Friday, May 29, 2009
The impact of lowering interest rates
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!
Thursday, May 28, 2009
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.
Friday, May 22, 2009
The real cost of buying a house
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.
Sunday, April 5, 2009
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.
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.
Tuesday, December 16, 2008
Some of my Internet Favourites
Divine Caroline - Life in your words. Many of the stories on this site are written by members like you. Serious. Funny. And everything in between. Just like life.
Monday, December 1, 2008
Spiders in your garden and Pesticides
There are quite a few poisonous spider species in South Africa but they all play an important role, especially in the garden and natural habitats. Spiders are generally excellent predators of various insects. Some might wait patiently on flowers for their prey, others chase after their prey and many build special webs that do the catching for them. Crab spiders, jumping spiders, nursery web and fishing spiders, funnel weavers and grass spiders, orb-weaver and cobweb spiders and wolf spiders are some of the species to look out for, and protect, in your garden.
When the lawn is covered in early-morning dew, I often find lace-like networks of spider webbing reflecting in the sun. What would happen to these spiders if the lawn was sprayed with a broad-spectrum insecticide to kill off lawn caterpillar? Without doubt, both the lawn caterpillar and the spider populations would be destroyed. Biological insecticides containing the bacterium Bacillus thuringiensis var. kurstaki can be used to control young active feeding larvae of lawn caterpillar with no harm to spiders, birdlife or any other beneficial organisms.
Avoid the use of most chemical insecticides containing active ingredients such as chlorpyrifos, mercapthothion, fenitrothion, carbaryl, deltamethrin, cypermethrin, bifenthrin, permethrin, d-phenothrin, tetramethrin, gamma-BHC, diazinon, alpha cypermethrin, cyfluthrin, propoxur, to name a few. Organic insecticides containing natural pyrethrins, nicotine, potassium salts of fatty acids and canola oil should be avoided where direct contact of spiders is possible. Canola oil and fatty acids will only harm very small-bodied spider species on contact. Spider species are unlikely to be repelled by insect repellents such as garlic juice extract formulations used to dissuade unwanted insects from landing on plants under protection in the flower, herb or vegetable garden. Biological control formulations containing Bacillus thuringiensis var. kurstaki and B. thuringiensis subsp. israelensis are completely harmless to spiders. Chemical insecticides containing pyriproxyfen should also not harm spiders. Most chemical and organic fungicides available in the home garden will not adversely affect spiders unless the label indicates toxicity. This includes fungicides containing mancozeb, chlorothalonil, copper ammonium acetate, plant organic acids and procymidone microbial formulations containing Trichoderma.
Commercially available insecticides authorised for use in organic farming and which are unlikely to cause harm to spiders include Margaret Roberts Biological Caterpillar Insecticide, Margaret Roberts Biological Mosquito Insecticide, Dipel DF and Vectobac WG. Insecticides which should have minimal or no effect on large spider species, at recommended dosage rates for small-bodied insects such as aphids, include Vegol, Margaret Roberts Organic Insecticide, Neudosan and ECO Insect Control. Fungicides include Margaret Roberts Organic Fungicide, Copper Soap and other approved copper and microbial formulations.
To learn more about spiders we start by having a closer look at crab spiders, a very important group of spiders found in the home garden environment which should be protected.
CRAB SPIDERS: The crab spider's first two pairs of legs are very long compared to its back two pairs. Crab spiders are flat-bodied compared to other spiders and get their name from their habit of holding up their front legs to resemble a crab with claws. They vary in colour from very bright yellow, orange or green to darker colours with grey and brown patterns. Most crab spiders do not live for more than a year. Hundreds of eggs are laid by the female in autumn and the offspring hatch in spring.
Most crab spiders ambush their prey after sitting patiently and motionless on flowers, leaves, fruit or other spots frequently visited by flying insects such as flies and bees. Many are well-camouflaged and blend in with their surroundings. Crab spiders can walk in all directions with ease!
Even though crab spiders prey on beneficial insects such as bees, they also feed on various fly species, adult mosquitoes, moths and many other insect pests. Even though research has found that the venom of crab spiders is more potent than many other spiders due to its ability to paralyse insects very quickly, they are not considered to be dangerous to humans. However, some larger species can bite humans and it is therefore best to leave them undisturbed and rather allow them to carry on hunting for their next meal. The most common crab spiders found in the garden are the flower spider (Thomisus sp.), common green flower crab spider, two-spotted crab spider, and the 'bont' flower crab spider (Thomisus citrinellis).
Enjoy the hot summer months and remember this is the time to safeguard our many biodiversities found in gardens. Information taken from "The Garden Guardians's guide to environmentally-responsible garden care".
Source: Gardening Eden
Sunday, November 30, 2008
What's on in Jo'burg
Art Exhibition and Sale
Presented by The Visible Edge Art Co & RE/MAX 2000. Everyone welcome! Art of all kinds will be sold in all price range. Friday 5 December from 6pm to 8pm. Art will stay on display daily from 11am to 3pm until Sunday 7 December.
Where: 9 Bantjes Avenue, Discovery, Roodepoort
Contact info 082 785 3305 caroline.dewet@gmail.com
Walter Sisulu Botanical Garden
Bird Identification Walk - 6 DecemberBooking essential as numbers are limited.
Meet at the entrance of the main entrance of the Walter Sisulu National Botanical Garden at 06h00.
Christmas Carols by Candlelight
17h00 Light entertainment associated with the festive season
18h00 The Duo: Riaan Swanepoel and Sylvia Blangwe. With Children's Choir to lead young members of the audience into songs for Christmas
19h00 Arrival of Santa Claus. Distribution of sweets throughout the audience, especially for the children
19h30 Welsh Male Voice Choir of SA. Carols by Candlelight and popular Choral music from around the world
Admission fees :Adult R35, Senior Citizens R25
Students R20, Scholars R10, Under Six – Free
(No booking required – pay at the entrance)
For more information contact 011 958 1750 or email
Open Day At Roodepoort Museum
When: 21 September 2008 - 31 January 2009
Where: Roodepoort Museum, Civic Centre, Christiaan de Wet road, Florida Park
Contact info 011 761 0228 carolinag@joburg.org.za
The Museum is open by appointment only - I'm not sure what this means but will go to see them this week
Thami Mnyele And Medu Art Ensemble Retrospective Exhibition
The exhibition honours the memory of the late Thami Mnyele, a South African resistance artist who died at the hands of apartheid security forces in the 1980s. A talented artist from Alexandra, he was committed to bringing about social change in South Africa through art. This led him to exile in Botswana, where he became a cultural worker with the Medu Art Ensemble, co-founded by his friend Mongane Wally Serote. Medu had units dedicated to the anti-apartheid struggle, dealing with music, theatre, visual arts, graphics and cinema, and counted among its ranks Deputy President Baleka Mbete as well as musicians Hugh Masekela and Jonas Gwangwa.Where: Johannesburg Art Gallery, Klein Street, Joubert
Date: 30 November 2008 – 30 March 2009
Time: 10am – 5pm
Booking fees: Free
Contact Info: 011725 3130/ KhweziG@joburg.org.za
When Life Happens: Art Exhibition At Museum Africa
- The opening is on Wednesday 3 December and kicks off with the When Life Happens poster competition.
- From 3 to 14 December is the visual arts exhibition with artists like Dinkies Sithole, Happy Dlame and Mandla Manana.
- 3 to 7 December - A public art installation on Mary Fitzgerald Square.
- 4 to 14 December - The creation of a new public art wall mural on Miriam Makeba Street.
- 4 December – Performance poetry and music event at the Bassline, featuring DJ Kenzhero, Fifi and many others.
- 5 and 6 December – The Dance Factory presents works, collaborations and performances by Tracey Human, Greg Maqoma and others.
- 6 December – Xarra Books presents an open forum discussion lead by Dr Gareth Edwards.
Where: Museum Africa, 121 Bree Street, Newtown
Date: 3 – 14 December 2008
Time: 10am – 5pm
Booking fees: Free but advance booking is essential
Business Opportunity
Being your own boss is a fantastic incentive to work hard, but you need pointers on making a success of your business. Business Opportunity could be the answer. The course looks at starting a business marketing herbal products; it includes recruiting others to join your business.Where: 778 Richard's Drive, Halfway House, Midrand
Time: 9am
Booking fee: Free
Contact Info: 0824784842 / Thembekile@housing.gov.za
The Von Memertys - A Celebration
Where: Arts Centre, University of Johannesburg, corner University and Kingsway streets, Auckland Park
Date: 2 – 14 December 2008
Time: 7.30pm
Booking fees: Tickets are from R100pp to R110pp at Computicket
Contact Info: 011 559 3058 / artscentre@uj.ac.za
Rod Steward In Jo'burg
He’s been around for a long time, and now blond-haired, gruff-voiced Rod Steward is finally coming to Joburg. Expect him to sing some of his old tunes, along with some of the newer stuff.
Where: Coca-Cola Dome, Corner Olieventhout and Northumberland roads, Northriding.
Date: 6 December 2008
Time: 8pm
Booking fees: Tickets are from R371pp – R1031pp at Computicket
Contact Info: 011 794 5800 / http://www.computicket.com
