No good deed will go unpunished! (part 2)

During this time we  chatted about what we had done during the 10 years of not seeing each other and I told her about my investment properties in Hillbrow and the CBD, this peaked her interest and she told me that she has been toying with the idea of becoming a Managing Agent. Subsequent to this discussion she offered to "help" me manage my units and I thought it would be a good idea because she was an accountant, she worked for Joburg water and had good inner city connections and knowledge and she could be trusted. Good deed number two!

The next thing she got suspended from work because she had unraveled irregularities and had become a threat to her boss and colleagues. I then introduced her to Dave, my principal (at that stage) who is also a city councilor and he was very keen to help her expose the irregularities - she never allowed him near her evidence.


Now I suddenly became her best friend, I think it was more like her only friend! She now insisted on visiting all my flats and meeting with my tenants, I did not think anything about this and was comfortable doing this. I don't know why she did this but I have always been on very good terms with my tenants and I don't think it would have been easy to interfere in these relationships.

Meanwhile she approached both Dave and I about her managing agent idea and we decided that it would be a very good mix of talents, her accounting and workings of the utilities knowledge, my connections, experience and knowledge of property in the inner city and Dave's property and council knowledge. Dave was at this stage managing a couple of buildings and was struggling to implement a good system. At the same time I had realized that one of my investments was being extremely badly managed and as chairman of the Body Corporate was thinking of replacing him. So, Dave and her went into a partnership and I got the managing agent fired and got her in as the new managing agent. Good deed number three! 

This was sort of a good thing because the previous managing agent was killed a couple of months later in a car accident and the story was that he was forced off the road by his Nigerian drug supplier and that a lot of money in his trust fund had disappeared. Fortunately I had saved my building from this but I had now put it on a course for another disaster!

Things went really well for a couple of months. I was working very hard trying to learn my new career and money was very tight on my side. She, however, was still suspended on full pay (this long vacation lasted nearly a year if I remember correctly!) and she worked on the three buildings. She seemed to be knocking on my door everyday to pop in for coffee and a chat, I was quite stressed about making money and I was still very uncomfortable about the drama in America. She arrived one morning just after breakfast, I had an appointment and told her she could come in but I didn't have time for coffee. I asked her to please stop arriving unannounced and to please just check with me that it was convenient and to please understand that although I was at home I was working and could not afford to be interrupted all the time. This was the trigger!

Charles - how will I miss you?

For those of you who don't know yet, my only child, Charles, is going to teach in Korea for a year. He will be leaving Monday 19 October. This is the feared "Leaving the Nest" time for me and I thought I would share some of the emotions with you and hopefully make it easier for some of you when your turn comes.

Dear Charles, our lives will have been wrapped around each other for the last 23 years, 9 months and 4 days on the day you leave and I can't imagine how it will be to wait for so long to have you home again.

What I will miss:
Being your GPS - You phoning me on the way to a strange place asking me the way and then arguing with me about my directions! Why do you phone me if you know where to go??

Being your deadline - How do you always manage to push your deadline to the last second and not only that, you push it onto me and then start nagging and threatening me that I'm not going to make it. Remember paying for your flight to Korea??

Drinking your tea - I need to ask you to make me tea a hundred times before you do, then you make it and leave it to draw while you sit outside smoking and reading a book. By the time I start freaking out about my tea you discover that the drawing tea is now ice cold and beyond strong then all you do is nuke it in the mike and tell me it was made with love!

Smoking - I am happy that you respect the no smoking inside the house rule, but why can't you put your stompies in the ashtrays provided at the front door and at the back door? The dogs will be happy to have ash-free water and it will probably take a year to get rid of all stompies in my garden!

Shoes - I don't know where you got the habit of taking off your shoes when you come into the house at night, I learnt very quickly to expect your shoes anywhere and always managed to avoid falling over them when walking in the dark house at night.

Sleeping - I am so used to waking up at 4am when you come home from playing computer games with Charl. Hopefully my sleeping pattern will eventually go back to normal!

Chatting - I often wonder what it must be like having a daughter to chat to. All I can say is chatting to you is never boring, your theories and opinions are a mixture of naivety, entertainment, frustration and amazement. You've got IT - don't waste IT!!

 All I can say is it's been a pleasure raising you and I hope you have an amazing adventure forwards, you are well prepared and will be able to handle anything that crosses your path. Dink voor jy doen! 

Remember your fanclub at home loves you very much
Woof - Ugly, Lucy, Roxy and Wit Hond
Bye, Bye King - Bongi
Bye Fat - Johanna
Bye my Liefie - Ouma
Bye my boy - Oupa
Bye Asshole - Mom

Property - The beauty contest has started!

Property Trends
There has now been a definite shift in the market in my area! The latest homes that has come to market are really stunning compared to stock on the market three months ago, check my links at the end of this post. The agents, the few that are left, have now also come out of hibernation and are very active again. Three months ago the MLS open hours were attended by 3 to 6 agents, this past week we had an average of 9 agents per viewing and in some cases 20 agents attending. This means the buyers are now serious and the agents' phones have started ringing again.

If you have been thinking of investing in a second property or upgrading - now is the time!

Some tips when buying in a buyers' market

• The timing in and out of the market is crucial for the investor. The homeowner who lives in the home for about 7 years will benefit from his/her patience but a buyers' market creates a golden opportunity to upgrade . If you are down-scaling you have to try and sell at the peak of a sellers' market.
  
• The best homes are withdrawn in a buyers' market and re-appear when the market starts picking up again, I believe we are now entering this phase.
• Location drives value. Buying a rundown property in the best location means that you will benefit from the surrounding area. It is a known fact that suburbs can demand a premium. A good example of is this over capitalised house in the list below, in a better area this house could fetch R890,000. The best example of this in my stock is this Florida home.
  
• The market is ruled by what we term "imperfect communication". Buyers and sellers only see asking prices which are extensively marketed, but seldom see what is really negotiated. Ask your agent to show a CMA (Comparative Market Analysis) for the property you are interested in buying. This will give you a good feel for the "real prices" in the area.

 New Stock on the Market
Under R700,000
An investment property - R360,000
For the first time buyer - R485,000
URGENT SALE - R499,000
Entry level home - R 540,000
An excellent investment both for R1,1m or R590,000 each
Upgrade from a flat to this beauty - R595,000
A fixer upper - R699,000

Under R1 million
A real beauty - R750,000
Stunning! Over-capitalised - R780,000
URGENT SALE - R820,000
Townhouse with private pool - R850,000
Well maintained home in cul de sac - R850,000

Over R1 million
A large home - R1,09 million
My favourite!! - R1,15 million
A large family home - R1,48 million
Large house and 2 bedroom flat - R1,8 million

No good deed will go unpunished! (part 1)

I have had a terrible fortnight! A "friend" from my past is haunting me and for two years I have tried to put the ugly mess behind me but I have now decided that it will not go away unless I do something about it!

What is friendship? Someone who was at school with you then went to the same Varisty and studied the same course and hung out together and became friends. We then lost touch, can't remember why, but she got married and I didn't. Couple of years later we realised we both had babies three months apart, she still married and me still not, skande! We then rekindled the friendship around the struggles of patenting. I actually can't remember if we kept in touch all the time or not but she got divorced along the way and of course I am still single. When the kids were about 9 we decided to take them to Disney World. It was a well planned trip and affordable because we were sharing everything.

Forcing two only children to share was a bit of a challenge and I ended up packing my bags and knocking on my long lost cousin's door in Houston. This was a blessing, they welcomed us with open arms and we had such a good time that we went back a couple of years later and she constantly nags me to come visit again.

Well I don't take kindly to being kicked out in a strange country and the friendship ended here, or so I thought! I sometimes wondered how she was doing because I can't imagine life could be easy if you are aggressive and constantly fighting, but she was involved in an affair with her boss and I imagined that she was happy. And my life was full with a son that was growing up fast and all the challenges of being a single parent, building a career in a very competitive environment and I have a family who are very involved with each other. So life went on.

I have another friend, Mr Cupboard, who was also at school with me and we have a very special friendship, we call each other every now and then meet up for a drink or a meal and generally have a good time in each other's company. For any of you thinking of making a match - he is married to a girl who also went to school with us and she also has a good time with us! Anyway he started nagging me to do a class reunion in 2006, which we did and he invited Angry Friend and I decided to be civil towards her.

At the reunion we were civil towards each other and after a lot of wine flowed she came to chat with me and asked about everyone in my family - it ended up being a one way discussion because by now she had fought with everyone in her family and alienated them all - I kid you not! She only had her daughter, then studying at the same Varsity as my son, Charles. I felt sorry for her, and had consumed way too much wine and so I decided that bygones were bygones and to get over myself.

Shame, after-all she had no one and I had a big family and lots of friends, surely I could open my heart and forget about the past - Good deed Number One.

How innocently we set ourselves up for disaster!

Property Scam - Please be careful

There is currently a group of people "buying" property who are running a scam, we are not sure what the final result of the scam is because we have been fortunate to smell a rat before they could complete the con.

The people we have dealt with are all foreign males but I'm sure that they come in all shapes and sizes. They approach us with a cash offer on a house, they seem to be very keen buyers not bothering to negotiate. They then insist on getting a copy of the offer to purchase but are not prepared to hand over their FICA documents or they supply forged letters.

Please be very careful, we are not sure why they are doing this! It seems the big thing is getting the offer.

Property Market Trends - Mortgage Bonds

There are signs of life returning to the property market, or green shoots (the new media buzz word). With the falling interest rates and the easier entry into the market (lowering of deposit requirements) there has been renewed interest and we are starting to see an increase in sales.

The banks had taken the opportunity of a quiet market to renegotiate their contracts with the bond originators and it seems there has been a power shift from originators (squeezing the bank's rates to as low as 4% under prime) to the banks dictating rates of up to 4% above prime.

Since 2005 the banks have steadily lost business to the originators, as the chart below shows the banks hardly granted any bonds (directly to customers) by end of 2008. This gave the originators the upper hand and they also squeezed the banks for commissions of up to 2.5%, which resulted in the banks paying the originators billions per year! These billions ultimately came from customers in fees and charges.

The banks have now renegotiated the originator's commission down to around 1.5% and are aggressively encouraging clients to approach them directly for bond finance at a rate lower than the originators can negotiate.

I hope that once the banks start feeling the benefits of the increase in revenues from interest rates above prime and lower commissions to originators they will give some back to their clients in the form of lower bank fees and also in lower bond rates!

Remember all these costs were shifted on to us as consumers in the form of admin fees and bank charges!

Source: Financial Mail

Property: House up for grabs in Sudoku competition

Struggling to sell your house?
I found this article on the Internet and I do believe it is true and I also think it is legitimate, I am just not sure what the legal requirements are for foreigners to buy property in the UK and would advise any foreigners to first inquire before spending the £50.

A 49 year old finance broker, Dave Mackie from Hambleton near Blackpool, is looking to raise £700,000 by getting 14,000 people to enter the Sudoku raffle for £50 each. The money collected in entry fees would subsequently cover the value of the three-bedroom property, which stands at £675,000, plus £25,000 worth of advertising and legal costs. The winner, who will be picked from the entrants who complete the online Sudoku puzzle, will be announced in February 2010, or when 14,000 people have entered the competition.

He/she will then be awarded the prize of the detached red-brick property, which is situated in large grounds on the Lancashire coast. The home, located on the banks of the River Wyre, boasts landscaped gardens to the front and rear, two balconies, three bedrooms, four bathrooms, a sauna and a steam room. The lucky winner will also be able to rent a river mooring if they wish to do so.

Mr. Mackie said: "There's no catch. I'm looking to retire abroad and the time has come to move on. I thought this was a fun way to get rid of the old house and beat the credit crunch." Mr. Mackie admitted that he is a puzzle fanatic himself, before going on to explain that because he will be 50 later this year, he felt it was time to review his life. "I have properties in Egypt and have considered living there for some time," he said. "I don't believe anyone has ever set up a Sudoku competition to sell their home. This way everyone's a winner. The lucky person gets the house free from any mortgage and I get its market value."

Mr. Mackie bought the house back in the mid 1970s. In 2008, he installed new windows and built two balconies, a sauna and a steam room, at a cost of £200,000. Anyone looking to enter the competition for a chance to win the property needs to visit http://www.win-free-home.com, solve the Sudoku puzzle, and pay the £50 entry fee. Entrants will then receive a unique entry number.

All entrance fees are being held in a bank account which has been opened specifically for the competition, and will be independently audited. If 14,000 people have not entered the raffle by February next year, one of the entrants will be awarded the competition fund as a cash prize.

This is the most imaginative way of selling your house I have come across! I am hooked on Sudoku and must say I am very tempted!

Please leave a comment if you decide to enter this competition.

Source: PropertyIndex.com

Jo'burg is pregnant!

If every I have seen a pregnant city it must be Jo'burg! You can't travel 2 km without running into roadworks of some kind.

It started with the Neotel cables which were installed in all the main roads late last year. Sold to us as "Best thing that is about to happen to us - reliable and fast Internet from June 2009 and apparently it will be much cheaper." I can't say that I have really noticed a huge difference, it certainly has not become cheaper yet - I live in hope!!

I have just been away for a week's leave to Badplaas (sign of the economic times - a year ago I went to Vietnam for 2 weeks!) and driving back into Jo'burg last week just highlighted it again. I wonder about the planning around this upgrade of the infrastructure, having been a project manager in my previous life (Rand Merchant Bank IT division), we were taught to plan maximum utilization of resources with minimum disruption of current operation. What they seemed to have done is decide which roads need to be worked on and sent a crew to each road, which has now resulted and massive road works all over the city and major traffic jams and at times gridlocked intersections! I wonder if we will just wake up one day to find that all the construction has been completed and all the crews and their machines have disappeared together???

Meanwhile during this time please follow these tips:

• Observe warning and caution signs before entering a construction zone and until you see the one that says you've left the work zone.
• Turn on your lights to make your vehicle more visible.
  
• Expecting the unexpected is a golden rule when traveling through construction zones.
• Avoid abrupt driving manoeuvres.
• Always be aware that vehicles ahead of you may stop unexpectedly and maintain a safe following distance. Rear-end collisions are one of the most common types of construction zone accidents.
• Drivers should slow to the posted speed and move to the proper lane as instructed.
• Keep -up with the traffic flow. Motorists can help maintain traffic flow and posted speeds by merging smoothly and not slowing to "gawk" at road work and equipment and crews.
• Obey road crew flaggers! The flagger knows what is best for moving traffic safely in the work zone. A flagger has the same authority as a regulatory sign, so you can be cited for disobeying his or her direction.
• Don't wait until the last minute to merge to the correct lane and use correct merging techniques when changing lanes – use your indicators. Narrow lanes and restricted shoulders make construction zones a common place for lane-change accidents.
• Stay alert for aggressive drivers. If another motorist is aggressively jockeying for position, drivers should let them move on. Challenging another driver encourages road rage and endangers the safety of other motorists and workers in the area.
• Avoid distracting activities. Remaining alert for unexpected hazards is critical when traveling through construction zones. Talking on a cell phone, tuning the radio, eating, reading, or other similarly distracting activities can quickly lead to an accident.
• Watch for construction equipment and workers. Construction equipment entering and exiting a work zone without warning, equipment extending into traffic, and construction crews and flaggers working dangerously close to moving traffic are a few of the hazards to expect.
• Stay alert for obstacles and debris. Construction equipment, signs, and barriers may be located close to the edge of the roadway. Debris from work projects, especially dust, dirt, and gravel, may cause added disruption.
• Be patient, cautious, and courteous. Remember, the work zone crew members are working to improve the road and make your future drive better.

 Ask any pregnant mom how difficult pregnancy is and she can write a book about nausea, swollen feet, not being able to sleep, being uncomfortable, being emotional and irrational, etc. Then ask the mom of a one year old about being pregnant and she will tell you what wonderful and special time it was in preparation for the joy of having this cute child and that it went by in a blink.

I do believe that we will be very thankful when this is over and that we will soon forget the frustrations of this time. I sincerely hope that new improved roads will be worth the wait and frustration during this time!

I'm Back!

I am very embarrassed about my absence from my blog!

I have been studying for my NQF4 - Real Estate and trying to make money in a very depressed market. After I got the fabulous news that I passed my NQF4 I took time off to relax, but now I am back again, hopefully in a better market!

For those of you who don't know what NQF4 - Real Estate is, let me explain:
I completed my POE (Portfolio of Evidence) for my RPL (Recognition of Prior Learning) for my NQF 4 - Real Estate (Don't know what NQF stands for but NQF4 is equal to matric). New legislation is forcing all current estate agents to qualify before 2011, I got a bursary (it costs R9000, not sure why it is so expensive - all you get is a file with all the questions and assignments and a two day lecture of how to put it all together - no answers!) and if I didn't meet the deadline I would have to pay back the R9000 and then pay another R9000 or more when I do it later.

I think it is a good thing to raise the bar for this industry (hopefully we'll improve our reputations) but I think someone has started another gravy train, the assessors get R300 per portfolio they mark so the average cost of the whole thing is about R1000 per person, how do they calculate R9,000 per agent?

Please don't get me wrong I am very happy about this, because it does mean that it will now be recognized as a profession and not something bored housewives do when they need a bit extra cash to pay for the next trip to Disney World. The current entrance requirements are NOTHING, you can walk into an agency, register as a candidate agent and start selling houses - the only restriction is that you are not allowed to sign a contract (so you don't even have to be literate!), you must have a full agent with you when signing an offer or mandate, but 12 months after you registered you automatically become a full agent and can even open your own agency!

No wonder people don't trust estate agents! I am amazed at how many of my colleagues don't have matric, this has now come to light because you have to either submit your certificate or do an extra 2 modules. If I had completed my B.com degree, it would have only cost me R750 to get exemption. I am intrigued about all this money, how are "they" calculating it and who and where are "they" and can't I sell "them" some property to invest the R400m "they" are making out of this! Remember there are currently about 40,000 registered agents in SA.

It seems the hard times in the property market are over and things are finally starting to improve! I am currently working on 7 transactions which are in different stages of the process, two are past delivery of guarantees which is close to conclusion, two waiting for bond grant and two very good prospects but low offers waiting to be accepted.

The last one I literally hatched, I have been working on it since November - sold it to 4 different buyers and twice to the current buyer! I'm amazed at the willingness of SA Homeloans to take a bath on this one instead of granting a 100% bond to a guy who has an excellent credit rating etc. They are now taking a R110,000 loss up front instead of R50,000 and the extra interest they could earn over 20 years. But I have always said these guys are given a "recipe" of how to grant a bond and are not taught to think out the box and do the calculations a little bit differently. But I am not complaining because at least they are starting to grant bonds again!

It seems the properties that have been on the market forever are now disappearing but at bargain prices - so if you are considering buying an investment property - now is the time and if you have been trying to sell be prepared to get an offer lower than your lowest threshold!

The impact of lowering interest rates

I have noticed a drop in "new" homes coming on the market, or in our technical terms new listings, over the last month or two.

My conclusion from this observation is that because the interest rates have dropped significantly it means that people are getting back to a point where they can start covering their bond repayments again and are thus not being forced to sell their homes. Some analysts argue that it could be the influence of the change in seasons, but I don't believe that the winter could have such a profound change in a market so deep in recession. There is still a huge oversupply of homes for sale on the market and thus many bargains still remain unsold, but I believe that the supply will now start shrinking slowly as the bargains start disappearing off the market.

As for the demand for houses, I do think that the demand is slowly starting to rise as a result of the drop in interest rates which makes the bond repayments more affordable plus the fact that the house prices have dropped by between 10% and 20% over the last couple of months. There is still the serious problem of not qualifying for bonds or not having enough cash for the deposit which keeps the demand very low. However, I have met with quite a few clients over the last couple of months who have decided to first get their financial matters sorted out before venturing into the property market. Most of these people sorting out their financial will be ready to start buying by around October 2009, which will hopefully indicate the turning point in the market. We can only determine a turning point in a market months after it occurs and we have collected the statistics and done the analysis.

So in conclusion, if you are looking to buy a bargain property it is now time to focus and to start making a short list of the properties you like and to start applying for your mortgage bond. Or if you are thinking of selling your home - please postpone this until 2010 if at all possible, because by then the supply of homes will have shrunk and the demand would hopefully have caught up to the supply again.

Thank Goodness for another cut in interest rates this week!

Free will?

Over the last couple of month I have seen a number of TV ads offering a variety of "free" financial and legal services. Included in some of these is a Free Will.

I have learnt over the years that you rarely get anything for free especially from the financial sector. A free will can sometimes be a very expensive purchase! As far as I understand the financial institution writes up your last will and testament for you for free but you are then forced to make them executors of your will and this allows them to claim their fees against your estate. These fees are a usually 3.99% of the GROSS assets in your estate, now this amount does not sound too much but the problem is that it is calculated on the gross assets and not nett assets.

You thus end up in a situation where you buy a house for R1,000,000 and then die within the first year of buying the house, which means you owe R1,000,000 and thus the nett value of this asset is R0 but your executor still has a claim of R39,000 from your estate for executors fees. Far from free in my book! You should then also receive the life insurance payout of R1,000,000 to pay off your bond - does the executor claim another R39,000 from this amount as well? Probably.

Please ask about any "free" service offered to you by a financial institution and read the fine print carefully. It is your right to ask questions if you don't understand and please don't sign until you understand what you are committing yourself or your estate to.

You can appoint anyone to act as executor of your estate and it is a good idea to find the most competent person you know to do this, please also consider your attorney or accountant when making this decision. People typically do not negotiate executors’ fees upfront, but rather leave surviving family members to deal with this issue after death – if at all. Most executors will only consider a reduced fee if requested by the beneficiaries, who are at that stage going through a difficult time. It is better to negotiate this upfront and the negotiated fee should then written into the Will which binds the executor.

The real cost of buying a house

Buying a house is probably the most important investment you will ever make. Apart from the purchase price of the house, there are several other linked, once-off costs which, if you have not budgeted for them, can come as a nasty surprise, it is always wise to work it into your overall financial plan before taking the plunge. This way you’ll also know first-hand what it is that you can afford, keeping in mind that the banks no longer grant 100% mortgages, so buyers need to have a deposit of up to 20% of the purchase price and the buyer also has to pay the costs of registration.

Below please find an example of the costs involved in buying a house for R1 million and the a house for R500,000 - please note that these are only approximate costs.

Example 1: Purchase Price of R 1,000,000
20% Deposit R 200,000

Transfer Costs
1. Transfer Duty to SARS R 25,000
2. Conveyancer Fees R 10,000
3. Postages & Petties R 425
4. Deeds Office Transfer Levy R 500
5. Electronic Document Generation Fee R 111
6. Deeds Office Search Fee R 91
7. Local Council Rate Clearance R 150
8. FICA R 400
9. VAT R 1,500
= Total Transfer Costs (approx) R 238,177

Bank & Bond Cost on a R 800,000 bond
1. Deeds Office Levy Fee R 500
2. FICA R 300
3. Attorney Bond Registration Cost R 5,800
4. Postages & Petties R 325
5. Electronic Generation Fee R 111
6. VAT R 900
= Bond Registration Costs (approx) R7,936

Total costs (approx) R 246,113

Example 2: Purchase Price of R 500,000
10% Deposit R 50,000

Transfer Costs
1. Transfer Duty to SARS R 0
2. Conveyancer Fees R 6,000
3. Postages & Petties R 425
4. Deeds Office Transfer Levy R 400
5. Electronic Document Generation Fee R 111
6. Deeds Office Search Fee R 91
7. Local Council Rate Clearance R 150
8. FICA R 400
9. VAT R 900
= Total Transfer Costs (approx) R 8,477

Bank & Bond Cost on a R 400,000 bond
1. Deeds Office Levy Fee R 340
2. FICA R 300
3. Attorney Bond Registration Cost R 3,400
4. Postages & Petties R 325
5. Electronic Generation Fee R 111
6. VAT R 580
= Bond Registration Costs (approx) R1,656

Total costs (approx) R 60,133

Other Costs
Next you need to budget for the physical move, on average the cost of moving your furniture within a 100km radius will amount to around R10,000. Another small cost to bear in mind is an electricity connection/registration fee.

Monthly expenses that need to be budgeted for include:
1. Monthly repayments on the bond: At the current interest rate of 12%, the monthly repayment on a bond of R800,000 will be around R8,800 pm or on a bond of R400,000 will be around R5,000 pm.
2. Bond Monthly Admin Service Fee: R30.
3. Home-owner’s insurance: Banks normally add this to the mortgage amount to protect themselves against claims for flood, fire and hail damage.
4. Insurance on the owner’s life: This is to cover the cost of the house in case of death. The policy will not only cover the outstanding loan amount to the bank, but will also ensure that at the time of death the home-owner’s dependants have a roof over their heads. Life cover insurance may vary from service provider to service provider.
5. Rates and taxes: Due to the municipality for rubbish removal and the maintenance of your area.
6. Electricity and water: Due to the municipality for your monthly consumption of electricity and water.
7. Monthly Levy: In the case of a sectional title, fractional title, share block or life rights scheme.

Properties in Possession (Repossessed homes not sold on auction)

Definition
A bank repossessed property is a canceled home loan agreement as a result of the borrower defaulting on agreed installments. Legal action is instituted by the bank's attorneys and a judgment is obtained against the defaulter from the High Court. The property is then attached and the Sheriff then sells the property at a sale in execution. If the bank’s reserve price is not achieved at the auction, the property is bought into possession. (If you want to learn more about this also Google REO - Real Estate Owned, which is the American term for this property class.)

It is an ideal time for those looking for a home to investigate this source of properties for sale. There is an oversupply of houses for sale in South Africa and it is a very good idea to if properties in your area of choice is on the banks' PIP lists. The media can sometimes be a bit misleading with reports of 500 homes on a bank's PIP list, this means there are 500 properties in the whole of South Africa, which often means not one in your area of choice.

Advantages of buying a bank repossessed home
1. No transfer duty is payable by the purchaser, if you are a non-VAT vendor. The purchaser does have to pay the transfer costs also known as conveyancing fees and the bond registration costs.
2. Property rates and taxes (including all arrear amounts in this regard) will be paid by the bank in question until the date of registration. (Properties bought on Auction - purchaser "buys" all arrear levies, rates & taxes).

Disadvantages of buying a bank repossessed home
1. All properties are sold "voetstoots” and the banks will not undertake any repairs.
2. The Electrical Compliance Certificate (ECC) is to be obtained by the purchaser and costs of repairs will be at the purchasers expense.
3. The banks do not guarantee vacant occupation of the properties being sold, and purchasers will have to obtain vacant occupation at their own cost. In my opinion, walk away if the property is occupied, in South Africa we have something called the PIE Act (PREVENTION OF ILLEGAL EVICTION FROM AND UNLAWFUL OCCUPATION OF LAND ACT) which has cost many property investors dearly - please consult your estate agent and/or attorney before taking this type of risk.

The procedure is quite simple
1. Complete the specific bank's offer to purchase (available from their websites).
2. Attach all the relevant information to the offer, copies of ID, payslips, bank statements and proof of residence.
3. If your offer is not a cash offer you will be able to apply for a bond from the relevant bank. Remember you still have to have the 10% to 15% deposit and you will have to be able to cover all legal costs and the bank will expect you to produce proof of these funds.

FNB and Alliance Auction Group have started a clever initiative called Quicksell Properties where FNB is still prepared to give the purchaser 100% loans for a list of properties on their PIP list. But terms and conditions apply, I can't find any reference of these terms and conditions on either website and so I would advise you to ask for a copy of these terms and conditions before committing to anything.

Warning
You are advised to consult the relevant Deeds Registry Office for accurate information pertaining to a particular property, such as size, endorsements, servitude etc. The Bank will not be liable for any losses of whatsoever nature incurred, as a direct or indirect result of the use of the information on this list.

All users of these list do so at their own risk!

Please take heed of this warning and ask your estate agent and/or attorney to help you before taking the risks involved in buying this kind of property.

I do have copies of the latest PIP Lists for the banks and will be happy to send them to you, just let me know.