'Huge savings to be made by selling properties faster'

'Huge savings to be made by selling properties faster'

Homeowners can cut up to two months off the average time it takes to sell a property by getting the asking price right from the start.

So says Berry Everitt, MD of the Chas Everitt International property group, who points out that sellers who do this stand to save a substantial amount in holding costs, as well as sparing themselves a lot of anxiety and stress.

"According to the most recent FNB survey," he notes "the current average time for a home to be on the market before it is sold in 106 days. But a recent analysis of our sales in various areas around the country revealed that homeowners who make use of our Market Value Report to determine the correct asking price at the start of the marketing process are achieving a sale in an average of 44 days.

"And the savings they achieve through this two-month reduction in selling time can be considerable. On a home bonded for R850 000, for example, the monthly repayment will be about R7700 at the moment, while the costs of municipal rates and services, insurance, maintenance and security will add up to around R4000 at least.

"So for every month that the homeowner can cut the listing time of his property, he will be saving around R12 000, which he could perhaps use to pay a bigger deposit so as to reduce the monthly bond repayments on a new home."

The potential to reduce selling times by pricing correctly is also especially relevant at the moment, Everitt says, because of the very long transfer registration times being experienced due to Deeds Office delays.

"The average period between sale and registration is now around 114 days, or almost four months, and home sellers cannot access the proceeds of their sale until registration is complete, so it is important to get the process started as soon as possible by selling quickly."

Further analysis of recent sales figures, he says, revealed just how big an effect the wrong initial asking price can have on achieving that objective. "Homes that were between 5% and 8% overpriced to start with took 77 days to sell, while those that were 8% to 10% overpriced took 117 days to sell, on average.

"What was really revealing, though, was that homes which were more than 10% overpriced to start with took anything up to 180 days to sell - and then generally only sold when the initial asking price was reduced by around 20%. Meanwhile, the sellers also lost out on at least four months worth of holding costs."

Chas Everitt International Press Release

New property development at V&A Waterfront

New property development at V&A Waterfront

The construction of a six-storey office building at the V&A Waterfront is one of its largest developments since it was established 22 years ago, said its chief executive, David Green.

Green was speaking at yesterday's sod-turning ceremony to mark the construction of the new building which is officially named No 1 Silo. The building is part of a R1 billion development that will extensively refurbish the Clock Tower Precinct over the next four to five years.

"One of the key differentiators of No 1 Silo will be its energy efficiency due to its unique positioning to the ocean and ability to benefit from a sophisticated sea water cooling system," he said.

"The V&A Waterfront is reaffirming itself as one of the most sought-after addresses for businesses operating in South Africa. By combining ease of access, optimal parking and secure living conditions with some of the unsurpassed views in Cape Town, the V&A Waterfront is truly offering the best in lifestyle options in a centralised and secure location."

According to Anya van der Merwe, director at Van Der Merwe Miszewski Architects, the building has been registered as a Green Star SA Office Design and is aiming for at least a four-star Green Star rating. The Green Star rating was established by the Green Building Council of South Africa in 2008, with the aim of evaluating the potential environmental performance of buildings, based on energy and water efficiency, quality of indoor environments and resource conservation.

"This will be the first office building in the City Bowl with a five-star Green Star rating, because in the future all office buildings will be required to have a five-star Green Star rating," said Van der Merwe.

V&A Waterfront project manager Mark Noble said the building would have a fully glazed double-skin façade to maximise views towards Table Mountain as well as the ocean, and to ensure "optimal use of natural light".

The construction of the building, including a car park, is projected to cost about R500 million and is expected to be completed in 2013. Noble said the cost was pushed up by the construction of the waterproof car park which would go below sea level.

The entire Clock Tower Precinct redevelopment is expected to attract 5 000 office workers in the next four years. Noble said the Clock Tower Centre had been reconfigured to offer more than 5 000m 2, supplemented by more than 2 500m2 of retail offering.

Cape Times

Interest rate remains unchanged at 9%

Interest rate remains unchanged at 9%

At the conclusion of this month's Monetary Policy Committee meeting, Reserve Bank Governor Gill Marcus has once again announced that the interest rate will remain unchanged at 9%.

With some economists foreseeing a possible second dip in the market, South African consumers will welcome the news that the interest rate has not increased this month as predicted earlier this year.

Although house prices continue to reflect the strain of a recovering buyers market, demand has increased and consumer confidence has remained fairly steady in the first three quarters of this year.

While for many buyers access to finance and competing with the stringent lending criteria of the major financial institutions will remain an issue, mortgage finance figures are looking more positive than they have in the past. Since April 2009 the bank approval rate for home loans has increased by 19% to its current rate of 45%, however this is still less than the 80% approval rate we saw in the boom period.

To date, market improvement has led to a 21% month-on-month growth in concluded real estate transactions for RE/MAX in the period of January to August 2011, which is the highest turnover achieved since 2007.

This points to the fact that although we still have some time before the market swings fully into a sellers' market, we are definitely on our way and the market is showing positive and encouraging increases, particularly in the middle sector.

RE/MAX Southern Africa Press Release

Power cut: Tshwane law firm sues council

Power cut: Tshwane law firm sues council

Power cut: Tshwane law firm sues council


The Tshwane Metro Council is facing a R150 000 damages claim from a local law firm, whose electricity supply was cut for two days because the council and the firm's landlord were embroiled in a battle over alleged arrears in rates and taxes.

Marius Blom & GC Germishuizen Inc said they were fully paid up on their electricity bill and the rates and taxes battle had nothing to do with them, as they were mere tenants on the property.

Attorney Marius Blom said in papers before the Pretoria High Court that the council couldn't just do as it pleased.

"I am quite aware that it is quite a common phenomenon that the council suspends services without proper notice, and in cases where it is not entitled to do so. The only way of making good the unfairness of it all, is for this court to grant damages against the council."

Blom applied for default judgment against the council as the latter did not give notice of its intention to defend the matter. This was despite the fact that the council knew about the application.

The lawyer said an official of the council's legal department, after receiving summons, asked him for the background facts and said he would refer the matter to the council's accounts department for further instructions. Nothing, however, came of this.

Blom stated that during the time the firm's power was cut, it could not conduct business as it depended on electricity to operate its phones, computers, printers and fax machines. He added that while the effect of the power cut was staggering on business, the electricity bill did not even reflect any saving during the power cut.

The firm is claiming R50 000 for the loss of income it suffered during this time. It is claiming a further R50 000 as the firm believes its good name was tainted as the power cut left the impression that it could not pay the bill.

Blom said during this time clients could not make use of the main entrance to the firm, as the door was electronically operated. They had to receive clients through the back entrance into the dark premises. Blom said they had to explain to people that their electricity supply had been cut, which he said, defamed the firm in the eyes of the public. The council is facing another R50 000 in damages for this.

Blom said the council in any event had no right to cut the power supply due to the dispute regarding the rates and taxes, as the landlord had declared a dispute about this.

When a council official came to the premises to cut the power supply, he was told that the firm was up to date with its bill and that the council could not just cut its power supply because of a dispute with somebody else.

Blom said the official turned a deaf ear and went ahead to cut the supply.

The council's side was not stated, as it did not file papers opposing the claim.

The matter was postponed indefinitely.

Fewer desperate sellers, but market on a knife-edge

Fewer desperate sellers, but market on a knife-edge

Fewer desperate sellers, but market on a knife-edge


With the relatively positive turn in the South African economy and the property market showing signs of recovery, it makes sense that fewer distressed properties are entering the market, as is being widely reported by agents handling these specialised sales.

For example, Mark Brickles of RE/MAX Ultra Select, which operates in the Cape Flats and south-eastern suburbs, including Grassy Park, Strandfontein, Mitchells Plain, Lotus River, Ottery and Lansdowne, says there has definitely been a slowdown in the number of distressed properties being offered for sale.

"In 2009, I would say at least half the properties we sold were in a distressed situation.

"Last year at least 40 percent of our sales were made up of distressed sellers, while so far this year that figure has dropped to about 20 percent of the sellers we deal with," Brickles said.

Peter Gilmour, chairman of RE/MAX of Southern Africa, who also heads up the group's specialised distressed property department, says that since January, the agency has listed about 600 distressed properties, of which 10 percent have been in the Western Cape, 20 percent in KwaZulu-Natal and 70 percent in Gauteng.

"Of the distressed properties listed in the Western Cape, 40 percent have been sold. These properties have spent on average 48 days on the market and range in price from R250 000 to R2 million. RE/MAX has sold the homes at 91 percent of the bank's asking price," says Gilmour.

RE/ MAX Ultra Select undertook a number of distressed sales in the middle of the recession and Brickles says banks were accepting offers as low as 50 percent of the value.

However, the banks are no longer accepting such low offers, which he says is a strong indication that a gradual recovery is taking place.

"The banks will look only at offers that are at least 80 percent of value. RE/MAX Ultra Select has sold 16 distressed properties since the beginning of the year and we have five on our books.

"The distressed property price band has not been at the really low end of the market, but rather more in the middle, with homes priced between R600 000 and R900 000.

"Previously, it was mostly lower-end homes that were sold as distressed properties."

Brickles says that distressed properties take between 30 and 60 days on average to sell - which is roughly the same period as normal listings - as they are priced at fair market value.

He believes that despite signs of a gradual recovery, the market remains on a knifeedge.

"It's as if people are just about coping with paying their bonds now, but don't really have money to upgrade in most cases or to spend money on luxury items," Brickles said.

"In my opinion, we will have a lot of people in trouble again, even if interest rates go up by as little as two percent or three percent."

Gilmour said: "Positive trends in the property market are by no means an indication that distressed properties are a thing of the past.

"We expect that distressed properties will continue to come on stream for the next five years at least, what with interest rate hikes on the horizon, along with other factors that will influence the ability of consumers to meet their monthly payment obligations."

Tough outlook for commercial property in 2011

Tough outlook for commercial property in 2011

Tough outlook for commercial property in 2011


"When evaluating the commercial office environment, according to Sapoa's latest vacancy schedule for the second quarter of 2011, South Africa's overall office vacancy rate has now breached 10 percent." says Rodney Luntz of High Street Auctioneers.

"This is a first in many years - we hadn't seen such levels since 2004. Furthermore, what are deemed popular office nodes have now experienced a decrease, including Bedfordview, Braamfontein, Bruma, Cresta, Blackheath, JHB CBD, Fourways, Greenstone, Hyde Park, Dunkeld, Randburg and Rivonia. Sandton CBD vacancies are at 9.6 percent, which is better than the situation a mere nine months ago when the vacancies in the Sandton CBD were recorded at 11.4 percent."

"This being said, it must be noted that even at a level of 9.6 percent that this is a high figure. Additional new developments on the cards will cause this percentage to increase drastically.

"In the industrial sector, manufacturing activity plunged in July with manufacturing activity producing a reading of below 50 which reflects a contraction. Furthermore, the sector shed 68 000 jobs in the first quarter of this year. Both these factors have an impact on the sector and ultimately on South Africa's economic growth and this in turn affects the industrial and commercial office market."

He says additional costs such as electricity are also putting pressure on rental properties. Dramatic electricity tariff increases of more than 25 percent this year alone have sent operational costs skyrocketing and these cost pressures are being passed on to tenants. He says similar increases can be expected in the near future. Interest rates are expected to start increasing towards the end of the year with the expected rise in CPI.

"South Africa as an emerging economy is still very dependent on what happens globally and the effects of a double-dip recession as well as the downgrading of the USA credit rating is felt in our own economy. With manufacturing activity also slowing in Europe, Asia and the US, South Africa has seen a knockon effect on exports which too are slowing and this ultimately affects the struggling industrial market."

He says the outlook for commercial property has definitely taken a knock and the current sluggish state is here to stay for some time. However there is a definite opportunity in the market place even in these difficult economic times.

By working with professional property consultants tenants will be able to tap into expertise when negotiating with landlords who are sitting with high vacancies in desirable nodes.

"We are seeing landlords offering incentives by way of increased tenant installation allowance, as well as lower rentals and favourable terms in order to entice tenants into their buildings."

Pickvest investors to discuss rescue prospects

Pickvest investors to discuss rescue prospects

How much of R4.5bn can be salvaged? A meeting on Wednesday will shed light.
JOHANNESBURG - Pickvest investors will meet on Wednesday to discuss the prospects of “rescuing” the companies they are invested in. The meeting will be held in Centurion at 15:00. In attendance will be Hans Klopper, who was recently appointed business rescue practitioner to seven of the eight Pickvest syndication companies.

On the agenda for discussion is the business rescue process and its prospects of success.

Many of Pickvest’s estimated 25 000 investors, who have invested as much as R4.5bn in its schemes, were unaware of Klopper’s appointment until a week after it happened, when it was reported on Moneyweb last Thursday.

Wednesday’s meeting has been hastily convened, but Klopper says there is nothing sinister in this. Klopper says the Companies Act dictates that a business rescue practitioner must convene, and preside over, a first meeting of creditors within ten business days of being appointed.

The only syndication excluded from the meeting will be Highveld 19. It was recently reported that a liquidation application had been lodged against Highveld 19, which prevented it from being placed under business rescue. However, Klopper told Moneyweb that this matter has since been settled, and he expects to be appointed to Highveld 19, too.

Ben van der Linde, a director of all eight Pickvest syndications, says that because of limited time, notices were only sent by e-mail to all known addresses.

The meeting will be held at Full Gospel Church Camping Grounds, 3C, 8 Jan Smuts Avenue, Irene Centurion. Financial advisers are welcome, but they must have at least one proxy from a shareholder.

Klopper says he was initially approached by Des Hudson, a director of the Highveld syndication companies, with a view to being appointed as business rescue practitioner. Klopper was later approached by Ferdinand Hartzenberg, a legal representative for the syndication companies. Hartzenberg is the son of Judge Willie Hartzenberg, who was appointed last year as chairman of the various Sharemax syndication companies.

Klopper’s fees will be paid by the income earned from the syndication companies, in accordance with the companies Act. The fees are prescribed by legislation and are currently capped at R2 000 an hour. Klopper says that a performance-related fee may be presented to investors and affected persons for their approval.

Klopper has 25 business days (unless an extension is granted) to present a business rescue plan to investors and other creditors for their consideration and possible adoption.

This plan should give investors a better idea what their companies are worth. For example, it’s been reported that there are substantial amounts owing to Nic Georgiou, who is intricately involved in the Pickvest schemes.

The business rescue plan must include a complete list of all assets and debt of the company. The practitioner must produce a projected balance sheet and income statement for the next three years, prepared on the assumption that his plan is adopted.

Klopper says he is busy familiarising himself with the Highveld syndication companies. He says he has had only one meeting with Georgiou, which took place on Wednesday last week.

13 Tips for avoiding falling victim to property rescue scams

13 Tips for avoiding falling victim to property rescue scams

Also a look at the types of scams.
1. Types of property rescue scams

i) Phantom help – In this scam, the supposed “rescuer” charges very high fees for basic phone calls and paperwork that the homeowner could have done. Or, the rescuer will make promises to represent the homeowner but will not follow through. This is really a too little too late scam as the helpless homeowner usually receives too little (or no) help too late to stop the foreclosure from taking place.

ii) Bailout – Here the scammer bails the homeowner out by helping them get rid of the house or giving the homeowner a loan on condition that he sign documents not knowing that he is selling his property. The way the scammers get the house varies, but each method ends with the homeowner surrendering the title of the house on the promise that they can stay on as renters and buy the house back once things have been "fixed." In the end, of course, the homeowner can't buy the house back and the supposed rescuers get most, if not all, of the equity.

iii) Signing over of property – This foreclosure scams involves signing away the ownership of your home. The owner only finds out that he is no longer the owner when he is evicted from his property.

iv) Debt review/liquidation/sequestration- Clients are approached by consultants to apply for these process not knowing the consequences. Assets are then handed over to these individuals/companies who will lease it to 3rd parties.

2. Tips for bank clients to avoid falling victim

Tips

Avoid doing business with companies, consultant and individuals that:

§ Guarantees to stop the foreclosure process.

§ Instruct/request you not to contact your bank/lender.

§ Collects a fee before providing any service.

§ Encourages you to lease your home so that you can buy it back over time.

§ Tells a client to pay your bond instalment to anyone other than the Bank.

§ Offers to buy your house for cash at a fixed price that is not set by the market at the time of sale.

§ Pressures you to sign paperwork that you have not read thoroughly or that you do not understand.

Furthermore:

§ Discuss repayment options with your loan servicer/lender, and do not ignore letters and other communication from your bank.

§ Compile a budget and determine the mortgage payment you can afford.

§ Create a file to record all communication with mortgage servicers, agencies, and financial institutions.

§ Don’t be rushed into a deal with a foreclosure “rescuer” with promises to stop a foreclosure.

§ Don’t pay a foreclosure “rescuer” in full until all services are performed as promised.

§ Do not agree to a repayment program if your bank is not informed and have agreed to such a repayment plan

Tips

Avoid doing business with companies, consultant and individuals that:

§ Guarantees to stop the foreclosure process.

§ Instruct/request you not to contact your bank/lender.

§ Collects a fee before providing any service.

§ Encourages you to lease your home so that you can buy it back over time.

§ Tells a client to pay your bond instalment to anyone other than the Bank.

§ Offers to buy your house for cash at a fixed price that is not set by the market at the time of sale.

§ Pressures you to sign paperwork that you have not read thoroughly or that you do not understand.

Furthermore:

§ Discuss repayment options with your loan servicer/lender, and do not ignore letters and other communication from your bank.

§ Compile a budget and determine the mortgage payment you can afford.

§ Create a file to record all communication with mortgage servicers, agencies, and financial institutions.

§ Don’t be rushed into a deal with a foreclosure “rescuer” with promises to stop a foreclosure.

§ Don’t pay a foreclosure “rescuer” in full until all services are performed as promised.

§ Do not agree to a repayment program if your bank is not informed and have agreed to such a repayment plan

New mortgage loans granted decline sharply in Q2 2011

New mortgage loans granted decline sharply in Q2 2011

Property

Largest segment of the new mortgage market moves into negative territory.

The September SARB Quarterly Bulletin provides some public insight as to patterns in new mortgage lending in the 2nd quarter of 2011. When it comes to the trend in the value of new mortgage loans granted (residential and non-residential included), it was not too surprising to see a further year-on-year decline in the value of loans granted. The overall mortgage market is dominated by residential mortgages, and this segment thus sets the trend.

The FNB Estate Agent Survey’s Residential Demand Rating is a fairly good leading indicator of residential mortgage grant trends, and thus for total mortgages granted. The demand rating’s year-on-year growth, too, has been negative in the 1st 2 quarters of 2011, with agents suggesting that the market has settled after a 2009/early-2010 surge.

So, after a year-on-year decline in the value of mortgages granted to the tune of -1.2% in the 1st quarter, the pace of decline accelerated to -9.7% in the 2nd quarter of 2011. On a seasonally-adjusted basis, the quarter-on-quarter rate of change for the 2nd quarter was -2.7%, which is the 4th consecutive quarter of decline by this measure.

The SARB Quarterly Bulletin also splits new mortgage loan grants according to purpose. From this we can see that the largest segment of the new mortgage market, ie, existing buildings, showed weakening growth into negative territory, recording a -13.4% decline in the 2nd quarter. By comparison, it would appear that the new development sector has bigger plans, with mortgage grants for construction of new buildings accelerating to 15.5% year-on-year growth from the previous quarter’s 8.3%, while vacant land mortgages shot up off an extremely low base to 114.1% growth, from a previous quarter’s 86.1%

The vacant land growth rate should be read with caution, though. The vacant land market remains weak, having experienced by far the most extreme slump of all the segments back in 2007-2009. It thus comes off a very low base.

Examining the value of loans paid out, which can be expected to lag the trend in loans granted, the 2nd quarter growth rate was +13.5%, virtually unchanged from the 13.5% year-on-year growth of the 1st quarter. On a quarter-on-quarter seasonally-adjusted basis, however, the growth rate was +0.3% in the 2nd quarter, down from the +5.5% of the 1st quarter, which indeed suggests a flattening out in the 2nd quarter (although quarter-on-quarter figures can admittedly be erratic)

CONCLUSION

Some data adjustments to the two major new mortgage sub-sets, namely residential and commercial segments, from early in 2011 make analysis of segment data difficult. However, the residential sector, being the largest segment of the mortgage market, remains the key trendsetter for the overall mortgage market.

The new residential mortgage sector is one of the economy’s leading sectors. As such, one could expect that its growth rate has been tapering off for quite some time (similar to the broadly slowing growth rate that one finds in the new vehicle sector), with an economy slowing and possibly headed for recession, and with the major stimulus of aggressive SARB interest rate cuts in 2008/9 having worn thin. The SARB Quarterly Bulletin data regarding the total value of new mortgages granted therefore presents little in the way of surprises, showing further year-on-year weakening.

The declining growth trend more-or-less tracks, with a lag, the year-on-year change in the demand rating provided by the FNB Estate Agent Survey panel, and we believe that this is supportive of our view that, in an environment of weak residential property and mortgage demand, house prices will remain under pressure in the near-to-medium term.

Syndication directors hope to prevent R4.5bn liquidation - Pickvest ; Highveld ; PIC

Syndication directors hope to prevent R4.5bn liquidation

The boards of seven Pickvest syndication schemes have resolved that the companies be placed into voluntary business rescue. They have appointed business rescue practitioner Hans Klopper, who is best known for his appointment as joint liquidator of Consolidated News Agencies (CNA), back in 2003.

In total there are eight syndications in the Pickvest stable. However, only seven are envisaged for the business rescue, not eight as previously reported. Moneyweb apologises for the error. The syndication Highveld 19 is excluded.

Morkel Steyn, a director of all eight Highveld syndication schemes, says in an affidavit that it was “imperative” to implement the business rescue and protect investors from liquidation and “massive losses”.

Public investors have poured nearly R4.5bn into the eight Highveld syndication schemes. The lion’s share, roughly R3.5bn, has gone to the four most recent schemes, Highveld 19-22. These syndications find themselves in the precarious position of having paid for properties they don’t own, as reported by Moneyweb in April.

A business rescue is an option in the new Companies Act. If the directors of a company have reasonable ground to believe that a company is financially distressed, and there appears to be a reasonable prospect of rescue, they can implement a business rescue.

While under business rescue, a company is temporarily protected from people and entities that have claims against it. Thus, liquidation may be prevented.

By placing the eight companies in business rescue, Steyn is admitting that all is not well in the Pickvest portfolio.

In his affidavit he refers to a dispute between Bosman & Visser and Nic Georgiou’s Zelpy group of companies.

Bosman & Visser is an intermediary that stands between the Highveld syndications and the person they buy the properties from, apparent billionaire Nic Georgiou. The syndication companies would pay investors’ money to Bosman & Visser, who would deduct Pickvest’s fees and commission, and, in turn, transfer the remaining cash to Georgiou.

At some point Georgiou became suspicious that Bosman & Visser had been short-changing him, and requested an audit. Georgiou claimed he had been underpaid to the tune of R883m.

An audit was conducted by Calculus Chartered Accountants. Calculus supposedly gave Bosman & Visser a clean bill of health. To this day, a letter (dated May 27 2011) is published on Pickvest’s website that suggests the dispute between Bosman & Visser and Georgiou has been resolved.

This flies in the face of Steyn’s affidavit, dated September 7 2011. Steyn notes: “There is a dispute between Bosman & Visser and the Zelpi [sic] group of companies whether the whole purchase price in respect of the four companies of R3.2bn had been paid. The latter group maintains that there was a short payment of R883m.”

Steyn says: “When it was clear that litigation was unavoidable it was clear that in such a case liquidations would follow and it was also clear that investors would lose the major portion of their investments. In total there are about 80 different large building complexes. The losses due to forced sales, liquidation and litigation costs and the time during which investors would not have any income would convert to massive losses to investors.”

The business rescue does not appear to have derailed a rescue plan proposed by Georgiou. The plan, known as the Orthotouch deal, would see Georgiou retaining ownership of the buildings he was supposed to transfer to investors. He will promise to pay investors an annual return of 6%, escalating by 0.25% a year for five years, after which time, Georgiou promises to repay investors their entire capital.

At least one organised group of Pickvest investors is against the Orthotouch deal, and has vowed to vote against it. Investors are wary of Georgiou’s promises. After all, it was Georgiou who “guaranteed” Pickvest’s investment products. In April this year, Georgiou walked away from these obligations, with apparent ease, leaving investors with substantially lower income.

In his affidavit, Steyn notes that there are ongoing negotiations between Georgiou’s Zephan (previously Zelpy) and the Takeover Regulations Panel (TRP) regarding the proposed Orthotouch deal. The TRP’s job is to ensure that a proposed takeover complies with legislation, before it is presented to investors. The TRP makes no finding on the merits of the transaction – that is for investors to decide themselves.