Agent mandates and fees must be clear
There is frequently confusion among sellers about estate agent mandates and fees, but with the new Consumer Protection Act it is becoming necessary for these agreements to be clear and transparent.
Bill Rawson, Chairman of Rawson Properties says recent court cases have shown that both estate agents and their clients often enter into agreements without clarifying their fee structures and the ethical questions that surround the paying of commissions for achieved sales.
Furthermore, says Rawson, seldom do any agreed rules or standards apply to mandates.
This situation, he says, will have to be remedied now that the Consumer Protection Act is in force because the Act will lead to any vagueness, inconsistencies or lack of transparency becoming a culpable offence.
Rawson says commission difficulties tend to become even more complex when, as several recent court cases have shown, more than one agent is involved in the sale -especially if a second agent had been appointed after the first had ‘failed’ to achieve a sale.
More distressed property in Gauteng
While there have been many positive indicators that trading conditions within the South African property market are continuing to improve, distressed properties are still a market reality.
This is according to Peter Gilmour, Chairman of RE/MAX of Southern Africa, who also heads up the group’s specialised distressed property department. Gilmour says that in January and February this year, they received over 300 new sole mandate distressed property leads from various financial institutions and over 100 of these properties have already been sold.
Last year the agency reported that distressed properties spent an average of 48 days on the market and fell predominantly into the R250 000 to R2 million price range.
The majority of distressed properties they listed last year were in Gauteng, which accounted for 70% of the total number of distressed properties compared to the Western Cape’s 10% and KwaZulu-Natal’s 20%.
Agents warned on overvaluing property
Estate agents must at all costs avoid the temptation to try to please property sellers, to possibly secure a mandate, by valuing the home too optimistically.
This is according to Tony Clarke, managing director of Rawson Properties who was recently talking to a group of trainee estate agents. He warned that this type of action invariably leads to a loss of reputation.
“Make it crystal clear to clients (i.e. sellers) that if they appoint an agent because he or she has valued the home higher than their rivals they will almost certainly be making a mistake – perhaps the biggest possible mistake that a home seller can make.”
On most sales, said Clarke, two or three agents will usually give values fairly close to each other. If another agent then quotes higher, the chances are either that he does not know how to value or is trying to secure the mandate by “telling the client what he would like to hear”.
DIY landlords beware tenant problems
Buy to rent property investors often think that they can do as good a job as an experienced rental agent.
However, this is seldom the case according to Tony Clarke, managing director of Rawson Properties and Rawson Rentals. “Time and again we have found that landlords going the DIY route run into difficulties with the Rental Tribunal because they are ignorant of the laws governing rental property transactions.
“They draw up contracts that are not compliant with legal principles.”
Landlords working without qualified agents, says Clarke, in his experience also often lack access to credit bureaux and are more easily duped into accepting an unreliable tenant than experienced agents. They also tend to be less adept at extracting payment from defaulters – and undergo considerable emotional turmoil in the process.
Higher CGT on property in trusts
Recent changes in the taxes applied to trusts now make them an expensive vehicle in which to hold property.
This is according to Lanice Steward, managing director of the Cape Peninsula estate agency, Anne Porter Knight Frank who says that since 1stMarch this year the capital gains tax on assets sold by a trust have been raised from 50 to 66.6% of the gain – and this gain is then also taxed at the flat rate of 40% applicable to all trusts.
Steward says it is clear that the government has set its mind against trusts being used for property owning purposes. “However, it is worth noting that if the gain is distributed among the beneficiaries they will be taxed at the lower rates applied to individual taxpayers.”
How many proxies in sectional title?
Although it is now clear that at some stage the Sectional Schemes Management Act will become law, right now, members of sectional title schemes can still collect as many proxies as possible for the scheme’s annual general meeting and special general meeting.
This is according to says Michael Bauer, general manager of the property management company, IHFM, who notes that by doing this they can very often get their own way even though this may not necessarily be the right course for the sectional title scheme as a whole.
Bauer has previously drawn attention to the proposed amendment to section 6 (5) of the Sectional Schemes Management Act, which will limit the number of proxy votes to two per member.
Tips to create more ‘buyer appeal’
Although the property market has been a tough trading arena for sellers over the past few years, the market is turning and sellers will find that making their home more appealing to buyers may be easier than they think.
This is according to Adrian Goslett, CEO of RE/MAX of Southern Africa, who says while market related prices will always be attractive to buyers, there are other simple things that sellers can do to make their home stand out and leave a lasting and good impression.
He offers a few tips:
If it’s attractive on the outside, buyers will want to see the inside
Homes that are visibly well-maintained and well-kept on the outside will be more appealing than the homes that aren’t.
Most buyers will pass over a home if they don’t like the outside look.
This doesn’t mean that the structure of the home needs to be changed, just simple improvements such as a fresh coat of paint, a cut lawn and flowers in the garden.
Buyers want to be able to move in and live there without the need for extensive renovating or upgrades.
Loop Street building greening CBD
The greening of 14 Loop Street, a recently refurbished 1904 building in Cape Town's CBD is paying both commercial and environmental dividends for the owners, the tenants and the city.
Rob Kane, Chairperson of The Central City Improvement District (CCID), says that world class working cities will need to be green cities.
Sustainability is no longer a nice to have, he says, but an imperative in order to keep the heart of the central city beating as a commercial, residential and retail hub.
“As with other successful global CBDs, the importance we place on making this a green city is fundamental for our plans to retain and attract business.”
Kane says 14 Loop Street, which is owned by Vunani Property Investment Fund Limited, is a great example of how this can be done.