Archive | June 2015

Want to sell? Put yourself in the buyer’s shoes

If you want to sell your home fast and for the best possible price, you actually need to think like a buyer – and scrutinise every part of the property as if you were seeing it for the first time.

Stand at the front gate and try to imagine what the approach to your front door might look like to a stranger. Walk through your home as a prospective buyer might do and view every room with a fresh eye. Go out to your patio or entertainment area and consider whether it really looks like an inviting leisure space.

In a familiar environment, we tend to “blank out” small faults – like that chip in the kitchen counter, or that one cracked tile in the bathroom – that make no real difference to our daily lives. However, such imperfections will stand out to prospective buyers, who after all are there with the express purpose of discovering whether your home is in good condition or if it would require a lot of repairs and upgrades.

And if their mental list of potential problems gets too long, they will rapidly lose interest, or perhaps only make you a lowball offer. On the other hand, the less work they can see, the more likely they are to quickly make a good offer, so it is well worth following the guidelines below to get your home “move-in ready”:

  • Have a major clear-out. You want potential buyers to see your home, not your belongings. Every cupboard should have the minimum in it so it shows how much storage space there is, and every room should look spacious, not crammed with too much furniture or darkened by heavy curtains.
  • You should also remove ornaments, mementos and personal photos from bookshelves and countertops and box them up ready to go to your new home. In fact, it is a good idea to hire a self-storage unit while your property is on show and keep everything extraneous there and all packed as this will make your move easier too.
  • Don’t forget the garage. Potential buyers want to see where they would be able to park their car – especially if the garage has direct access into the house and this is important to them for security reasons. They do not want to see a room filled with old garden furniture, broken pool equipment, half-empty paint cans and various other junk.
  • Get a second opinion. Once you’ve decluttered your home, ask a friend to give it the once-over with clipboard in hand and make a list of whatever they would change or fix. This will help you identify everything you might need to address before you put your home on show.
  • Get expert advice. If you are working with an experienced and properly qualified agent, he or she will quickly be able to tell you which of the projects on your list are really worth doing – and which will probably not be important to potential buyers.
  • Give buyers a blank canvas. If your agent recommends freshly painted walls inside or out, neutral colours like beige, pale grey, cream and white should be the colours you pick. Again, you want buyers to visualise how they would live in your home – not necessarily to see your personality expressed in vivid colours or bold patterns.
  • Make it shine. Glossy floors, sparkling taps, gleaming widows and not a speck of dust or grime anywhere. Nothing sells like fresh-smelling and scrubbed-looking, and even if you don’t have time to do anything else before your home goes on show, a deep clean will score you lots of points with potential buyers.

Lower taxes, deposit rates give first-time buying a boost

First-time home buyers are still working hard to get into the property market and as a result, they currently account for more than 40% of all home loan grants, according to the latest statistics from BetterLife Home Loans, which is SA’s biggest mortgage originator.

“Despite all the economic gloom, we have also seen the actual number of home loan applications from first-time buyers start to pick up again in the past few months,” says BetterLife CEO Shaun Rademeyer.

“This has perhaps been prompted by rising prices and the prospect of higher interest rates in the near future that might prevent them from being able to afford a home or from qualifying for a bond. However, the increase in the transfer duty threshold has really helped, as has a decline in the average deposit size required.”

Although we do have a home loan calculator on our website, first-time buyers will not require one to realize that this is great news.

The BetterLife statistics, which represent 25% of all residential mortgage bonds being registered in the Deeds Office, show that in the 12 months to end-May, the average percentage of the home purchase price that first-time buyers were required to pay as a deposit was 7,64%, compared to 8,51% in the previous 12 months.

This meant, he says, that the actual cash amount first-time home buyers had to pay as a deposit also declined during this period – even though the average home purchase price for first-time buyers increased. “What is more, a home at the current average first-time buyer purchase price of R648 000 has since March attracted no transfer duty, so the total amount of cash that such buyers need to complete their transaction is now considerably smaller than it was a year ago.”

It is safe to say that buying a home is a more pleasant experience knowing that the deposit is reduced.

Meanwhile, says Rademeyer, there has been a strong gain in the past 12 months in the percentage of home loans being granted for more than R1m – even though the overall average home purchase price for this period is only R945 000.

“Our statistics show that the percentage of loans granted for more than R1m rose by more than 7% – with most of the corresponding decline occurring in the under-R500 000 category.”

Most of this gain, he says, occurred due to repeat buyers expressing their confidence in the market by “trading up” – and in many cases using the equity they had built up in their existing homes to do so. As it is, repeat buyers account for some 53% of all home loan applications at the moment (compared with 46% two years ago) and of course for 60% of loan grants.

On the lending front, Rademeyer says, the percentage of home loan applications that are being declined outright fell to 28% in the year to end-May from 32% a year ago and 37% in 2013, which he believes is largely due to the fact that many prospective borrowers are in much better financial shape now than they were two years ago. “They have less debt, their salaries have risen and, as mentioned, many now have more equity in their existing homes that they can use to put down bigger deposits and lower their risk profiles.”

Nevertheless, he says, it is still advantageous for homebuyers to go through a reputable mortgage originator like BetterLife to make sure that their application is prepared and presented properly and that they will get the best interest rate possible.

“The evidence of this is that BetterLife has been able to secure the approval of 73,6% of all the home loan applications it has submitted to the banks in the past 12 months, while the average approval rate in the home loan sector is below 60%.”

Home sellers: Don’t forget the great outdoors

Most homes have some outdoor space – even if it is only a tiny balcony or a pocket hanky-sized patio – and this area really can make or break the sale of your property, especially in SA where the great weather prompts so much outdoor living and al fresco dining.

What is more, it’s not necessary to spend a fortune to get it looking its best. Just focus on the following fixes and your “weekend space” will be a winner when your home goes on show:

  • If you have a front veranda, make it say “welcome”. Banish clutter, paint the ceiling, clean the floor and set up an easy chair or a small table for two to show how inviting the space is.
  • If you have a back patio, perhaps off the living or dining room, you can easily and inexpensively install some basic exterior lighting, add a (spotless) braai that says “relaxed entertaining”, and stage a party table with fresh linens and glassware.
  • If you have a courtyard just off the kitchen, don’t just hang your washing there. Make sure the walls are freshly-painted, add some tubs of bright flowers and herbs, and install some seating to make it an attractive space for morning coffee or afternoon tea. If you have to have a wash-line here, choose one that folds flat against a wall.
  • If you have a wooden deck make sure it is freshly washed and / or newly varnished, and once again stage it somewhat to show potential buyers how it could be used. For a look that instantly says summer, add a sun-lounger or two, a large garden umbrella and a couple of planters full of bright blooms. For winter entertaining, you could set up the braai and a patio heater, and dress up your garden chairs with some warm throws.
  • If you have a large garden, bear in mind that what most buyers want these days is a low-maintenance space that does not require too much of their limited downtime to keep up. The best way to present a space like this is to mow the lawn, neaten up all the flowerbeds, cut back any overgrowth and stage a gracious garden party beneath a large tree. If you have the money, it is also really worth installing an irrigation system and a timer.
  • If you have a pool or a hot tub, make sure it is clean, safely fenced and set off with some shrubbery or planters. Turn on the lights and the pump if buyers are viewing your home at night.

Manage Your Credit Record

A high salary and a substantial deposit are no longer enough to ensure the success of your home loan application if your credit score is low, says Shaun Rademeyer, CEO of BetterLife Home Loans, SA’s biggest mortgage originator.

“Lenders will always look for stability and reliability in a potential borrower, and a good record of paying off previous debt such as a student loan, a credit card balance or a car purchase will go a long way towards boosting your credit score and securing the approval of your home loan application.

“If the prospective buyer has already had a home loan that has been managed well, the process should be even easier, but even a good record of making the monthly repayments on a cell phone contract or a store account  on time and in full will help.”

On the other hand, he says, consumers seeking credit should never try to cover up any previous money problems. “Your credit record in this country is easily traced by the lending institutions, who have access to information about how you manage your finances from a multitude of sources, so if there has been a payment default in the past it is far better to be honest about it.”

Do not wait until you have a bad credit rating to improve your credit score, simple things such as ensuring that you check your credit score and keeping up-to-date with your credit rating will ensure that you do not fall into the pit of bad credit.

“The fact is that most people have had some money trouble at one time or another, and that as long as you have dealt with it responsibly and established a new pattern of wise financial management, it should not preclude you from being able to obtain a home loan.”

What is more, says Rademeyer, it is easier than most people think to build up a good credit history and improve your credit score, by sticking to the following guidelines:

  • Always use exactly the same name and surname combination for credit applications and credit cards, so that there can be no confusion about which credit lines belong to you or misunderstanding about how much credit you currently enjoy.
  • Never run joint accounts. One person’s credit problems can haunt another’s credit rating for years, even if they were created before they had a joint account. And in the case of divorce, any existing joint account should be terminated immediately.
  • Never pay late. When you open your municipal account or credit card statement, for example, you will see both a “payment due” and a “due date”. Make sure you make all payments due no later than 30 days past their due dates, or there will be “late payment” entries on your credit record that could cost you your home loan.
  • Don’t use your available credit too much. Maxing out your credit card every month, for example, can really hurt your credit rating, even if you diligently pay off the whole balance due every payday. What matters to lenders is how much of your available credit you use each month, so try to keep the balances as low as possible on all your lines of credit. This will guarantee that you manage your credit record efficiently.
  • Make sure to use some credit. If you have been scared off purchasing anything on credit and always use cash only, you will have difficulty proving that you can manage accounts and monthly repayments. Also if you have had accounts in the past and no longer use them, you need to formally close them yourself or they could show up as default/ abandoned accounts on your credit record – unfair as that may seem.
  • Sweat the small stuff. Check your credit score once a year to see if there are any problems you didn’t know about. Errors do occur and businesses make mistakes, and you need to address these as soon as possible. But you could also have unpaid bills you were not aware of or thought you had paid – especially if you have changed address a few times – and these cause your credit score to plummet if they go unresolved. If you do end up with bad credit, learn how to fix your credit and proceed to raise your credit score.
  • Save for a deposit. You don’t have to put all your savings towards this goal but there’s no doubt that lenders are more inclined to grant loans – and interest rate concessions – to those who have demonstrated the financial discipline to save, and who are prepared to invest at least some money in their own properties.
  • Don’t allow too many credit enquiries. Each time you apply for credit and the credit provider generates an enquiry, it shows up on your credit record, and too many enquiries can damage your credit score because it looks as though you are trying to borrow too much. However, multiple enquiries within a two-week period are usually “read” together as one enquiry, so if you are “shopping around” for a home loan, you should be sure to collect the quotes from various lenders within 14 days – and this is where a mortgage originator like BetterLife Home Loans can really help.
%d bloggers like this: