definitely add to the value of your property.

 

How solar works?

  • Solar panels collect sunlight and channel it to an inverter, where it’s converted to electricity to power your home.
  • Photovoltaic (PV) cells convert sunlight to direct current (DC) electricity.
  • The electrical panel sends power to your lights and appliances.
  • The meter tracks how much electricity is generated and measures the energy you draw and feed back to the grid.

 

Some solar electric systems will use batteries to store the unused electricity.

 

Cost involved?

Solar energy systems can be quite expensive when it comes to installation. The size of your home as well as the amount of work that is involved for installation will determine the cost. The costs are decreasing as new technology is introduced for more efficient solar energy generation.

 

Cala van der Westhuizen, Head of Marketing and Sales, Energy Partners Home Solutions highlights the main pricing categories as follows:

 

  • The complete heating solution costs around R35 000 for the average home.
  • The complete Solar photovoltaic (PV) system costs upward of R80 000 and should be viewed as a long term investment solution.
  • The cost of the ICON Home Energy Hub ranges between R100 000 – R180 000.

 

Some suppliers are approved credit providers and offer financing options for homeowners. Energy Partners has also developed a long term lease model, where the client can simply lease the system    instead of having to pay for it upfront.

 

Where should one start?

Installing a solar system is not just a matter of putting up a few panels and adding a few batteries, there is no standard system, each system has to be correctly sized to suit the requirements of each home. Make sure the company you are dealing with is an established company with a good reputation and can provide the correct advice and service backup.

 

 When investing in solar technology, it is important to prioritise, reducing your heaviest loads first, as this will deliver the greatest savings:

  • Start by replacing the home’s light bulbs with energy efficient lighting.
  • Replace your home’s geyser with a heat pump, or solar geyser. A highly insulated hot water storage system can also cut the homes electricity costs by an estimated 50%.
  • A solar photovoltaic (PV) system can provide up to 30% of an average home’s energy. It is hugely beneficial in the long-term and must be viewed as an investment. However, before embarking on this, it is important to understand whether the home’s rooftop has been designed to accommodate the optimal number of panels.
  • Lastly, homeowners can choose a complete integrated system. A hybrid inverter and battery, such as Energy Partners’ own ICON Home Energy Hub, enables property owners to integrate power from their solar PV panels, the national grid and batteries. It also incorporates a mobile app to track energy usage and savings in real time.

 

Latest technology

Until a few years ago solar panels were a scarce sight and largely limited to the roofs of affluent households. This has changed rapidly in the last ten years; the specific development in solar energy has seen the sharp drop in prices and an increase in technological advances in solar technologies and in power storage.

 

According to Cala van der Westhuizen from Energy Partners Home Solutions, solar panels are currently at the top of their game. Storage is improving constantly and lithium ion batteries are currently the preferred technology with many other technologies in battery storage being developed. Another exciting product that has been introduced is a DC element and solar PV conversion that can be applied to your current geyser.

 

As technology improves, the cost of the technology will decrease and investment recovery periods for the solar equipment and devices will become much shorter.

 

Pros

  • Saves money – after the initial setup costs have been taken care of, you will start to benefit from having solar energy by reducing your electricity bills and see it is indeed a return on investment.
  • Increase property value – buyers are increasingly interested in eco-friendly homes and the increased efficiency with a pre-installed solar panel system is an added bonus.
  • Reduces your carbon footprint – solar power is environmentally friendly and doesn’t produce any carbon emissions, it’s clean and renewable, which allows you to do your bit to alleviate global warming.
  • Low maintenance – once you have your solar energy system installed, you don’t need to maintain it, once you’re equipped you’re set to enjoy years of trouble free energy.
  • Multi-functional – solar power can be used in many ways namely to generate electricity, charge batteries, power lights and heat water.

 

Cons

  • High initial cost – to install solar power in your home will require a substantial initial investment.
  • Weather dependent – solar panels need direct sunlight to gather solar energy effectively. A period of cloudy, rainy days can have a noticeable effect on the energy system. Unless you include a system of batteries with enough capacity to store up energy to last your home through the night, as well as days/weeks when it may be raining or overcast.
  • Positioning is important – household and other structures do not always allow for the ideal positioning of solar panels on your property.  If you install them in an area that doesn’t get much sunlight, you will still get some energy but you won’t get the full benefits.
  • Solar energy storage is expensive – solar energy must either be used immediately or stored in deep cycle solar batteries with PV inverters. The batteries can often be large and heavy, taking up space and needing to be replaced from time to time.
  • Space required – extensive space is needed to house enough solar panels for significant electricity production.

 

The sun is an unbeatable source of renewable energy, providing us with more energy in a single hour than the world’s population uses in one year, if you are looking for ways to boost sustainability in your home, having solar power is key. As electricity prices soar and the cost of solar power installation decline, a renewable energy investment is increasingly looking like a smart choice for all homeowners.

 

Property Scams

Our lives have been made considerably easier with technological advances such as the internet. Unfortunately it has also opened up a world of opportunities for con artists. As automation improves, so does the level of property scams, and while every precaution is taken, there will always be yet another way that fraudsters discover to deceive buyers and sellers out of large sums of money.

“Fraud and investment scams thrive in all degrees in the real estate market, from developers who expect payment for work not done or a pretend agent who embezzles money. Working with a legitimate estate agent at your side will ensure that you will be protecting yourself against common types of real estate scams. When dealing with an agent, buyers and sellers must check that the agent is registered with the Estate Agency Affairs Board and has a valid Fidelity Fund Certificate. It’s illegal for an agent to practise if they are not in possession of this important document. These certificates are issued on an annual basis and must reflect that the agent is licensed to practise for the current year. Always obtain certainty on the banking details were payments or deposits are being made” advises Craig Hutchison, CEO Engel & Völkers Southern Africa.

 

We single out the most predominant property scams you may encounter while searching to buy or rent property.

 

Intercepted Emails 

This involves scammers, hacking into the email of people involved in the transactions, such as agents or lawyers, by tricking home buyers into wiring funds to them instead of the appropriate parties. They often will use a generic email address indicating that the funds should be wired to a specific account which will then vanish without a paper trail.

 

Changes made regarding payment details must always be done by the seller in person if possible, or telephonically verifying the email, and not via email alone. Protect yourself by double checking everything, verifying all emailed instructions that deal with the purchase even if they’re from trusted parties, any bank detail changes need to be accompanied by the required verification of the bank accounts in question.

 

Fraudsters posing as a Buyer

They will approach a seller privately and show keen interest in the property and put in an offer. After a few days, the supposed buyer will contact the seller asking for a document to be signed to help them get their home loan approved, which the seller then signs without reading too much of the document only to discover later that a third party claims to have bought the home.

 

It will be found that the scam artist (the first buyer) has been marketing the home online as an agent, by taking the photos off various websites, and has found a buyer who is also unaware that something is wrong – and who might have paid a large deposit over to the supposed agent. Make sure you check every detail when it comes to property sale transactions, documents can be falsified and email addresses cloned.

 

Identity Theft

Criminals have become much more experienced and are using stolen identity details not only to empty bank accounts but to obtain various credit accounts and even home loans. They are able to delay detection of the fraud for long periods while the unpaid bills and instalments mount up. The scammer will use false documents to pose as the property owner, register forged documents transferring a property to their name, and then get a new mortgage against the property. After securing a mortgage or line of credit, the criminal takes the cash and disappears.

 

Bait and Switch Scheme

This occurs when a prospective buyer offers an ‘above market value’ price to a seller. The seller, impressed by the high offer signs the contract, meanwhile the deceitful buyer has no intention to purchase the property. Once the seller signs the contract, the seller may only sell to that buyer for a specified time, when that time ends the fraudster asks to extend the contract a few weeks to work out closing details. Sounding reasonable, the seller agrees to the extension blinded by the high offer.

 

In the meantime the seller keeps paying taxes, maintenance, utilities and insurance the buyer comes back to the seller with an excuse as to why this price no longer works, and requests a reduction to below market value and threatens to cancel if their demand is not met. Stressed by time and on-going costs, the seller agrees to the reduction.

 

Duplicated Listings

‘Agents’ copy legitimate rental listings and advertise for a much cheaper price. Unfortunately, many people fall for these fake listings and wire money to the owners of these fake listings. When searching for a rental, do your research and make sure you are working with a reputable company or agent.

 

Fake Rental Agents

When you find a property you really like, you call the agent to arrange a viewing and they say they will meet you there. Later they call and say they won’t be able to make it anymore, but no need to worry the landlord will be there to show you around. The agent then promises to negotiate a lower price with the landlord. When you arrive at the house you find many other people interested in renting the same place. You call the agent back to negotiate a better price that you’re happy with; they will phone you back shortly to inform you of the new price, all you have to do is transfer the money for the first two months to secure the place. On moving day, you find someone else is moving in and the agent wasn’t an agent; they just found the property online and reposted it with their own contact information. They purposely send several people at a time to view the property to generate a sense of urgency for the potential renters.

 

Avoid becoming a victim

  • Be wary when you are requested to make a payment for something minor like a credit check or security deposit, in most cases, there’s nothing you can do to get your money back because the scammer can’t be tracked.
  • If the price looks too good to be true, it probably is. Prices are considerably higher than they were a few years ago.
  • The email sounds strange – some listings hide the email address when you send a message, so you might not be able to see the address if you respond to the listing. Scammers usually use free email servers and they’ll often go by a series of random letters to make them less easily traceable.
  • The Agent won’t show you the property – If you ask to see the property and they claim it’s impossible, it’s probably a fake listing. Agent will make time for people who are interested in the property.
  • The seller pushes you – the faster a scammer gets you to agree to a business deal, the faster they can steal your money and avoid getting caught. The seller will often use high-pressure tactics that attempt to push you into acting quickly in order to purchase the home. Don’t be prodded by any seller to send money.
  • The seller asks you to wire money – when you see the term “wire money” or similar variation of that phrase come up in a business conversation with someone you’ve never met, red flags should go up. Many scams entail wiring of funds because it’s more difficult to trace and enables the scammer to collect the money sooner. Scammers will come up with a variety of plausible reasons why the money should be wired rather than sent through a bank or lawyer.
  • The buyer or seller is foreign and wants to buy a home unseen – most people want to at least see a property and become familiar with the area before making a large investment. This doesn’t mean you should be wary of all foreign inquiries, but many scams often occur overseas because it’s harder to trace the person behind the fraud. Foreign buyers who don’t ask questions, act in haste, and don’t care to see the property indicate a high likelihood of fraud.
  • Be well informed about market related prices within the area you are looking to rent or buy. If a property is advertised way below the market related price for that area it should raise your concerns.
  • If you found a “bargain” online you should call the estate agency to find out if the deal is for real. Don’t call the number at the bottom of the ad because this number could lead to a fake office. Rather find the actual office number, call there and ask the receptionist to give you the number of the specific agent or branch you are looking for.
  • Be wary of agents and landlord who seem too eager or pushy to get you to live in their property or one they are marketing. A legit agent or landlord will always conduct the necessary checks and will not be too disappointed when you don’t show much interest in the property.
  • If the agent is constantly making up excuses as to why they are not able to meet you or show you the property, you should also be worried. The chances are good that they don’t have access to the property and are stalling for time until they can think of a clever way to get you to pay the deposit.
  • Never pay a deposit before you have viewed a property.

When dealing with an agent, buyers and sellers must check that the agent is registered with the Estate Agency Affairs Board and has a valid Fidelity Fund Certificate. It’s illegal for an agent to practise if they are not in possession of this important document. These certificates are issued on an annual basis and must reflect that the agent is licensed to practise for the current year. Always obtain certainty on the banking details were payments or deposits are being made

Mortgage Bonds

Banks and mortgage companies understand that purchasing a home is an important investment, whether you’re a first time buyer, or buying your second or third home.  A mortgage is simply a loan that is secured on immovable property, normally your home. The mortgage is lent to you in a lump sum to pay for the property, which needs to be paid back over a period of time.

 

It’s important to be familiar with what is required from you and what precautions you can take, to ensure that you qualify for a home loan. “Be sure to use a reputable estate agent and mortgage originator to ensure you to make the best decisions for your unique circumstances, as they act as the liaison between you, the seller and financial institution” advises Craig Hutchison, CEO Engel & Völkers Southern Africa.

 

There are certain things that you should know about the loan application process before you apply for one, the actual process and financials required are often not known. We have a look at the options available to you and answer some important questions that could help you once you decide to search for a new home.

 

Type of Mortgage options

  • Variable Home Loanthis type of home loan is very popular among new homeowners, the interest rate is attached to the prime loan rate, if the prime loan base rate goes down by 1%, the interest rate follows, but unfortunately, it also works the other way around.
  • Capped Rate Home Loan – the criteria is very strict and hard to meet, it’s seldom available with a maximum rate built into the loan. When interest rates go down, you enjoy the benefits, and when interest rates go up, you are not affected since you are only required to pay the agreed capped rate.
  • First Time Buyers Home Loan – this is an opportunity for people who would like to invest in a home but may not have the required amount to deposit on it. Banks are now open to lending more than 100% of the purchase price, which includes registration and transfer costs. This works best for people who have never applied for any home loan or never owned any property.
  • Fixed Rate Home Loan – has a fixed interest for a certain period, which covers one or two years. The fixed rate would always be higher than the base home rate but will protect you from increasing rates. This will free your mind from potential increasing interest rates since you already know what your repayments are. While this may be good, it will also be a disadvantage once the interest rate drops, since you will still be paying the same interest rate.
  • Reducing or Step Down Home Loan – here there will be a guaranteed small interest rate decrease every six months for an agreed period. Even when the home loan interest rate rises or falls, the gradual reduction would still apply.

 

Benefits of using a Bond Originator

  • You only need to complete one application, which will be submitted to all the major banks by your Bond Originator. After your approvals are received it’s up to you to decide which bank your wish to go with.
  • The Originator knows exactly what is needed and will collect all the necessary documentation and setup your application to ensure the process is a smooth one.
  • Bond Originators have a strong relationship with all the major banks therefore they are able to negotiate a lower rate on your bond, as the banks will be competing for your business.
  • The best feature of the Bond Origination industry is that the service offered is totally free. The bank pays the originator and these costs are not passed onto the client.

 

Steps in the Bond registration process

  • Step 1 – The Bond Attorneys (appointed by the bank registering the bond) request the draft deed and guarantee requirements from the Transfer Attorney (appointed by the Seller to transfer the property to the Buyer’s name) who obtains this from the Cancellation Attorney (appointed by the bank cancelling the Seller’s bond).  This information is forwarded to the Bond Attorneys to draft bond documents. The same attorney could be appointed to do all.
  • Step 2 – The Transfer documents are signed by the Buyer & Seller.
  • Step 3 – The Buyer pays transfer costs and the Transfer Attorney pays the rates & taxes, which allows them to obtain a rates clearance certificate. The Transfer Attorney also pays the Transfer Duty. Both of these are legal requirements for registration to take place.
  • Step 4 – Bond documents are drafted, signed by the Buyer and the guarantees are forwarded to the Transfer Attorneys, who in turn forwards the guarantees to the Cancellation Attorneys to obtain consent for cancellation from the Seller’s bank.
  • Step 5 – The Buyer pays the bond costs to the Bond Attorneys.
  • Step 6 – Once all documents have been signed and the costs paid, the Transfer, Bond & Cancellation Attorneys arrange for simultaneous lodgement of the documents.
  • Step 7Once lodged, the deeds office takes approximately 7 – 10 working days to process the documents before registration takes place.
  • Step 8 – Payment of the guarantees is made on date of registration of the bond. The registration process typically takes between 8 and 12 weeks to complete. However delays are possible if some information is not provided.

 

What is Pre approval?

A Bond Originator can be contacted to get you pre-qualified for a home loan even before you have started the house hunting process. They will take you through the pre-qualification process where you will need to submit supporting documents for a credit check and financial assessment which will need to be done. Once that is completed they will issue you with a pre-qualification certificate that is valid for 3 months. Now that you know what you can afford you can start your search.

 

What other costs are there associated with Mortgages?

Transfer fees

Whenever you buy a house valued at over R900 000 fees are payable to the South African Revenue Service (SARS). It is calculated as a percentage of the purchase price and varies depending on the purchaser’s legal status. The transfer duty is paid by the purchaser of the property prior to registration of transfer, or within six months after signing the agreement. There is a penalty fee for late payment of 10% per annum for each completed month after due date is levied.

 

Bond registration costs

The attorney registering your bond charges fees. They receive an instruction from the bank that has approved your home loan, draw up the paperwork, do FICA checks and lodge at the Deeds office. These attorneys should be in touch with you within a week of your mortgage being approved. They will ask you to come into their offices to sign the necessary documents.  The fees are charged on a sliding scale, and your mortgage originator will be able to inform you how much these will be.

 

Conveyancing costs

The conveyancing attorney is appointed by the seller, but paid for by the buyer. After the introduction of the National Credit Act the banks no longer charge a valuation fee but have included it in their increased  ‘initiation fee’ . These fees are on a sliding scale that your Originator can help you with.

 

Bank’s initiation fees

Under the National Credit Act banks are allowed to charge up to R5,700 for their initiation fees. These vary from lender to lender but expect to pay at least R3,500 and no more than R5,700.

 

Ways to pay off your bond ahead of time

  • Refinance your home loan from a standard 20-year term to a 10-year bond. If you refinance to a 10-year home loan, you’ll typically pay a lower interest rate while making larger payments each month. Since your term is so much shorter and the interest rate is likely much lower, you will have a considerable saving on your interest costs.
  • Paying extra into your bond – consistently adding just R1 000 to your monthly bond payment can make a big difference, if interest rates stay the same, you could pay off your bond more than three years earlier, and save in interest, compared with having a bond for 20 years.
  • Use salary increases on your bond – one way to find extra cash to put toward your home loan is to use your salary increases. The goal is to put the same percentage of your income toward your bond, even when your pay goes up, if you’re currently putting 15% of your income towards your bond payment, 15% of each annual increase amount should also go towards your bond, in addition to what you’re already paying.
  • Use cash windfalls to pay lump sums – instead of paying a little extra each month, you could pay a large lump sum here and there, such as from an annual tax refund, 13th cheque or bonus, or inheritance.

 

The hunt for the right home has begun

Buying your first home can be a thrilling experience, although it can also come with its own unique challenges. It is quite common to be anxious when you’re house hunting – especially if it is your first property. A small amount of preparation can go a long way to ensuring you end up with the perfect home.

 

“Buying a property is both exciting and terrifying at the same time, even though it is seen as business transaction it is an emotional affair too. Try your best to try and keep your emotions under control before you make a hard-pressed and foolish decision about a home which is financially out of your reach, or alternatively settling for something within your budget, yet not what you wanted” advises Craig Hutchison, CEO Engel & Völkers Southern Africa.

 

In order to avoid finding yourself drowning in “house” possibilities, set priorities and organize the house hunting process early on, you can then rest assured that you have armed yourself with as much knowledge as possible.

 

To help you stay focused on the important details during your house hunt, here are some tips and important decisions to think about before rushing to the property market.

 

Know Your Budget

Determining what you can afford is the first step in narrowing down the home search. Buyers need to know what they will be able to afford on a monthly basis, and decide ahead of time what amount they are comfortable with paying per month for their mortgage. Remember to include the other costs associated with homeownership, such as home insurance, property taxes, maintenance and utilities.

 

Check Your Score

The higher your credit score, the better. Good credit is like gold when obtaining a mortgage and securing the best interest rate possible. If your credit score falls short, get busy repairing it -correct any errors that might be on your report, start paying all your bills on time, and get your credit limit raised.

 

Pre-Approved Home Loan

Most people will need to take out a bond to purchase their first home. Applying for pre-approval with the assistance of a Bond Originator puts you in a much stronger position to buy, and you’ll feel more confident of your limitations when making an offer. You’ll be able to show sellers that you are a serious buyer and have the required finances to purchase the property. Once you know how much home you can afford, you can perform your home search based on your pre-approval amount or less.

 

Plan ahead…

It is crucial to determine how long you think you will be living in the property you are about to buy. It is pointless to buy a studio flat knowing you wish to start a family soon. Similarly, if your job or your financial circumstances are in any way to become unstable in the near future, make sure you will be covered financially.

 

Find a Diligent Agent

Once you know how much you can spend, and what your planned future holds, you are ready to begin your search for an agent. Some buyers choose to first select their agent before doing any of the above. This might be a wise choice in many cases, as if you have the right agent by your side, you are covered in all areas.

 

Your agent can help guide you through the financing part of buying a home and will have a better handle on the market. They will represent your interests and keep a constant eye out for newly listed homes you might love. Look for an agent who is educated and who has lived in the area for a long time, knows the market, and who is knowledgeable about problems with potential homes and who’s invested in educating you about how to buy a home.

 

Where You Would Like to Live

If you aren’t sure about your specific location, spend some time in the areas you’re interested in at different times of the day to get a feel for the area, for instance visit during  rush hour and at night time. Consider what you would prefer: an older, more established area, or a newer one? Do you like communities with plenty of activity or a secluded cul-de-sac with more privacy? Would you like to live in a gated community or are you prepared to trade some security for your independence?

 

To some extent, the answers to these questions will help you decide where you should start looking, but you also need to consider whether these neighbourhoods are within easy reach of work, schools, public transport, medical services, shopping and entertainment facilities.

 

Market Research

The statement “Knowledge is power” applies multiple times to the process of buying property.  A level-headed understanding of the property market, will give you an advantage.

 

Once you have chosen your suburbs to buy in, take your time to learn more about that area. What is the price of homes there? Does this fall within your range? Is there potential for solid capital growth? Browse the online listings in and around your budget, go to open houses, and depending on what’s important to you get to know the neighbourhoods, find out about schools, crime/safety and traffic.

 

Your Current Housing

It might seem very unappealing to a seller if your offer is dependent on you selling your current house, as they have no idea how quickly or easily it will be to sell. It is advisable to sell your current home before you seriously start looking to buy a new one. That would mean possibly needing to rent a storage unit for your belongings and find provisional housing.

 

What Features Do You Require?

You will need to decide on the features which are required in order to meet your family and lifestyle needs. Make a careful list of the things they would regard as essential and non-negotiable, for both your current circumstances, as well as your future plans.

 

How many bedrooms or bathrooms do you need? Make decisions around a home office or a granny flat, how much parking is required, and whether or not you need a large garden for their children and pets. This will make it easier for the real estate agent working in your chosen area to help you find your ideal home, and not waste anyone’s time showing you unsuitable properties.

 

Sectional Title or Full Title?

Sectional title units are less maintenance intensive for homeowners. All exterior maintenance of the property and the complex are taken care of by the body corporate, however, this will require the homeowner to pay a levy or monthly association fee to cover services and repairs within the development. On the other hand, full title homes come with more privacy and the freedom to add on or renovate without requiring permission from the body corporate. Along with the freedom comes the full financial responsibility for all maintenance.

 

House hunting is a learning experience and buyers need to take into account that there is no such thing as the perfect house. Ultimately you want to find that home that incorporates the things that are most important to you.

 

Be water wise

Gardens are an enormous contributor towards a home’s curb appeal, a term which has been around for centuries. One could imagine that as real estate trends change, this might have as well, but it is still very much a huge determining factor when buying a home.

 

The busier we are, the less time we have, the more our attention span decreases, leaving visual aspects a primary element in today’s busy lifestyle. Just look at your social platforms or how general marketing & communication has changed – photos are key, and that is true in property as well. A well-established and maintained garden is always considered an asset, unfortunately not everyone has the time to tend to a garden, and with recent water restrictions it’s not always possible.

 

Statistics show that the demand for water wise properties equipped with boreholes, smaller lawn areas or with small gardens has escalated. Online searches for “borehole water” and “eco estates”’ have also increased steadily. “The prolonged drought, especially in the Cape, has home buyers thinking twice about the choices they make when buying property. Homeowners that have an alternative water source or low water consumption on their property definitely have an excellent selling point, not only do buyers hope to conserve water, they are also hoping to reduce their bills” says Craig Hutchison, CEO Engel & Völkers Southern Africa.

 

Buyers have become more informed when making property purchases and are ensuring they have some sustainability in their homes; it is not only in the sales sector but in rentals as well. Landlords are starting to invest in implementing rainwater-harvesting systems and adding water wise indigenous plants, considering artificial lawns, and water and electricity saving mechanisms. This ensures that they offer tenants the opportunity to live in a place where the utilities are more controlled and properties equipped with these elements are more marketable.

 

Water wise gardening

In the past having a lush green garden was no problem, this is not the case anymore and we need to ensure we can adapt to still deliver a pretty picture but while saving water. We look at garden trends we can expect to see this year, to help create a water efficient garden.

  • Lawns guzzle plenty of water, so some consideration should be given to if you really need one. Reduce its size or remove the lawn completely and replace it with paving, decorative stones, ground cover, gravel, pebble paths, succulents or a mix of all, which will provide inexpensive and low maintenance solutions. If you keep some lawn, don’t mow it too short, as this lets the roots dry out quicker. For smaller areas artificial grass can be used.
  • Replace all plants that need plenty of water with low water users. Look for plants that store water such as succulents and aloes. Plant a xeriscape succulent garden – xeriscaping is a landscaping style and method that was developed in arid areas that uses a lot of stone and a succulent plants. A xeriscape is very low maintenance garden and will actually die from over watering. Remember to go indigenous, planting what occurs naturally in your area – exotic plants often need more water.
  • Use mulch to stop moisture escaping, preferably organic, such as pine needles, bark, and straw or wood chips. Apply a 5cm-thick layer to soil that’s already moist. Check that water is able to penetrate; simply loosening the mulch can improve its porosity, reapply periodically.
  • Build a water conserving rock garden, which can take many different forms and can be a great way to showcase different and unique plants. Rock gardens can be designed with shade or sun tolerant plants. When selecting plants consider choosing plants with the same sun, water, and soil requirements. Ground covers can create a cascading or trailing effect; succulents thrive in hot, dry sites and high elevation wildflowers can create a beautiful bloom effect.
  • Check whether your garden has bore water and whether a simple spore and pump can be installed to access it.
  • Install a grey water system to capture and recycle water from baths, showers and washing machines. Make sure you use cleaning products that are safe for garden use. You’ll also need a booster pump to operate the irrigation system and have your grey water connected and filtered in to the irrigation system.
  • Don’t waste rainwater; harvest it from the roof, the driveway and patios. Direct it into water tanks or reservoirs which can be hidden underground.
  • Install a water wise irrigation system preferably fitted with a controller, soil moisture sensor and rain sensor. This ensures that plants will only get water when they need it.
  • Resurface driveways, yards and paths with porous surfaces or paving blocks and plastic grid systems filled with plants.
  • To save water, change your swimming pool into a wetland pool which can be used to water the garden during periods of drought.

 

Even with the blessing of the needed rain, it is still going to take the country some time to restore itself, and even if we were to reach this point, being water wise will always remain a positive point. In the long-term, small changes could save you money and ensure your property is always market -ready and appealing to buyers.