Andre de Villiers - Chas Everitt Cape Regional Chairman
The client is not your friend! Just like the family needs their doctor the family needs their real estate agent to 'give it to them straight' and yes - with compassion when it's needed.
Today I came back from visiting my agent's show houses in my area, and the one property I called in on was way over what it should be on the market for - even when times were on the seller's side!
It was clear to me that my agent who is an enthusiastic charming and polite lady is having a problem telling the seller what she needs to hear. The seller (who has already complained about the size of the display ad we gave her) has over capitalised on the property and maintains a very personal attachment to her home and has a high regard for the value of her improvements. My agent needs to take the facts of the market and equate them to the selling price of comparable properties but I see the problem - the seller clearly does not believe her house is comparable to any other property in the area.
There is no easy answer to over capitalised properties but one thing is to ask the seller that if they knew when they were spending the money that they would be selling would they done so? The answer is hopefully "no" and then the follow up question of course being "why?" and hopefully the seller then says something like "because we probably won't get our money back". Hello!
Some fixtures can be removed and taken by the seller to their next property. Encourage this as it starts a process of real quantification of the values as in many cases the real value to the subject property for the item is very little as it is a matter of subjective personal taste and preference. This property for example had three precast water features in a tiny garden and encouraged me to find out where the loo was after being there for two minutes.
Removing the item from the sale will allow the seller to maintain some 'victory' in the price adjustment and may be a great relief to there buyer! For the seller it allows them to rationalise a drop in price. Quantifying the second hand value of items also gets the seller to start looking at the itemised value and not the total package that seems to encourage the overwhelmingly optimistic comparison of their home to the next door neighbour's property!
The point is we need to be firm on competitive pricing or we do the seller no favour at all. Too often estate agents are overly concerned with the seller's ego and think that if we do not share their 'dream vision on price' they will think we are unenthusiastic. That's like going to the doctor when you have tumor and respecting his professionalism because he chooses to go with your opinion that you just have a headache when he knows better. Is that the type of doctor your seller wants? Ask them!
The vast majority of sellers who are over priced know it! They are playing a game and they have you to play with! As long as the agent 'plays the game' we encourage (at our and our company's great expense) everyone to waste their time and to lose valuable selling opportunities by driving potential buyers into the arms of the house and agent around the corner!
Not being truthful with our over priced sellers is a dishonest disservice to them and to ourselves and nobody has anything to gain.
Andre de Villiers - Chas Everitt International (Southern Suburbs and False Bay) Cape Town South Africa
Tuesday, July 15, 2008
Upgrading in a Buyer's Market is a Great Opportunity!
- Andre de Villiers - Regional Chairman - Chas Everitt Cape Region
We are all familiar with the saying, “A rising tide lifts all boats” and the truth is the reverse applies just as well.
Sellers in a depressed market can be left with little comfort and it's hard to find a silver lining for a financially stressed seller who is selling and downgrading but this does not apply to the seller that plans to upgrade.For those who can afford it, it could never be a better time to upgrade and it's simple maths but most sellers don't see the advantage to them when they buy because they are so intimately involved with what they have to sell to move on they can't see beyond the emotion of their selling price.
The agent needs to spell out that selling in a strong buyers market has many opportunities to the upgrading buyer. Let's take a simple scenario of a seller who is selling for R1 000 000 and buying for R1 750 000 and let's say the estimation is that prices are 15% down on what they were, then the R1 000 000 house will sell for R850 000 (a loss of R150 000 to the seller) but as the R1 750 000 house is going to sell for R1 487 500 (down R262 500) the upgrading buyer scores a R112 500 - 'thank you very much!'
The key to this is obviously for the seller to put himself into the strongest negotiating position he can, and that is a cash buyer needing a modest mortgage finance. You are not in a strong position if you are still trying to buy up with a 'subject to sale' contingency!
Increasingly we see sellers who missing the boat and the opportunity to move onwards and upwards because they are so fixated with not selling below a increasingly mythical target!
While we accept that the price of oil, gold and equities rise and fall we tend to fight so much harder against the reality of the real estate market's moves. With all the readily accessible data available to home sellers (and buyers for that matter), resistance to the inevitable price reduction makes little sense.
There is confusion between the value of the property and the value of the home. Get the seller to separate them more clearly in his mind and realise the home goes with them and we are 90% of the way to letting go of the emotional obstacles to more realistic pricing.
We are all familiar with the saying, “A rising tide lifts all boats” and the truth is the reverse applies just as well.
Sellers in a depressed market can be left with little comfort and it's hard to find a silver lining for a financially stressed seller who is selling and downgrading but this does not apply to the seller that plans to upgrade.For those who can afford it, it could never be a better time to upgrade and it's simple maths but most sellers don't see the advantage to them when they buy because they are so intimately involved with what they have to sell to move on they can't see beyond the emotion of their selling price.
The agent needs to spell out that selling in a strong buyers market has many opportunities to the upgrading buyer. Let's take a simple scenario of a seller who is selling for R1 000 000 and buying for R1 750 000 and let's say the estimation is that prices are 15% down on what they were, then the R1 000 000 house will sell for R850 000 (a loss of R150 000 to the seller) but as the R1 750 000 house is going to sell for R1 487 500 (down R262 500) the upgrading buyer scores a R112 500 - 'thank you very much!'
The key to this is obviously for the seller to put himself into the strongest negotiating position he can, and that is a cash buyer needing a modest mortgage finance. You are not in a strong position if you are still trying to buy up with a 'subject to sale' contingency!
Increasingly we see sellers who missing the boat and the opportunity to move onwards and upwards because they are so fixated with not selling below a increasingly mythical target!
While we accept that the price of oil, gold and equities rise and fall we tend to fight so much harder against the reality of the real estate market's moves. With all the readily accessible data available to home sellers (and buyers for that matter), resistance to the inevitable price reduction makes little sense.
There is confusion between the value of the property and the value of the home. Get the seller to separate them more clearly in his mind and realise the home goes with them and we are 90% of the way to letting go of the emotional obstacles to more realistic pricing.
Sunday, April 15, 2007
Property Owners Advised - Look After Good Tenants
Sunday, 15 April 2007
Landlords Advised to Look after Good Tenants!
By Andre de Villiers - Chas Everitt International
Over the last few years legislation has become far more tenant friendly, indeed many share the opinion that the property owner is being unfairly treated and that the risks associated with renting a property increasing.
Everyone in real estate is aware of cases where problem tenants are taking property owners for as ride. In many instances these ‘tenants’ are nothing but confidence tricksters and outright scam artists. Maybe the public sentiment is not that sympathetic for the property owners at a time that property prices have escalated dramatically but those that are investing in the so called ‘Buy to Let’ market are to a significant degree fuelling the current construction boom that is creating a lot of employment, which in turn is playing a significant part in the economic prosperity our country is enjoying.
But the supply of rental properties is increasing and many tenants have taken advantage of the lowest interest rates for decades to buy properties. In some areas the buy-to-let residential market appears to be saturated and there are substantial numbers of developments nearing completion that will add substantially to the supply. According to agents and real estate developers I have spoken to the number of Buy to Let owners in many developments is over 70% and in one case I was told as high as 90%. A recent report from Jacques du Toit an ABSA economist highlighted this issue.
Du Toit confirms the strong demand for residential property, driven by a rapidly growing middle class, that has caused the development of higher-density residential units to increase strongly over the past five to six years. Together with low interest rates and easily available finance, many new investors have invested in property against the background of the relatively poor performance of some other types of investment.
The property owner is taking a risk and is paying rates and taxes. It is only fair that the law protects their substantial investment and does not encourage those that try to benefit from loopholes and unfair legislation. Even worse there seems to be an increase in ‘professional’ bad tenants who know how the ‘work the system’ and end up staying for months in a property without paying rent before they are evicted.
Property owners with good tenants should appreciate them! The tenant is actually caretaking the owner’s substantial capital asset. It is far better to have a below market rental from a really good tenant than a good rental from a really below average tenant. The risk simply is not worth it. Vacancy factors and the loss of rental income due to a tenant moving due to a high increase in rentals should also be considered. The loss of a month’s rental may really not worth pushing the envelope with that annual rental increase if it’s a good tenant.
Property owners who decide to ‘DIY’ their own rentals are taking an increasing risk and would be well advised to consider using a professional rental service as this can protect a good relationship between the parties. Property evaluations of tenants is increasingly difficult as the law seeks to limit what info may be recorded and made available regarding bad debt and poor payment histories. Rental agencies are able to share information between them, scrutinise and evaluate data obtained (an experienced agent knows how to ‘read between the lines’ in an application that looks good but actually has little substance) and contact genuine references from objective third party sources.
End.
Contact André de Villiers
mailto:andre@cei.co.za
http://www.cei.co.za
http://www.CapeTownProperty.com
http://www.ChasEveritt.co.uk
http://www.ChasEveritt.co.uk
0832300549
Chas Everitt International ©
Landlords Advised to Look after Good Tenants!
By Andre de Villiers - Chas Everitt International
Over the last few years legislation has become far more tenant friendly, indeed many share the opinion that the property owner is being unfairly treated and that the risks associated with renting a property increasing.
Everyone in real estate is aware of cases where problem tenants are taking property owners for as ride. In many instances these ‘tenants’ are nothing but confidence tricksters and outright scam artists. Maybe the public sentiment is not that sympathetic for the property owners at a time that property prices have escalated dramatically but those that are investing in the so called ‘Buy to Let’ market are to a significant degree fuelling the current construction boom that is creating a lot of employment, which in turn is playing a significant part in the economic prosperity our country is enjoying.
But the supply of rental properties is increasing and many tenants have taken advantage of the lowest interest rates for decades to buy properties. In some areas the buy-to-let residential market appears to be saturated and there are substantial numbers of developments nearing completion that will add substantially to the supply. According to agents and real estate developers I have spoken to the number of Buy to Let owners in many developments is over 70% and in one case I was told as high as 90%. A recent report from Jacques du Toit an ABSA economist highlighted this issue.
Du Toit confirms the strong demand for residential property, driven by a rapidly growing middle class, that has caused the development of higher-density residential units to increase strongly over the past five to six years. Together with low interest rates and easily available finance, many new investors have invested in property against the background of the relatively poor performance of some other types of investment.
The property owner is taking a risk and is paying rates and taxes. It is only fair that the law protects their substantial investment and does not encourage those that try to benefit from loopholes and unfair legislation. Even worse there seems to be an increase in ‘professional’ bad tenants who know how the ‘work the system’ and end up staying for months in a property without paying rent before they are evicted.
Property owners with good tenants should appreciate them! The tenant is actually caretaking the owner’s substantial capital asset. It is far better to have a below market rental from a really good tenant than a good rental from a really below average tenant. The risk simply is not worth it. Vacancy factors and the loss of rental income due to a tenant moving due to a high increase in rentals should also be considered. The loss of a month’s rental may really not worth pushing the envelope with that annual rental increase if it’s a good tenant.
Property owners who decide to ‘DIY’ their own rentals are taking an increasing risk and would be well advised to consider using a professional rental service as this can protect a good relationship between the parties. Property evaluations of tenants is increasingly difficult as the law seeks to limit what info may be recorded and made available regarding bad debt and poor payment histories. Rental agencies are able to share information between them, scrutinise and evaluate data obtained (an experienced agent knows how to ‘read between the lines’ in an application that looks good but actually has little substance) and contact genuine references from objective third party sources.
End.
Contact André de Villiers
mailto:andre@cei.co.za
http://www.cei.co.za
http://www.CapeTownProperty.com
http://www.ChasEveritt.co.uk
http://www.ChasEveritt.co.uk
0832300549
Chas Everitt International ©
Avoid Unpleasant Drama over Property Fixtures
Sunday, 15 April 2007
PRESS RELEASE
Avoid unpleasant drama over fixtures
By Andre de Villiers, (Western Cape Regional Chairman ) Chas Everitt International
Buyers, sellers and agents need to be aware of what is legally included and excluded from their sale.
Most experienced real estate agents have horror stories about "fixtures," which the seller removed but the buyer thought were included in the sale.
To illustrate, I remember buying a house in Newlands and was furious to discover that the seller had replaced a beautiful ornate door knocker with a small cheap version, fortunately, a phone call to the estate agent resolved the problem, the seller sheepishly restored the knocker with the original but not before I threatened everyone with sleepless nights!
Most home buyers and sellers, and even their estate agents, often do not understand the simple law of fixtures.
A "fixture" is moveable personal property, which, by means of bolts, nails, screws, cement, glue, or other attachment method, has been converted to real property. Clearly, that door knocker had been converted from personal property to real property because of its permanent attachment to the structure. Nothing was said in the sales contract about its exclusion from the sale.
A more troublesome example can be window coverings such as blinds and curtains. Suppose a house has beautiful curtains and attached wood window blinds. Those curtains hang by hooks from a rod that is screwed into the wall. While the curtains are personal property because they can be easily removed without damage, the curtain rails and or rods are fixtures included in the home sale. The wood window blinds, if permanently attached to the structure, are also considered fixtures, which are included in the home sale.
But the printed sales contract can change the result. A well written offer to purchase contract should specify or detail such coverings as included in the sales price (unless otherwise excluded).
IF YOU DON'T WANT IT INCLUDED – REMOVE IT
It may be practical for a seller to put a notice on a fixture saying “not included in sale” and thus to clearly exclude it from the sale and this is not commonly done. A better approach for home sellers is to remove the item before marketing the property. Removing the door knocker and installing a tasteful replacement would be a better idea. It is fundamentally unfair and unreasonable to present a property with lovely trimmings only to try strip it bare after the sale and replace quality items with cheaper alternatives.
OFTEN NOT A CLEAR CUT ISSUE
I heard of an instance where a property with built in bar had been sold and the bar stools had been taken by the buyer. This would not normally be an issue but the bar stools were a particular hand-carved design that matched the design of the bar. In the dispute that followed it was resolved that the stools were indeed fixtures as they were an integral part of the bar.
Plants and trees growing in the ground are considered to be fixtures because they are permanently attached to the land, however plants in pots are not considered fixtures and the seller may remove them.
AVOID TROUBLE WITH A WELL-DRAFTED OFFER TO PURCHASE CONTRACT.
When a home buyer identifies non-fixture items, such as pot plants or pool equipment, which the buyer wants included in the sale price, the buyer should itemise that personal property in the sales contract. Similarly, if the seller wants to exclude any fixtures that are attached to the property, those items must also be itemised otherwise they are automatically included in the sale.
Troublesome items to consider include: track lighting, fireplace inserts such as grates, solar systems, built-in appliances, shutters, window coverings, screens, awnings, non fitted carpets, coverings, TV aerials and satellite dish, telephone and wiring, adsl or wireless routers, air conditioners, pool equipment, water purifiers, security systems, keys to all locks, garage door openers and remote controls, mailbox, and even the council garbage bin which we all had to pay R350-00 for!
“RULES” IN A FIXTURE DISPUTE
1. ATTACHMENT. The most important fixture rule is the method of attachment. If the item is permanently attached to the structure, it is legally considered to be a fixture, which is included in the home's sales price.
However, if an item can be removed without damage to the structure, such as curtains, it is not a fixture. Examples include unscrewing light bulbs and unplugging a refrigerator because both are personal property not permanently attached to the building.
The item's weight is immaterial. To illustrate, an aboveground jacuzzi is removable personal property unless it is built in.
2. INTENTION. If the written sales contract cannot be used to obtain clarity the intent of the buyer and seller becomes critical.
The flyer or ad can be valuable here. For example, when the newspaper ad specifies a “private garden with Jacuzzi” that implies the seller intends to include the jacuzzi and the buyer can rely on that statement. Or a description of the “easy to maintain” swimming pool can be interpreted to mean the seller plans to include the pool cover and Kreepy!
3. INTEGRATION TO PROPERTY. When personal property is built into a home, it indicates it has become a fixture, which is included in the sales price. The bar stools I mentioned would serve as a good example here!
4. AGREEMENT. A written contract that lists a specific item, whether it is a fixture or personal property, usually prevails to make it included in the sales price. If in doubt, buyers should list any questionable items.
This is clearly an area where many disputes can easily arise and cause ill feeling. I know of many incidents where properties that have been sold for a great deal of money turn into an unpleasant drama over relatively inexpensive fixtures. People can be unbelievably unreasonable, so be warned – make every effort to be clear in writing!
End.
PRESS RELEASE
Avoid unpleasant drama over fixtures
By Andre de Villiers, (Western Cape Regional Chairman ) Chas Everitt International
Buyers, sellers and agents need to be aware of what is legally included and excluded from their sale.
Most experienced real estate agents have horror stories about "fixtures," which the seller removed but the buyer thought were included in the sale.
To illustrate, I remember buying a house in Newlands and was furious to discover that the seller had replaced a beautiful ornate door knocker with a small cheap version, fortunately, a phone call to the estate agent resolved the problem, the seller sheepishly restored the knocker with the original but not before I threatened everyone with sleepless nights!
Most home buyers and sellers, and even their estate agents, often do not understand the simple law of fixtures.
A "fixture" is moveable personal property, which, by means of bolts, nails, screws, cement, glue, or other attachment method, has been converted to real property. Clearly, that door knocker had been converted from personal property to real property because of its permanent attachment to the structure. Nothing was said in the sales contract about its exclusion from the sale.
A more troublesome example can be window coverings such as blinds and curtains. Suppose a house has beautiful curtains and attached wood window blinds. Those curtains hang by hooks from a rod that is screwed into the wall. While the curtains are personal property because they can be easily removed without damage, the curtain rails and or rods are fixtures included in the home sale. The wood window blinds, if permanently attached to the structure, are also considered fixtures, which are included in the home sale.
But the printed sales contract can change the result. A well written offer to purchase contract should specify or detail such coverings as included in the sales price (unless otherwise excluded).
IF YOU DON'T WANT IT INCLUDED – REMOVE IT
It may be practical for a seller to put a notice on a fixture saying “not included in sale” and thus to clearly exclude it from the sale and this is not commonly done. A better approach for home sellers is to remove the item before marketing the property. Removing the door knocker and installing a tasteful replacement would be a better idea. It is fundamentally unfair and unreasonable to present a property with lovely trimmings only to try strip it bare after the sale and replace quality items with cheaper alternatives.
OFTEN NOT A CLEAR CUT ISSUE
I heard of an instance where a property with built in bar had been sold and the bar stools had been taken by the buyer. This would not normally be an issue but the bar stools were a particular hand-carved design that matched the design of the bar. In the dispute that followed it was resolved that the stools were indeed fixtures as they were an integral part of the bar.
Plants and trees growing in the ground are considered to be fixtures because they are permanently attached to the land, however plants in pots are not considered fixtures and the seller may remove them.
AVOID TROUBLE WITH A WELL-DRAFTED OFFER TO PURCHASE CONTRACT.
When a home buyer identifies non-fixture items, such as pot plants or pool equipment, which the buyer wants included in the sale price, the buyer should itemise that personal property in the sales contract. Similarly, if the seller wants to exclude any fixtures that are attached to the property, those items must also be itemised otherwise they are automatically included in the sale.
Troublesome items to consider include: track lighting, fireplace inserts such as grates, solar systems, built-in appliances, shutters, window coverings, screens, awnings, non fitted carpets, coverings, TV aerials and satellite dish, telephone and wiring, adsl or wireless routers, air conditioners, pool equipment, water purifiers, security systems, keys to all locks, garage door openers and remote controls, mailbox, and even the council garbage bin which we all had to pay R350-00 for!
“RULES” IN A FIXTURE DISPUTE
1. ATTACHMENT. The most important fixture rule is the method of attachment. If the item is permanently attached to the structure, it is legally considered to be a fixture, which is included in the home's sales price.
However, if an item can be removed without damage to the structure, such as curtains, it is not a fixture. Examples include unscrewing light bulbs and unplugging a refrigerator because both are personal property not permanently attached to the building.
The item's weight is immaterial. To illustrate, an aboveground jacuzzi is removable personal property unless it is built in.
2. INTENTION. If the written sales contract cannot be used to obtain clarity the intent of the buyer and seller becomes critical.
The flyer or ad can be valuable here. For example, when the newspaper ad specifies a “private garden with Jacuzzi” that implies the seller intends to include the jacuzzi and the buyer can rely on that statement. Or a description of the “easy to maintain” swimming pool can be interpreted to mean the seller plans to include the pool cover and Kreepy!
3. INTEGRATION TO PROPERTY. When personal property is built into a home, it indicates it has become a fixture, which is included in the sales price. The bar stools I mentioned would serve as a good example here!
4. AGREEMENT. A written contract that lists a specific item, whether it is a fixture or personal property, usually prevails to make it included in the sales price. If in doubt, buyers should list any questionable items.
This is clearly an area where many disputes can easily arise and cause ill feeling. I know of many incidents where properties that have been sold for a great deal of money turn into an unpleasant drama over relatively inexpensive fixtures. People can be unbelievably unreasonable, so be warned – make every effort to be clear in writing!
End.
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