Archive | October 2012

Top Tips For New Agents

By Meg Wilson

People new to the real estate industry obviously need training and technology, but even if they are fortunate enough to work for a company that provides the very best of both these things, they are going to need something else, and that is a “take charge” attitude towards their own future.

They need to take responsibility and plan for their own success, and with that in mind, here are the four top tips for new agents gathered from some of the top real estate trainers in the world:

* Get started right away on building your client base – business is not going to just come to you. Look beyond your circle of family and friends and their contacts and devote a certain amount of your time every day to business development through calls, emails, creating relationships with other property service providers such as bankers, attorneys, relocation specialists, developers and renovators. And if you don’t already know, learn to use social media because these can help you expand your sphere of influence exponentially.

* Real estate is a real job, so be there. Among other things, this means putting in a full day’s work every day, and showing up to appointments and meetings on time. Being late for a listing presentation can easily cost you a mandate and being unprepared when a prospective buyer calls can easily cost you a sale.

* Always tell the truth. Agents face many dilemmas – for example, what to tell buyers who can’t afford the type of home they want to view, or sellers who want to put a R1m price tag on a property that is only worth R900 000 – but it does not pay to hedge or shade the truth. In the latter instance, many agents would take the listing at R1m and deal with the price reduction problem later. The point is that they will have to face the consequences at some point, and they will probably have wasted a whole lot of time and advertising money in the meanwhile. Likely as not, they will lose the confidence and respect of the seller in any case as the overpriced property languishes on the market.

* Learn to let go and to laugh. The real estate business is fraught with tension when you consider you are dealing with people’s lives, emotions and hard-earned money, and they will often take out their anxieties and frustrations on their agent. So in addition to competence and empathy, a sense of humour will help you keep your balance. And when things don’t go as planned, don’t brood. Work to understand what went wrong and then move swiftly on to make the necessary changes so it doesn’t happen again.

Niche Marketing: Selling to millionaires

According to the most recent WealthInsight report, South Africa has the highest number of millionaires in Africa – some 44 700 of them, with a combined wealth of around US$188 billion.

This means that there are very likely more millionaires in the country now than estate agents, so if there was ever a time to start building a career in luxury real estate, it’s right now – especially since the top end of the market seems to have come alive again (see article above).

But in order to make the transition to high end properties and high net worth clients, you’ll have to give up the idea of a lifestyle as leisurely and apparently effortless as that of your clients.

Says one agent who has already made her mark in this sector: “You don’t just get to deal with wealthy sellers and buyers overnight. These are people who are used to working through business managers and attorneys. Their level of sophistication is extremely high and they expect extraordinary service, 24/7.”

However, for those who aren’t deterred by that thought, it is definitely a huge market, not only in SA but around the world – even though the number of super-wealthy has dropped slightly in the past few years.

The latest Cap Gemini and RBC Wealth Management Report reveals that there are still 9,9 million people in the world who have between US$1m and US$5m to invest, and 100 000 with more than US$30 million at their disposal. (SA, incidentally, has 543 of these multi-millionaires).

In the Asia-Pacific region there are 3,37 million men and women with more than US$1 million in the bank, and in North America there are 3,35 million.

Altogether, the world’s wealthiest have US$42 trillion at their disposal, and it certainly would be great to attract some more of those investment dollars to SA.

Deposits Back at Recession Levels

The average home price rose at an annualised rate of 6,15% in September to R886, 000, but the average percentage of purchase price required as a deposit in order to obtain a home loan also continued to accelerate. It rose to 19,3%, compared to 17,4% in August and 16,5% in July, according to BetterBond’s latest statistics.

This means that the average home-buyer must once again have almost one fifth of the home purchase price available in cash before applying for a home loan, in addition to the funds required to cover transfer duty, bond registration and legal costs. This is similar to the situation during the recession of 2008/ 09 and, given the mounting pressures on the lending institutions to lower their risk, we do not anticipate that this trend of increasing deposit requirements will change for some time, meaning that those who are currently on the fence about buying property should do so without further delay.

First-time buyers may find it somewhat easier to take this step, with the average first-time buyer home price now at R648 000 and the average percentage of purchase price required as a deposit at just 12% – even though this has also increased, from 11,6% in August and just 9% in July.

However, the BetterBond statistics – which represent a quarter of all residential mortgage bonds being registered in the Deeds Office and include applications to, and bond grants from, all the major lending banks in SA – also reveal a sharp drop in the percentage of loans being granted for 100% of the purchase price. This dropped to 29% in September (from 35% in August, 39% in July, and 41% in June) and could signal a slowdown in first-time buying over the next few months. Indeed, the percentage of bonds granted in the R500, 000 to R1m bracket that is traditionally the preserve of first-time buyers has already dropped to 35% from 38% a year ago.

For now though, housing demand continues to rise – perhaps because more consumers in the upper price brackets are realising that if they don’t buy soon, while prices are still at relatively low levels, the increasing deposit requirements and other costs of home acquisition could drive them out of the market.

Our statistics show an increase of 11% month-on-month in the total number of home loan applications made during September – with a surge in demand for bonds of more than R1,5m, even though the average deposit required in such cases is well above 20%. Some 29% of the bonds granted in September were for homes priced at more than R1,5m, compared to 25% a year ago, which resonates with a number of reports recently about an increase in sales activity at the upper end of the market.

Save Money on Household Expenses

According to recent reports by the Central Bank, South African household debt now stands at 75% of disposable income. In order to help you rein in some of this debt, we’ve compiled a list of ten ways you can save money.

Shop around for the cheapest household insurance.

The Internet has made finding cheaper insurance easy and you can compare hundreds of policies in minutes.

Learn to say ‘no’

You probably don’t need that R189 pack of nuts from Woolies, or that pre-packed meal. Sometimes you just need to say no to yourself. And if you have children, get out of the habit of buying them a treat every time you’re at the shops.

Trade down your car

Buy an economic car that doesn’t guzzle petrol so you aren’t spending thousands every month on fuel. You can also find plenty of great quality second-hand vehicles from reputable dealers.

Stop smoking

If you smoke one pack a day, you’re spending roughly R10,950 a year. That’s a holiday overseas.

Take up a money-saving hobby

Hobbies not only open your mind to new experiences but also keep you busy (ie not spending money on expensive lunches at Clifton).

Shop online

Online grocery shopping is getting easier and better all the time. On top of being able to easily compare prices, you will also avoid the temptation of buying impulse purchases that you see in-store.

Sell your clutter

Everyone has stuff they never use. Garden implements, tools, old clothes, paintings. If you don’t need them, sell them to someone else who does. You can sell anything on Gumtree or Ebay.

Clear your credit card debt

One of the golden rules of financial planning is to clear your most expensive debts first, in other words your credit cards.

Avoid those after-work drinks

Saying no to a few drinks after work will not only prevent you wasting money on booze, but can make you healthier as well. It also stops one drink turning into ten.

Book holidays early and do it online

If you book a holiday early, you can benefit from substantial discounts. Additionally, finding your own package holiday online and comparing this with a travel agent could save you some extra money as well.

 

The First Time Buyer’s Guide to Deciding on a Home

When deciding on purchasing property for the first time (and every time after that) it is necessary to understand exactly what you are getting into. You should plan for every cost as far as possible, and think of what owning that property will entail. Below we have provided a few things you should check before you buy your dream home.

You should try plan for the future, and consider the whole family’s needs. Do you have an elderly relative who may need caring for some time in the future? Are you planning on starting a family soon? Will your twins need separate bedrooms? Do you have an idea of how long you plan on staying in this house? All these questions will help you make a decision about what sort of property you need.

Look at rates in the area to budget appropriately. As well as considering other expenses such as repayments per month on your bond and transfer fees, even things like groceries and school fees should be taken into account. Make sure you can afford all costs associated with buying a house- and living in it.

Make a list of all the things that you would like in your ideal home and another list of what you deem absolutely necessary that your new home has. For example: you need two bedrooms, but would like three. Two bathrooms are absolutely necessary. That way, you will have a checklist to take when looking at houses, and can easily rule out those that don’t meet your needs.

You should also consider the area you want to buy in, and whether this is the area you can actually afford to buy in. You may have to sacrifice a big garden and a larger house for a smaller property if you are looking to buy in a popular, more expensive area. Look at the facilities in the area as well; are there gyms, school, transport routes nearby, and is it near a highway, or close to the shops? Research the area, ask neighbours what the crime levels are like and look at the schools. Get a crime report of the area as well.

What sort of ownership will you have over your new property? In South Africa we have several types of ownership: freehold, sectional title, 99-year leasehold, or share block. It is important to check the title deeds and land ownership to ensure you know exactly what rights and responsibilities are attached to the property.

You should look at what council submissions are necessary to make sure that any future possible extensions are legal. Some properties also have restrictions on what can be put on them (these will be in the title deeds), but most extension and renovating involves planning permission from a council, so you should check what this entails. You should also check the condition of things like the roof, whether there is damp and any other faults there may be in order to avoid lengthy and expensive renovations in the near future.

There are a number of ways to protect yourself, especially as a first time buyer. By ensuring you are prepared for many of the eventualities that often trap new buyers, your first buying experience will be as pain free as possible.

 

 

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