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.

Some of my Internet Favourites

Garden Care - People who have the privilege of owning and tending a piece of land or garden earn with that privilege a significant responsibility. They are, after all, custodians of the environment not only for themselves and their families and friends to enjoy, but also for the generations of people, animals and organisms that follow. This website is there to provide the necessary information for you to make the right choices in caring for your garden with no or minimum adverse effects to your health and the environment.

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.

Spiders in your garden and Pesticides

Spiders prey on many insects, including various moths, gnats, flies, mosquitoes and ants. Popular plants for attracting spiders in the garden are dill, cosmos, daisies, marigold, spearmint and caraway. I have found that plectranthus planted as a groundcover and agapanthus as fillers below and around trees are a popular choice for spiders, especially the nursery web spider, looking for a home. Plectranthus and agapanthus hardly ever shows evidence of destructive insects and therefore needs no spraying. Snails and slugs sheltering underneath can be controlled by hand or with baits. Once plectranthus and agapanthus have covered a planted area, you will hardly ever need to walk there and the spiders can be left undisturbed to silently prey on insects. Unfortunately, however, those insects are not always unwanted insect pests, but also beneficial insects.

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