1

THE COMPREHENSIVE PROPERTY GUIDE 2008 By Pam Snyman

Everything you need to know about selling your property, finding a new one, dealing with estate agents and

moving to your new home.

1. PURCHASING A PROPERTY

1.1 Finding the right property

1.2 Different forms of property ownership

1.3 The choice between buying old or new

1.4 Financing your property purchase

1.5 Hidden costs

1.6 What to look for when viewing a house

1.6.1 What to look for in general

1.6.2 What to look for regarding the improvements

1.6.3 Possible defects to be on the lookout for

1.7 How to make an offer

1.8 Questions and answers for foreign buyers

1.9 In which legal entity should you purchase?

1.10 The financial implications for couples

1.11 What taxes are payable on purchasing a property?

2. SELLING YOUR PROPERTY

2.1 Why not sell yourself?

2.2 Choosing a professional estate agent

2.4.1 Where to start and what to look out for

2.4.2 The value of awarding a sole mandate

2.3 Preparing for selling

2.3.1 Preparing yourself

2.3.2 Preparing your home

2.4 Pricing your property correctly

2.5 How to handle potential buyers

2.6 What taxes are payable on disposing of a property?

3. THE CONVEYANCING PROCESS

3.1 The deeds registry

2

3.2 What happens between the date of sale and the date of transfer?

4. MOVING TO YOUR NEW HOME

4.1 Occupation date, possession and taking transfer.

4.2 Getting connected

• telephone

• electricity and water

• postal service

• new address notice

4.3 Relocating children and pets

4.4 Preparing for the move

4.5 Settling in with ease

5. IMPROVING YOUR NEW HOME

5.1 Budgeting for improvements

5.2 To attempt D I Y or not?

5.3 Ten ways to improve your new home

5.4 How not to over-capitalise

1. PURCHASING A PROPERTY

1.1 Finding the right property

Whether you are looking to buy a property for the first time, upgrading, downsizing or purchasing as an investment

(for a regular income by letting) or speculating (to sell immediately at a profit) – out there the right property is

waiting for you to make it yours. Of course, the reason behind your purchase will have a major effect on what the

“right” property is going to be...

Buying property often turns out to be a major emotional rather than a rational experience. We all know that you

might set out determined to buy a neat well-kept two bedroom townhouse in a security complex and end up with a

derelict five bedroom rambling farmhouse on a 5 hectare smallholding with no security whatsoever. But it has loads

of “potential” and you fell in love with it the moment you set your eyes on it! This story may have a good ending,

but on the other hand it may not and you may end up regretting your spur of the moment decision.

As with everything else the answer lies in finding a balance.

Sit down and decide what it is that you require from the property you wish to purchase. List features that are

essential to you. This should include those things that you would prefer to have, as well as those that you definitely

do not want. The location is a very important consideration. Remember, that it is always better to buy the poorest

house in the best area, than the other way around. The other way around may prove to be a temptation, especially

to the novice, but it is one that should be resisted. The house can nearly always be improved, but the area can

3

hardly ever be bettered. An important aspect to keep in the back of your mind is that of resale. The best location at

the time is there where buyers are eager to buy. Things to consider are affordability, proximity to amenities,

availability of money,

A good way of obtaining knowledge about the local property market is to approach the estate agents. Make sure

that the agent of your choice works for a reliable company that can offer you the kind of service and back up that

you, as the consumer, deserves. A property transaction requires specialised knowledge as well as good negotiating

skills. You will soon be able to ascertain who gives sound and knowledgeable advice about property prices, the

range of properties available and the better areas to invest in. Even though the Seller is strictly the agent’s client,

there is a strict code of conduct that estate agents in South Africa are obliged to follow. This includes the agent’s

conduct towards the Buyer.

Most of the larger and well-known estate agencies advertise in the media on a regular basis. The property sections

of the newspapers are therefore valuable sources of information.

1.2 Different forms of property ownership

Most houses that form part of a residential suburb and are situated on separate stands where each stand has an

ERF number and its own title deed are freehold properties. This means that the owner of the stand has full

ownership rights to the property. This form of ownership is registered in your name in the Deeds Office. This is

proof to the whole world that you are the owner.

Some group housing complexes also consist of freehold stands.

Property can also be owned by sectional title. This normally applies to a unit in a cluster housing development, a

townhouse complex or a block of flats. The owner then owns a unit that consists of one or more sections (an

apartment and a garage) as well as a share in the common property. The owner is responsible for the maintenance

of his section and the Body Corporate (all the owners collectively) is responsible for the common property. The

right to exclusively use a specific portion of the common property (a parking bay) may be registered in favour of a

particular section.

1.3 The choice between buying old or new

A home in need of “tender loving care” or one that is brand new? Which is the choice to make? This will once again

depend on your personal inclination. Some people would not be seen dead in an “old” property, others cannot

resist the challenge of resurrecting the past and only feel comfortable living amongst their antiques in “olde

worlde” surroundings.

• It may however be your goal to purchase a rundown property, renovate and resell in order to make a tidy

profit. One has to be aware of a few important factors when undertaking this route: make sure that you

do not overspend on renovation

4

• If you have borrowed money to fund your purchase, keep the interest factor in mind---especially if the

property does not resell immediately

• Do not renovate with your own tastes and needs in mind---try to keep to classical finishes that would

appeal to more potential buyers.

• Make sure that the Receiver of Revenue is not going to tax you on profit when you resell!

If you undertake the renovation process for the love of it and you intend to live there yourself, make sure that the

existing building can support the changes and remember to check the building regulations with the local

authorities.

If renovation does not appeal to you, buy something “out of the box.” If you are purchasing off plan, you often

have a choice of fittings, finishes and colour schemes. You may even have a choice of the layout of your new home

if you are purchasing the stand on a “plot and plan” basis. If you are purchasing from a property developer it is

always good advice to check on his previous developments. Double-check to make sure that you will get everything

that you see in the showhouse. Make sure that the list of specifications is comprehensive and includes everything

that you will require. Insist on a work/time schedule. Put all changes agreed to in writing. Do not pay for building

materials in advance, rather agree on paying in stages where you pay for the work that has been concluded and

always insist on the right to hold back an amount for three months after the completion date. This retention

amount should be about 5% of the purchase price.

1.4 Financing your property purchase

It is, of course, imperative that a potential property purchaser first ascertains what amount he or she can afford to

spend on their home. If it is necessary to obtain a loan from a financial institution, it is always a good idea not to

spend more than 25-30% of monthly gross income on the repayment of the loan. It is also advisable to firstly

provide for as large a deposit as possible so that the loan amount does not constitute more than 80% of the

purchase price. Provision should be made for fluctuating interest rates as our country has a reputation of unstable

interest rates in the short term.

A sudden rise in interest rates can impact seriously on your cash flow. At 14,5% interest over a 20-year term the

monthly payment on a R200 000 loan is R2 560.00. At 16% interest the same loan amount requires a monthly

repayment of R2 782,50 and at 25% interest the monthly payment is R4 196.40! This means that should

interest rates raise from 14,5% to 25% the difference in monthly repayment amounts to R1 636.40.

On a loan of R500 000, this amount raises from R6 400 to R10 490 a difference of R4 090 per month!

In order to facilitate the process have the following documents handy when applying for a mortgage loan:

- a certified copy of your identity document

- your marriage certificate or divorce decree

- a copy of the sales agreement that has been signed by all the parties

- proof of your gross monthly income

5

- most recent personal financial statements

- a Z573 Government Guarantee Form if you are employed by the government

- a copy of your permanent residence certificate if you are not a S A citizen

- a utility account as proof of address

The question of fixed rates vs. fluctuating rates also arises often, especially when the interest rates have fallen.

This usually places the borrower in a predicament. If he/she fixes his/her home-loan rate for say 24 months,

he/she loses out in the event that the rates decrease further. On the other hand, should the rates rise significantly

over those 24 months, the borrower who has fixed his rates will benefit considerably. Further considerations should

include extra costs (i.e. cancellation penalties and bond registration fees) involved in a possible changing of lending

institutions in order to get the best fixed rate, the added disadvantage that you are not allowed to speed up the

term of your loan by making larger monthly payments than the required payment or by paying a lump sum into

your account.

The main factor to consider is whether the current trend is rising or whether a fall in rates is imminent. The

borrower would be prudent to keep up with the monetary policy of the day, as it is very difficult to predict these

movements with accuracy.

What are the advantages to the borrower should he/she decide to pay more than the required monthly repayment

amount into his/her bond account?

The main advantage is that the term of the loan is reduced considerably even by paying a small amount extra

monthly, or by paying a lump sum that is available into the bond account. By reducing the term of the loan, a

saving on interest occurs, as interest is compounded and calculated on the outstanding amount of the loan. The

following simplified example should illustrate this principle:

A borrows R300 000 at 16% over 20 years.

The monthly repayment amount is R4 173.77

A decides to pay R4 500 a month. This would result in A reducing the term of the loan from 20 years to 165,89

months (say 166) months, thus:

A should have paid R4 173.77 x 240 = R1 001 705 over the term of 20 years

A now pays R4 500 x 166 = R756 000 over the term of approx.14 years.

.

A has effectively saved R245 705 over 14 years. TAX-FREE!

1.5 Hidden costs

When purchasing a property, the principal cost is obviously the purchase price, which may or may not include

Value Added Tax.

6

If the Seller is a registered VAT vendor and the property is being sold as part of stock in trade, VAT of 14% will

be included in the purchase price. In the event that the transaction does not include VAT, Transfer Duty will

be payable by the Purchaser. This duty is payable within 6 months of the acquisition of the property, i.e. from

the date that the offer to purchase becomes a binding contract.

If the Purchaser is a natural person (real and living), transfer duty is calculated as following:

0 % on the first R500 000 of the purchase price

5% on the amount exceeding R1million (R25 000)

8% on the balance above R1million (R25 000 plus 8% on balance above R1million)

If the Purchaser is a legal entity (Close Corporation or Company) or a Trust, transfer duty is levied at a rate of 8%

of the purchase price.

The purchase price normally includes the estate agent’s commission (normally thus payable by the seller). This

is the fee payable to the estate agent that has negotiated the sale. Law does not set the fee, but the general rate,

which is used in the trade, is 7,5%. The amount is then paid out of the purchase price to the agent on registration

of transfer. If the estate agent is registered for VAT, the commission will be subject to VAT.

The attorney who has been appointed as the conveyancer, charges the Purchaser a conveyancing fee for

registering the transfer of the property from the Seller’s name to the Purchaser’s name. These fees are calculated

on a sliding scale and normally amount to between 1% and 2% of the purchase price. This would also be subject to

VAT.

If the purchaser makes use of mortgage bond finance, the attorneys that register the bond will charge a mortgage

bond registration fee. This is normally between 0.5% and 1,5% of the amount of the mortgage loan and is

payable by the purchaser. The amount is subject to VAT.

The banks charge an initiation fee of approximately R200.00 (plus VAT) for opening a new account.

The Deeds Office levies a charge for property registrations as well as mortgage bond registrations and

cancellations. The levy varies from R55.00 to R1 000.00 for the registration of property transfers, and from

R200.00 to R1 000.00 for the registration of mortgage bonds. The bond cancellation fee is R90.00.

The transferring attorneys will also charge a fee of between R250 and R500 plus VAT for Post and Petties.

The purchaser may have to reimburse the seller for rates and taxes that have been prepaid by the seller.

Local Authorities require deposits for the connection of water and lights.

Connection of and deposit on a fixed line telephone would also need to be paid.

7

Provision has to be made for life and short term insurance.

Relocation costs can also amount to a considerable sum.

1.6 What to look for when viewing a house

All so often homebuyers base their decision on which house to buy on their “gut feel”. Some even buy after a

single visit. This is clearly unwise. Here are some suggestions to minimise the possibility of the all too familiar

“buyers’ remorse”.

Try to view the property that you have set your heart on during the day as well as at night-time. Also try to view

during the week, at the weekend and during rush hour. We all know the importance of location, but what may

seem to be perfect in the morning, may be a whole different kettle of fish at night!

1.6.1 What to look for in general…

• Is it in your price range?

• Is the area appropriate?

• Does the size of the erf suit your life-style?

• Is the location in keeping with your needs? (Proximity to schools, shops, sport facilities, attractive

surroundings, pollution, noise, crime-risk etc.)

• The condition of the other properties in the area.

• North or South facing?

• Windy?

• Noise? Highways and busy roads. Near local nightspots?

• Future developments in the area.

• Rezoning for business or industrial.

• Public open spaces

• The general condition of the area

• Why is the owner selling?

• How did the seller arrive at the asking price?

• How long ago did the current owner purchase the property?

• Is the property mortgaged and what is the outstanding balance on the mortgage loan?

1.6.2 What to look for regarding the improvements…

• Layout and position on the site

• Type of construction material used

• General condition, repairs and maintenance required

• Accommodation

• Fitted cupboards

• Security features

• Fixtures to be removed by the seller

• Movable property to be included in the sale

• State of the garden

• Does the property lend itself to alterations or extensions?

8

1.6.3 Possible defects to be on the lookout for…

Once you have found a property that you consider purchasing, take your time and do a thorough inspection.

Remember to inspect the inside as well as the outside.

• Damp (patches of blistering/flaking paint and mould)

• Leaking roof (stains on ceiling and against fire-place, missing or cracked roof-tiles/slates)

• Broken gutters/down-pipes (stains on walls)

• Wall cracks (vertical cracks can be serious)

• Badly maintained woodwork (cracks and rot or doors and windows that stick)

• Blocked drains (water flows from basins slowly)

• Antiquated electrical wiring (old electrical box and sloppy wiring)

Always enquire from your agent whether the owners have disclosed, in writing, all the defects known to them.

Remember that it is always better to discuss these issues before committing to purchasing a property. In the event

of the owner agreeing to rectify any defects, it is wise that a written undertaking to this effect be embodied in the

agreement of sale.

1.7 How to make an offer

Once a purchaser has found the property that he wants to buy, it would be prudent to find out why the current

owner is selling and how long the property has been on the market. This knowledge can assist when making an

offer.

Be sure that all the fixtures, fittings and movables that the purchaser expects to remain in the property are written

into the sale agreement. Items such as pool-cleaners, window blinds, security systems, television aerials, remote

controls, special light-fittings, Wendy-houses, washing-lines, garden tools and bar stools have been known to

cause major disputes between buyers and sellers!

The Purchaser makes an offer on a document called an Agreement of Sale. Once the offer to purchase has been

signed by the Purchaser, it is relayed to the Seller who then accepts the offer by signing it as well. Should the

Seller reject the offer totally, he/she just does not sign the acceptance. If he agrees with some of the terms and

conditions but disagrees with others, he/she can make a counter offer to the Purchaser, who then has the choice of

whether to accept or reject it.

Once both parties have accepted all the terms and conditions of the agreement and the agreement contains the

essential elements of a sale of immovable property, a binding agreement between the parties exists.

It is important to know that an agreement of sale of immovable property must be in writing and signed by the

parties or their agents under their written authority. It must contain a correct description of the property, the

purchase price and the identity of the buyer and seller. No spaces should be left blank; all clauses must either be

completed or deleted. Both parties should initial ONLY changes and deletions.

9

The agreement must record all aspects agreed upon by the parties. If the offer made by the Purchaser is subject to

a condition that the Purchaser needs to obtain a loan in order to finance the sale, the agreement only becomes

binding and enforceable once the loan has been approved.

A purchaser should NEVER sign a document without reading it or if it is incomplete. Remember that once the offer

that you have made is accepted in writing, a legally enforceable Deed of Sale binds you.

1.8 Questions and answers for foreign buyers

Foreigners are referred to as non-residents in South Africa. A non-resident can be a natural person or a legal entity

whose normal place of residence or domicilium falls outside the common monetary area, which consists of South

Africa, Lesotho, Namibia and Swaziland. All property transactions by non-residents have to be routed through the

South African Reserve Bank.

• Can non-residents purchase property in South Africa?

They can, but they cannot be granted a loan for the full purchase price.

• To what extent can a property be financed by means of a South African loan?

A non-resident may borrow up to a maximum of 50% of the purchase price. The other 50% of the funds have

to be brought into the country by the buyer.

• How does one go about applying for mortgage bond facilities to the Reserve Bank?

All requests for foreign purchases of South African property must go through a local bank.

• How long does it take for the Reserve Bank to process an application?

It normally takes one to two weeks.

• What happens once approval has been received?

A non-resident account must be opened from which the bond repayments must be made.

• How can a non-resident bring funds into South Africa?

A non-resident account is opened locally, after which a telegraphic transfer can be made into the account.

Cash may also be paid into the account, but need to be converted into South African Rand. Telegraphic funds

will however enjoy a better exchange rate than a cash conversion.

• Will I be able to get my money out of South Africa if I sell the property?

Funds brought into the country by a non-resident may be repatriated at any time. Capital gains on immovable

property will however be taxed.

10

• How secure is my investment?

Registered South African banks are well established and technologically advanced. The transfer of funds is

secure and guaranteed.

• How is ownership transferred into my name if I purchase a property in my private capacity?

South Africa has a modern registration system that is based on an accurate diagram and Title Deed relating to

all registered property. This Deeds Registration system in respect of land, ensures the security of tenure and

indisputability of an owner’s title.

1.9. In which legal entity should you purchase?

Once a property has been selected as the most appropriate for the purchaser, he/she needs to choose a vehicle

that will hold the property. There are different entities in which the property can be registered. The choice will rely

mainly on the objective for which it is required.

• The individual. A property can be registered in an individual’s name alone or jointly with other parties. In the

event of more than one person acquiring a property jointly, they will have collective pro rata liability for

payment of the purchase price. The contract can however specify differently if they so wish.

A partnership. A partnership is not a legal person. This means that the rights and duties of the partnership are

those of the individual partners. As long as the partnership exists, the partners are joint debtors. This means

that they can be held liable collectively for the partnership debts. Should the partnership dissolve or the

estate of one of the partners be sequestrated on insolvency, this rule falls away and the partners will be held

jointly and severally liable for all debts incurred during the partnership. South African law allows for a

maximum of 20 partners in a partnership.

• A private company. A private company exists perpetually and separately from its shareholders. The

company owns its assets and any liabilities are binding on the company, in other words only the company can

be sued for payment of the debts it incurs, its shareholders are not liable. A company cannot enter into a

contract personally, but can do so through its ‘duly authorised representative’. The contract must clearly state

that the individual is entering into the agreement for and on behalf of the company. A sale to an

unincorporated company is void. An agreement can, however, be entered into on behalf of a company to be

formed by a nominee purchaser. Once the company is incorporated, the purchase of the property can be

ratified or adopted by the company. A private company may have a minimum of 1 and a maximum of 50

shareholders.

• A close corporation. A close corporation enjoys the same benefits of limited liability and perpetual

succession as a company. It is however simpler and more inexpensive to run than a company. A CC is a legal

person separate from its members. There are no shares in a CC, each member’s interest is expressed as a

percentage. A close corporation may have no more than 10 members who, as a general rule, must all be

natural persons.

11

• A trust. A trust is an arrangement whereby one person (the trustee) administers property or assets for the

benefit of another person (the beneficiary).

1.10 The financial implications for couples.

An increasing number of couples choose to live together without being married. When a man and a woman live

together as husband and wife without legally becoming married, their relationship is known as a ‘common-law

marriage’.

There are three marital regimes that govern marriages in South Africa. If a couple does not enter into an

antenuptial contract prior to marriage they are automatically married in Community of Property. If, however, the

couple sign an Antenuptial Contract prior to marriage and the accrual system is not expressly excluded, it will

automatically apply. They are then married BY ANTENUPTIAL CONTRACT WITH ACCRUAL or if the Accrual system is

excluded, they will be married BY ANTENUPTIAL CONTRACT WITHOUT ACCRUAL.

The Accrual system was introduced for the first time in October 1984. Before 1 November 1984 essentially only in

Community of Property and Antenuptial Contract existed.

• In a common-law marriage community of property does not come into effect. Neither party has any claim

over the other’s property by virtue of their relationship. A couple who plan to live together in a permanent

relationship without marrying may decide to enter into a universal relationship. In such an agreement the

couple agrees that all their possessions shall be partnership property. Both partners have equal control over

the partnership’s assets. Such partnerships can be brought about tacitly by implied consent and

circumstances.

• In a marriage, which is in community of property, the couple has a joint estate, which they share equally

(assets and liabilities). In the event of death or divorce, each partner receives half the value of the combined

property.

• In a marriage by antenuptial contract with accrual, each party retains sole ownership of property brought

into the marriage or acquired through inheritance or other means. However, the value of all assets

accumulated during the marriage is divided in terms of a formula. This is only calculated on termination of the

marriage.

• In a marriage by antenuptial contract without accrual, the same rules apply except that, any assets

that accrue to either of the parties’ estate during the marriage, remains solely that party’s asset.

1.11 What taxes are payable on purchasing a property?

When purchasing a property the buyer has to pay tax called Transfer Duty on the purchase price. If the seller is a

registered VAT vendor, then the buyer is exempt from paying Transfer Duty because VAT of 14% will be included in

12

the price that he/she is paying. The buyer therefore only pays Transfer Duty if the seller is not a VAT vendor. (See

1.5 above)

2. SELLING YOUR PROPERTY

2.1 Why not sell yourself?

Property sales are specialised transactions, not only from a legal point of view, but an in-depth knowledge of the

property market including competitive values and property-selling skills are indispensable as well. Even if you, as

the seller, have these attributes it is still difficult for buyers to discuss matters like their financial position with you.

• Qualifying potential purchasers is also best left to your agent as he/she has had the opportunity to

objectively ascertain the buyer’s tastes, needs and requirements.

• Properties are bought by comparison. You only have one property to show.

• An estate agent can smooth the process by offering added value to the sale by means of extra services

like mortgage bond applications.

• If the buyer wants to negotiate the price, it is much easier for him to do so through a third party.

• Buyers are reluctant to admit their true likes and dislikes to the owner of the property. It may just be

easier to walk away from a potential deal than to admit certain things directly to the owner.

• Buyers normally have objections to purchasing a certain property. Are they real or only a smokescreen to

obscure other more real problems? An estate agent should have the skill to determine the seriousness of

the objections and to deal with them in order to facilitate the selling process.

• Agents can freely follow-up potential buyers who have viewed the property. If the owner does this it may

be interpreted as his anxiety to sell.

• Agents know what the needs of current buyers in the marketplace are looking for and can advise you on

how to improve your property for selling.

• Sellers tend to do their own ‘research’ before selling their houses. They may hear conflicting suggestions

and confusing information that is not going to aid them in their efforts.

• Potential sellers may end up spending unnecessary money on advertisements, unnecessary time and

effort on showing their property to unqualified ‘buyers’ and experience unnecessary frustration dealing

with insincere offers.

• Without the assistance of an experienced agent sellers may end up litigating against buyers who were not

financially or legally competent to enter into an agreement of sale for immovable property.

• Disasters like this can cost the seller vast amounts of money and time.

• Most serious buyers make the use of reputable agents.

• Your agent will price your property to sell at fair market value. The average owner overprices his property

and ends up accepting less than the market value.(Remember, buyers buy by comparison. They see many

properties before buying. “You cannot sell a R50 note for R60.” The market knows where to get one for

R50.)

13

2.2. Choosing a professional estate agent

2.2.1 Where to start and what to look out for

Make sure that you choose an established company with experienced estate agents with a good reputation and a

sound knowledge of the area in which you are selling.

Visit their offices and satisfy yourself that they have a professional set-up. Look out for well-presented and precise

marketing material without floral superlatives, spelling and grammatical errors. Good estate agents will take pride

in presenting their clients’ properties in a professional manner.

The sale of your home requires special skill and knowledge. By making use of the services of a skilled and

reputable estate agent, the transaction can be trouble and stress free.

Find out what the agency’s percentage sale rate is. If they have not been selling a significant portion of the local

market, how sure can you be that they have the resources to sell your home?

Check the local newspapers for their advertisements. You will be able to ascertain whether they sell your type of

property as well as if their ads are well designed and the lay-out is good.

Check the local area for “for sale” and “sold” boards.

The way in which the estate agent values your property will give you a good indication of whether you are dealing

with someone who knows what he is talking about. Trying to get you to commit to a sole mandate by over-valuing

the property is unworthy of your time. The sale of your property will only be slowed down if it is placed on the

market at an inflated price and it will ultimately cost you money.

Remember, you get what you pay for. If you are therefore offered a ridiculously cheap package (the normal

commission rate is 7% plus VAT), all that you are going to get is ridiculously cheap service. Preparing for and

marketing your property is not a cheap exercise. If the agent does not possess the skills to negotiate the best

commission deal for himself with you, how is he going to be able to negotiate the best price for your home on your

behalf?

In terms of the Estate Agents’ Affairs Act all estate agents must be registered with the Estate Agents’ Affairs Board.

Make sure that the agent who is going to act on your behalf is in possession of a fidelity fund certificate that he

receives on registration.

2.2.2 The value of awarding a sole mandate

• What is a sole mandate?

A mandate to sell is an instruction given by the owner of a property to an estate agency to market and sell his/her

property.

A mandate can be ‘open’ whereby the same instruction is given to various agencies, or it can be a ‘sole’ mandate

whereby a single agency is given the sole right to sell for a specific period of time. A sole mandate must be in

14

writing and signed by the owner of the property or his/her duly authorised representative. A sole mandate may be

so worded that the owner retains the right the sell his property himself without having any obligation to pay the

sole agent commission.

Where the mandate is worded as an ‘exclusive selling right’, the owner may not sell the property privately. Should

he do so, or sell it through another estate agency during the duration of the mandate, he will be liable to pay

commission to the agency holding the exclusive mandate.

• Is it better to give a sole mandate to a single agency?

Many property sellers believe that with more agents working for them, they have a better chance of selling their

property sooner because it will be exposed to more potential buyers.

This argument is simply not sound because of a number of reasons.

An agent, who has accepted the instruction to market your property exclusively, is far more committed to selling

your property as one of maybe 10 properties on sole mandate, than one of maybe 100 on open mandate.

More time, effort and money will go into the marketing of your property in order to find a willing and able buyer as

soon as possible before the mandate expires.

By giving the exclusive mandate to a reputable and competent agent at a respected company, your property will

receive the attention it deserves at a standard above the rest. The marketing strategy will be put together

intelligently in order to attract the most suitable buyers. Remember that every house for sale has only one real

buyer!

Give the selling mandate to the agent most likely to source the buyer and negotiate the best possible price for you.

Take your agent into your confidence (legally, a relationship of trust exists between you) and disclose your needs,

objectives and selling motives honestly to him/her.

There rests a big responsibility on your agent’s shoulders. If you expect him/her to do their best for you, it is only

fair that you give them the opportunity to do so in a dignified manner without the rest of the county’s estate

agents breathing down their necks!

2.3 Preparing for selling

2.3.1 Preparing yourself

Are you up to facing strangers opening your cupboards and looking in your drawers? Can you face weird looking

people making even weirder comments about your precious home and life-style?

15

Putting your property on the market can be a traumatic experience. As a potential seller it is imperative that you

must be absolutely sure that you in actual fact do want to sell. Do not put your property on the market in order to

“test” the market or to find out what price your property should fetch. There are other far better ways of

establishing this that are far less stressful!

When you are absolutely certain that you want or need to sell, it is essential that you prepare yourself and all the

occupants of your home to know what they can expect and what is expected of them in order to facilitate the

process. A well-trained and experienced estate agent that is knowledgeable about the area, in which you live,

should be able to assist you in preparing to sell.

2.3.2 Preparing your home

Before potential buyers view your home it is essential that you look at it through a buyers’ eyes. One tends to grow

accustomed to and not notice the little and not so little imperfections that once annoyed you, but that remained

unattended to. Walk through your home intent on searching them out. Potential buyers are bound to notice them

first thing!

Here are a few tips on how to make your property more saleable…

• Make the entrance attractive. Take a good, long, hard look at your front gate, front door and entrance and

make sure that the doorbell works. A good visual first impression is “worth a thousand words”.

• Get rid of clutter. Studies, spare rooms, garages, outside rooms and garden sheds need special attention. It is

difficult to appreciate the size of a room or visualise living there if it is cluttered with unnecessary “stuff”.

• Clean the windows. The best view in the world can be spoilt trying to squint through a dirty windowpane. Don’t

forget the frames! An unsightly frame can ruin an exquisite picture. Now is the time to wash those curtains

and fix the hems that you’ve been meaning to do for so long.

• Look down. Glue your eyes to the floor and make a tour of your home. Your carpets, tiles, floorboards and

skirting might tell you a story that you have been deaf to until now!

• Look up. Do the same exercise. Where did those cobwebs come from so suddenly?

• Walls need to be neat. Peeling wallpaper looks very shabby and dirty walls are an instant turn-off. It isn’t

necessary to go to town and repaint the whole house…the buyers may want to do this themselves. It is

however necessary to ensure that cracks are filled and the walls are fresh and clean.

• No leaking or dripping taps. Make sure that these are mended.

• Lighting needs special attention. Make sure that all light bulbs work. Remember to switch on feature lights

when potential buyers come to view the property.

• Cupboards must be neat. Cupboards must be features and not disaster areas! Storage space is an important

and often neglected feature in a home. Buyers are going to open those cupboards and drawers…

• Kitchens are selling points. Kitchens often sell houses. They can also be the reason for a potential buyer to

walk away. Go for a revamp, not necessarily a replacement. New handles on cupboard doors can work

wonders. Work surfaces should be clean and clear of clutter.

• Ditto bathrooms. Keep it clean and minimal. Fresh fluffy towels can do wonders.

16

• Children should be neither seen nor heard! Tidy rooms will help the process along. Children should not be

present when the property is being shown: they might unintentionally give a few secrets away!

• Pets should be an asset - not an embarrassment. Very similar to children when it comes to selling your home.

• Smells in the home should always be pleasant! Pet smells, cigarette smells, mouldy smells and any others that

are off-putting are distinct no-no’s in the home. Enticing aromas (fresh coffee, baking bread, fresh fruit and

flowers) on the other hand can add to the saleability of your home.

2.4 Pricing your property correctly

Here are some home truths about property pricing that sellers need to take cognisance of and come to terms with.

• The price that you paid for your property, the amount of money you have spent on it, the average capital

growth on properties and the municipal valuation are not necessarily particularly relevant to the present value

of your home.

• Overpricing your property when it initially goes onto the market will probably be the main reason that it does

not sell as soon as you have anticipated.

• The length of time that a property is on the market is bound to affect the price. If it was overpriced when it

came onto the market, it will most probably sell at below true market value because the price has been

reduced by an over-exposure to the market.

• The best offer is often the first offer when the house is new on the market.

• The length of time on the market will not increase the price of the property, i.e. you will not necessarily

receive a higher offer if you wait longer.

• Never select an agent based on the price that they value your property on. The agent does not control the

property market…only the marketing of your property.

• The value of a home is determined by what a willing, able and informed buyer will pay a willing seller on a

specific date.

• Pricing your home correctly (fair market value) is the way to ensure a quick sale at the highest possible price.

• Compare your home to similar properties in the area

a.) that have sold recently,

b.) that are for sale at present and c.) those that were on the market for a long time

And have been withdrawn because they could not sell.

a.) will give you an indication of what willing buyers are prepared to pay,

b.) will give you an indication of the competition that your property will be up against. Remember that asking

prices are not necessarily going to be selling prices. Consider how many properties on the market

currently.

c.) tells you what the market is not prepared to pay

• Here are some concepts concerning property pricing that sellers should know:

Price: the amount a seller is willing to accept for his property

Cost: the amount that the seller paid when he purchased the property including transfer duty and other costs as

well as what he has spent on improving the property since buying it.

Value: the amount that a buyer is willing to pay. It is determined by the usefulness of the property to the buyer,

not what it has been to the seller.

17

Market value: the amount that a willing buyer is prepared to pay a willing seller.

Market valuation: the amount estimated to be the market value based on actual sales in the area.

• Market conditions can change rapidly due to external factors.

• The property market is a very local market. Conditions in one area do not always influence prices in another.

• The price of property is regulated by the market forces of supply and demand.

• Prices are not controlled by the owner or the estate agent.

2.5 How to handle potential buyers

Seeing that you are going to appoint a professional estate agent to market your property, by far the wisest thing to

do is to leave the showing of the house to the estate agent. They are trained to do this as effectively as possible.

Do not become involved unless the agent specifically requests you to. Go for a walk and leave them to it. Buyers

also tend to feel uncomfortable and inhibited with owners present.

Selling your home is a traumatic and emotional experience in anybody’s language. A personality clash with a future

purchaser can prove disastrous for all concerned. Do not be prejudiced against potential buyers. Whether you like

them or not and whether you agree with their plans to improve the house or chop down your beloved trees, is of

little consequence. Leave it to your agent who will handle the sale as a business transaction on your behalf.

Once you have received an offer signed by the buyer, take time to sit down with your agent who is obliged to

explain the terms and conditions of the offer to you. The agent will also explain to what extent the offer differs

from your needs and objectives as put to him/her initially.

Do not feel pressurised to accept any offer. The agent is obliged to present all offers to you. This does not mean

that he/she necessarily sees this as the best potential offer. Discuss the offer with your agent who is in the best

position to advise you on how to view the offer.

2.6 What taxes are payable on disposing of a property?

• Income Tax

If a property is purchased with the intention of selling it in order to make a profit (i.e. speculation), the profit thus

generated is deemed revenue. Revenue gains are subject to taxation at the full marginal tax rate.

• Capital Gains Tax

The sale of a home that was purchased with the intention of keeping it to live in will result in a capital profit, which

is subject to Capital Gains Tax. However, CGT is not payable on the first R1, 5million of capital gain on the sale of

your primary residence. Capital Gains tax is also payable on the sale of your second home and investment

properties (those that generate a regular income stream or are held for capital growth) or holiday home. The gain

is calculated from 1 October 2001.

A natural person pays income tax at his or her marginal tax rate on 25% (effective rate of 10% maximum: 40% of

25%) calculated from 1 October 2001. A company or CC pays income tax at 29% on 50% (effective 14.5%) of the

gain and a Trust pays income tax at 20% of 50% (effective rate of 25%) of the gain.

18

3. THE CONVEYANCING PROCESS

3.1 The deeds registry

The current ownership of a property can be established with reference to the deed of transfer in the Deeds Registry

at the Deeds Office.

A deed of transfer of immovable property is executed by the Registrar of Deeds. A copy of the executed deed is

filed in the Deeds Registry.

3.2 What happens between the date of sale and the date of transfer?

Once an Agreement of Sale between the Purchaser and the Seller has been completed successfully, it normally

takes between two to three months for the property to be transferred into the name of the Purchaser.

The Seller nominates an attorney to effect the transfer. The transferring attorney communicates in writing with

both the Purchaser and the Seller confirming that he has accepted the appointment. He also writes to the agent

informing him of his instruction.

The attorney requests copies of identity documents and marriage certificates from both parties. If transfer is being

given or taken by a legal entity (Company or Close Corporation) he requests copies of the relevant resolutions. If

the purchaser decides to take transfer in the name of a trust, a copy of the Trust Deed is required. If he decides to

take transfer in the name of a company, copies of the Memorandum, Articles of Association and Certificate of

Incorporation of the Company are required. A copy of the Founding Statement is necessary in the case of a Close

Corporation purchasing the property. He also requires the Title Deed that is either in the owner’s or the

bondholder’s possession. If the property is bonded, he requests cancellation thereof.

A deeds search is done to ensure that there are no interdicts, attachments or limited real rights (e.g. servitudes)

registered against the title deed.

The transferring attorney now draws up the transfer documents to be signed by the parties. He writes to the local

authority to obtain a Rates Clearance Certificate as well as proof that all outstanding debts to the local authority

have been paid up. All these documents are lodged in the Deeds Office along with a transfer duty receipt. (The

attorney collects the transfer duty amount from the Purchaser and pays it over to the Receiver of Revenue).

The purchase price is payable on the date of transfer. The transfer will only be effected once payment to all the

parties has been made.

4. MOVING TO YOUR NEW HOME

4.1 Occupation date, possession and taking transfer

The date of occupation of the property is agreed on by the parties in the Agreement of Sale. This will be the date

that the buyer acquires the right to physically occupy the property. Should it be agreed that occupation takes place

prior to transfer, the buyer will probably have to pay the Seller compensation until transfer is effected.

Under common law, the risk of damage or destruction of the property passes to the buyer once the Agreement of

19

Sale is concluded even if the seller remains in occupation or possession of the house. Most agreements therefore

make provision that the risk only passes on possession or occupation. Where possession passes before registration

of transfer, it is imperative that the buyer must insure the property from date of possession. Whoever is liable

should make sure that the property is properly insured.

Agreement is normally reached about the approximate time that transfer of the property will be given and taken. It

is however impossible to predict when transfer will be registered, as there are many aspects of the transfer process

that are beyond the conveyancers control.

4.2 Getting connected

• If the buyer is going to have the existing telephone number transferred to him, he must ensure that the

seller has cancelled his account so that the number can be reconnected for the buyer’s account. If the

seller’s new address falls under the same telephone number prefix area, he can arrange to take his old

number with him and keep the account open.

• The same applies to electricity and municipal services. These services need to be terminated and

reconnected for the account of the new owner from date of occupation.

• The post office must also be informed so that post can be forwarded to your new address.

• Remember to send notification of your new address to all your friends and business associates.

4.3 Relocating children and pets

Children need to be prepared for the move to new home. It will be easier if they are part of the decision-making

process when it comes to the choice of their new home. They need to have seen the property beforehand and

should look forward to the move.

The positive aspects of relocating must be explained to them so that the anxiety that they might experience due to

uncertainty is lessened.

Unfortunately you cannot explain what is happening to your pets, but try and make the actual relocation as

pleasant as possible for them. Also ensure that they have name- tags in the event that they decide to inspect the

new neighbourhood for themselves and get lost. Keep cats indoors for at least two weeks. It is also a good idea to

take the pets’ old bedding along to the new home.

4.4 Preparing for the move

If you opt for packing and moving yourself as opposed to making use of a removal service company that does

the packing for you, here are a few tips that may help you:

• Make a list of the sequence in which you are going to pack. Remember certain items can be packed well in

advance, i.e. sport equipment like golf clubs, sailing gear, skiing gear and the likes.

• Don’t forget the contents of outbuildings, basements and attics.

20

• Check the details of your insurance and arrange for extra cover if necessary. All risks goods in transit

insurance cover would be necessary. Many ordinary householders’ policies can be extended to provide cover

during moving and storage if necessary. It would however be prudent to check whether your policy provides

for breakage of china and mechanical derangement.

• Collect suitable boxes in advance to ‘packing day’.

• Label the boxes clearly so that you will be able to establish what is inside at a glance.

• Label the boxes with ‘room-names’ so that they can be off-loaded in the correct rooms.

• Put dirty washing in one box.

• Wrap breakables with care and stick on “FRAGILE” stickers.

• If it is preferable that certain boxes remain upright, mark them accordingly.

• Make sure that domestic appliances and electrical or electronic equipment are suitably stabilised for transport

• Be sure to back-up your computer software and files and keep the back-ups separate from your computer.

Arranging your own transport and making use of casual labour is an option if you choose to oversee the process

yourself. If you are not moving far, a few trips in a small van or pick-up truck can do the trick.

Removal companies like Stuttaford Van Lines are of course equipped to handle everything on your behalf. All

you will need to do is to organise everything beforehand, so that they can just come in and pack. You will

therefore have to sift out, sort out, and throw out before they arrive. They will arrange to come in and pre-pack

the smaller items like glassware, ornaments, books, kitchenware, linen and clothing the day before the move.

When household effects are moved long distance or go into storage, they prepare an inventory. Remember that

you should keep your valuables and keys aside and take charge of them yourself. Removal companies charge

differing rates according to size and distance of the move.

If you cannot take occupation of your new home immediately and you require storage, it is by far the best to

make use of the storage facilities offered by the removal companies. Stuttaford Van Lines pack pallet boxes at

your home and transport them back to the warehouse where they are stacked away. This avoids 60% of the

handling of furniture involved in the old method of loading into vans, transporting to the warehouse and stored.

Ensure that kelims and carpets are prepared adequately for storage (moths and insects can cause extensive

damage). Once again ensure that your furniture and other movables in storage are adequately insured for the

period in storage.

4.5 Settling in with ease

• It is up to you to make yourself at home in the new neighbourhood and the new home as soon as

possible.

• If you haven’t met the neighbours yet, go and introduce yourself as soon as possible. They can be a

valuable source of information regarding local amenities, doctors, dentists and the likes.

• Holding a house warming party may be a good idea to get acquainted with the people from the area.

21

• Try and get unpacked and settled in sooner than later. Unpacking should take place immediately;

otherwise you may find that two years later there are still unpacked boxes in the garage!

5. IMPROVING YOUR NEW HOME

5.1Budgeting for improvements

Having now purchased a new home the time has inevitably come for the renovation, decoration, re-doing phase of

the operation. Improving your home can improve the value of your asset, but it is then necessary that the

improvements be carried out as cost-effectively and economically as possible. The most effective outcomes are

often the result of creative techniques that are not necessarily the most expensive.

For inspiration, try the following:

• Visit interior design shops in order to glean ideas. Sometimes the most striking effects are obtained by

combining textures and forms that you have not thought of.

• Collect fabric and colour samples in order to create your own collections of textures, patterns, tones and

shades that go together. A shell (walls, floors and ceiling) of a neutral colour normally provides a good canvas

to work on. Different textures, shades and tones of a single colour can make for effective decorating. Accents

can be added to create interest.

• Read interiors and lifestyle magazines…especially European ones packed with wonderful ideas that you can

place your own personalised interpretation on.

• Make use of the relevant television programmes on the satellite channels that cover many different aspects of

the home, like gardening and decorating.

• Make use of the local library. It is also a good place to meet people that have the same interests as you.

• The Internet is always a goldmine of knowledge and ideas.

Most home improvements end up costing more than you bargained for, so it might be a good idea to add an extra

20% on to your budget for those unforeseen expenses.

5.2 To attempt DIY or not?

Doing your renovations yourself can certainly save you money and be a lot of fun at the same time. It is however

absolutely necessary that you are aware of the pitfalls and the fact that it could end up costing you more than

necessary if you do not know exactly what you are doing. If you are confident that what you are attempting will

give the desired results, here are a few basic tips:

• Preparation is of utmost importance. Always use the right tools. Take the necessary safety precautions. Read

the instructions…

• Do not start knocking out walls without consulting with a knowledgeable person first.

• Do not attempt anything that has to do with plumbing or electricity without consulting an expert.

• Do not replace window-frames if you do not have the expert knowledge

• Damp proofing requires an expert.

• Rewiring requires an electrician.

22

• Wallpapering, installing light-fittings, fitting carpets, fitting shelves, sanding a wooden floor and sanding and

varnishing wooden doors and frames can be tackled by a DIY enthusiast if he/she possesses the necessary

skills.

5.3 Ten ways to improve your new home:

Here are ten simple improvements that can add value to your home:

• Modernise the kitchen.

• Bathrooms need to be updated; especially the colour scheme can make or break.

• Details that have been selected and added with care and flair can add tremendous value. Light switches,

cupboard-door handles, light fittings, taps, cornices, skirting boards and the likes are important in this respect.

• Replace worn carpets with up-to-date floor coverings i.e. gleaming wood, durable tiles, coir carpets.

• A well-landscaped and neat garden can add to the overall appearance and appeal of the property.

• Security in the form of burglar-proofed windows, alarm and sensor lights is a necessity.

• Extras like fireplaces, under-floor heating, covered parking, built-in braai’s, Jacuzzis, saunas, electric garage

doors and garden irrigation systems can also add value.

• Well-maintained woodwork and a freshly painted exterior with no loose gutters and roof tiles are a must.

• Creating space by knocking out a wall or two can create not only space, but value too.

• Utilising an unused attic or cellar as an extra bedroom or a much-needed playroom or wine cellar, might be

good ways of improving you home.

5.4 How not to over-capitalise

Every area has a price ceiling. Before you start spending money on improvements and renovations you need to

ascertain what that ceiling in your particular area is. If the most expensive house has sold for R900 000, it would

not be wise to spend R200 000 on a new kitchen!

A swimming pool is an extra that is not always appreciated by homebuyers. A pool is an expensive commodity and

does not always add value. You should make up your mind beforehand if you are prepared to pay for the

convenience without necessarily getting your money back on resale.

If you are considering extending your house by adding on extra rooms, it is a good idea to first take a good long

look at the other houses in the area. Having the biggest house in the neighbourhood may boost your ego, but it

may turn out not to be the best investment that you can make. It may very well result in an increase in value to

the other houses in the area, but at the same time the state and size of the other houses will result in a decrease

in your property’s value.

End