Be a Strong Buyer – Get a pre-approved Bond

We haven’t seen such a strong buyers’ market in Dullstroom in decades!

Clearly the result of an oversupply of property stock, an increase of ‘desperate sellers‘ and banks relaxing their lending criteria in the last year – up from 60% last year to 73%.

The question remains, ‘how much can you truly afford to buy property for?’ If you don’t understand bank finance, you will always be on the back foot.

Here are some TIPS to put you financially in a strong negotiating platform to snag that bargain property.

blog281.    Maximum lending rates & Deposits

While some banks will offer a 100% loan to their own clients for properties under R1,5million, generally you need anything between a 5% to 20% cash deposit. Standard Bank will offer a 100% loan to their own clients, FNB will offer 100% loans to salaried clients, while if you are self-employed expect to pay a deposit.

2.    Properties held in Companies, CC’s or Trusts

Banks generally do not allow any home loan finance if the property is to be registered into a trading entity. If it is a shelf CC though the normal lending criteria applies. (Note Nedbank does not currently do finance into any entity).

3.     Vacant land

Getting finance to acquire vacant land seems to be even more difficult. In most cases you will need up to a 40% cash deposit. Also, banks will be reluctant to grant a loan over an extended period, longer than 10 years.

4.    A “thumb suck” Bond

If you want an unscientific but helpful way to calculate how much you may qualify for:  take your gross salary for one month, divide by 3 and round up to the nearest million. E.g. if you earn R30,000 gross salary per month, you can qualify for a bond of around R1,000,000.    Please note this is not a scientific approach and may change depending on your bank and application.

5.    Get pre-approved now.  

If you really want to ‘window shop’ with confidence why not get pre-approval from your bank or ask your Bond Originator. At Q-Fin if you provide your credit check together with bank statements they will be able to give you a pre-qualification estimate that is 90% accurate.

It goes without saying that your credit rating plays a vital role in securing bond finance; check your credit profile on It is also imperative to use a reputable bond originator when applying for a home loan; they can help you prepare the strongest application possible.

Remember, if you aren’t in the business of buying and selling property – you might do this once or twice in your lifetime –  seek advice from a professional Estate Agent.

Information in this article can change at any time, please speak to your bank, originator or Agent for up to date information. Some info courtesy of Jaco Ellis of Q-Fin, who has had proven results for gaining finance for many of our clients.

Don’t Over-Capitalise On Your Property?

Although you may consider your home to be your castle, it’s highly unlikely to be on a scale of Buckingham Palace and anyone who is considering renovating a property needs to bear this in mind. Over-capitalising on an investment is asking to fail, at least in the short term.

The demographics of an area dictate who buys what within a certain price bracket. Trying to transform a normal three bedroom home into a mansion, while perhaps physically possible, is financial suicide.

Modern bathroom design

Certain areas tend to attract certain age groups. Although not an exact science, communities where older inhabitants choose to retire are more likely to attract others in the same boat. Likewise an area that is close to schools and shopping centres is more likely to appeal to those with young families. There are exceptions, but generally speaking anyone who wants to revamp a property with a view to selling needs to take these factors into consideration before embarking on renovations or improvements.

“Remodelling your home to suit your family’s long-term needs is one thing; adding improvements in order to increase the value of the home is another”.

Anyone who is considering investing more money in their home needs to ask themselves: who would buy this home? Putting in an Olympic pool in the hope that Ryk Neethling is going to come a knocking is unrealistic, but surprisingly many South Africans have similar unrealistic expectations.

Knowing what sells in a community often proves to be a huge advantage. If you live in an area that attracts older people, it is unlikely that a pool is going to be seen as added value. Similarly young families are not particularly concerned about a small ornate landscaped garden preferring a larger area in which there children can play. Different age groups value different things. Older people will consider living on a bus route a major drawcard. Younger families with children, however, may consider this as a hindrance because they prefer to live on quieter roads.

You can’t please everyone all of the time, but knowing what is going to add value to your home and what isn’t will improve your chances of selling at a profit or at least recouping your investment. If the suburb in which you live primarily comprises starter homes, over-improving could price you out of the typical market range, leaving you with little option but to sell for a far lower price than expected. Similarly,Rome wasn’t built in a day and making expensive improvements months before you place the property on the market – could result in disappointment. As with any commodity, property values increase over time andanyone who assumes that they are going to recoup the full value of the improvements over a short time periodmay find that this is not the case and end up losing money on the deal.

Another area that property owners should consider is how much they spend. Humans are generally an optimistic bunch, however, assuming that the pool that cost you R50 000 to install is going to add R150 000 value to the home is unrealistic. Eventually, of course, homeowners will recoup the rewards that renovations and additions bring, but property has and always will be regarded as a mid- to long-term investment and as such takes time to appreciate.

Although many would balk at the idea of putting a R65 000 sound system into a clapped-out old rust bucket of a car, strangely enough, the same ideology does not appear to apply to property. Some properties mainly because of their location are never going to match the homes of Cliftonand spending money trying to transform something into something it is never going to be is a waste of time. Investing money into an existing property is always recommended. Get it right and you will recoup your money with interest. Get it wrong, however, and you may well sit with a property whose owner has completely out-priced the property on the market.

Article By Lea Jacobs 23 Aug 2011

Buying Property? Understand How Banks Value Property

Rob Lawrence*|22 August 2011

It is essential to understand how banks go about property valuations.

The property media have done an excellent job in educating and informing the general public on property matters and their increased knowledge has become apparent in the questions they put to agents and the requests they regularly make for carefully researched information to back up the agent’s statements.

Nevertheless many surprising “patches of ignorance” still exist – one of which concerns the valuing of property.

South African valuers operate to international standards, but this does not mean that all valuations will be the same or be what the agent, seller or buyer feel they should be.

The most important fact to grasp is that the bank valuer is there to assess how the property rates in relation to the price being paid for it, i.e. how much security its value offers the bank.

A valuer is not there to check on the physical state of the property or what parts of it need repair.

blog30Bank and other valuers use a number of tools to do a market related price valuation, one of which will be a Comparative Market Analysis.  This tries to fix a realistic value for the home by comparing it to similar properties in the area that have sold recently.


CMAs are, of course, an inexact science because no two homes are the same, even when they have the same designs and are in the same estate.  In particular, the condition of one home may be very different from that of another – its defects, or lack of them – should lead to a different valuation but often do not.

Where a property has obvious defects, but the valuer feels that the valuation can be reached if these are fixed, valuers may take cognisance of such defects by calculating what it would cost to repair them and inserting a retention clause stipulating that specialised repairs have to be carried out before the Bond can be registered.

Municipal valuations can be useful guidelines, provided it is accepted that these days they are often far higher (as much as 20%) than the market value – the aim of the municipalities being to increase their rates and taxes.

Another guideline in establishing a fair valuation may be the insurance value – but as this will take into account the cost of replacing the home, it, too, will probably be high because, in today’s market, building a new home is 20 to 30% more expensive than buying one “second hand”.

Valuations become exceptionally important when a buyer is applying for a bond.  Quite often the bond applicant will, possibly on his estate agent’s advice, make an offer only to find that the banks’ valuers see the property as being considerably less.  The bank will then be prepared to issue a bond only in relation to their valuation.

In these cases if market value is not found, a good bond originator may be able to persuade the bank that their valuation is not market related or he may be able to get the buyer and seller to rectify defects which will make the higher valuation valid.

It has to be understood that a home may have certain features (e.g. proximity to a school or an especially attractive garden) which give it huge value for some buyers but might reduce its appeal to other buyers.

In a willing buyer, willing seller market, where a bank does not find value, we always suggest that the valuer meets with the estate agent selling the property and have a relook at the comparative market analysis and decide what it is about this property that detracts from the value as calculated by the valuer.

This will enable the agent to find out what the bank thinks should be changed or improved before they will consider granting the loan and often matters can then be put right.

*Rob Lawrence is the National Manager of Rawson Finance, the Bond Originators for the Rawson Group.

SNOW IN DULLSTROOM 2011 – Image gallery

We had so many calls asking about the snow in Dullstroom, so I thought I would put together a quick blog with pics this morning. It really snowed a lot last night and it was amazing to stand in the dark with a torch watching the flakes come down. We woke up to a winter wonderland this morning. It was fantastic to walk in thick snow where your shoes disappear and there is a wonderful ‘crunch’ with every step. The kids are in heaven with their gumboots on and wonder in their faces. The town is embracing the mood with snowmen and snowball fights the order of the day! We have uploaded the entire album on our Facebook page. Click here if you want to view it. Otherwise here are a handful of photos below!

gallery1 gallery2 gallery3 gallery4 gallery5 gallery6 gallery7 gallery8 gallery9 gallerya galleryb galleryv

Extra warm regards!

From the Team at Zest


Non Residents Must Declare Capital Gain / Loss On SA Property

I thought it would be useful to pass on this info that Jaco Ellis sent me. Short, sweet and to the point. Jaco has helped many of our clients obtain Mortgage Finance when many others could not!

Did you know that even as a non-resident, you are obligated to declare the Capital Gain or Capital Loss when selling immovable property in South Africa? Where the seller of immovable property is a non-resident and the gross sales price exceeds R2 million, the purchaser has an obligation to withhold 5% of the purchase price from the seller (if a natural person)*, and pay such withheld portion to SARS as provisional Capital Gains Tax. The seller is however entitled to apply to SARS for a directive for no withholding or a reduced witholding tax.

* If the seller is an entity, a different rate applies.

For clarification or more info, you can contact Jaco on his email or as follows:

Jaco Ellis
Q Fin Solutions
083 448 8724
JHB Office: 011 394 0194 / Pretoria: 012 809 3405
Fax: 0866709955


Buy Dullstroom Property & Earn Income

Dullstroom and small upcoming tourist towns linked to the Highlands Meander, offer ‘Gautengers’ the perfect country escape from the big city. Many buyers have taken the option of ‘buying to let’ and have been able to earn income on their properties to contribute towards their bond repayments.


So what type of property will be the most attractive for holiday rentals?

Dullstroom Reservations say that the majority of their enquiries are for couples or families of four, so you don’t have to buy the biggest house on the market. For the more brave being able to offer flexible accommodation options is ideal. For example  a grouping of cottages that sleep 2 to 4 guests individually but are close enough together to book out as a group. This can be done in the village by buying and building on a stand that already has subdivision approval, but is easier on a farm property where obtaining Resort Rights on agricultural land is far easier than gaining Full Title approval.

Farm or Village Accommodation?

Both offer pros and cons and cater for two markets which are equally as popular.  Visitors are split with half enjoying being near to all town’s amenities, shops, restaurants etc. The other half prefer to book farm accommodation with access to private fishing waters.  Venues located within a 10km radius of Dullstroom will have an advantage over those in outlying areas, but you will pay more for the privilege! Access is one of the most important considerations, and if you can only make it to your venue in a 4×4 then understand that your target market will be limited.

Occupancy Rates

Dullstroom attracts a weekend clientele filling 75-85% occupancy over weekends, while midweek occupancy is approximately 10 -15%. However it must be noted that this area has experienced a marked increase in the number of midweek and off-season bookings over the past 2 years. It takes time to establish a strong venue presence, sometimes up to 18 months, so one must be realistic that creating meaningful income will take time. However it is good to know that venues operating for 3 years or longer, which have maintained their standards, have been known to increase their overall occupancy levels to between 40% and 60%.

Servicing & Standards

Often it is a drop in servicing standards that is the demise of  venues just as they start to gain popularity. Venue owners should set aside a percentage of their income to reinvest in their properties. Soft furnishings should be added and replaced annually, with linen and towels being replaced as needed according to occupancy levels. The public and regular feet can sometimes play a part in wear and tear and the industry often requires for decor, carpeting and painting upgrades every 5-7 years.

Most venue owners do not live on the property, often managing it from afar. It is important to investigate the services in your area to ensure that standards don’t drop from one guest visit to the next. Dullstroom have a few service providers that are particularly geared up to do just that from cleaning and changeover services to property management services who employ a dedicated staff member to ensure that the venue is maintained and that changeovers are done effectively and efficiently.

The reservations office charges clients a booking commission anywhere between 12% and 16% commission depending on a sole mandate or open listing with them. They will market your property to their client base, confirm bookings, collect the deposit and key collections. The two operations, Dullstroom Reservations and Dullstroom Accommodation (013 254 0020), are professional and have many years worth of experience and can help you when first consulting on rates to charge (ranging from R250 to R550pppn), servicing and décor ideas.

Stats in this article are courtesy of Dullstroom Reservations 013 254 0254 or

Dullstroom Winter Festival Set To Rock 10th – 19th June 2011

blog101The 2011 Dullstroom Winter Festival is jam packed with music, outdoor activities, winter goodies and the creative arts. The Festival is running for a total of 9 days with a public holiday in-between on the 16th June and will cater to all visitors.

During the festival this quaint village comes alive with shops, businesses and restaurants putting up sparkling decorations and Christmas lights to ensure families will continue to enjoy the midwinter Christmas theme that has been a firm favourite for many years.

Most pubs and restaurants will offer various Winter Festival specials or Christmas goodies on their menus and will ensure you will have a warm welcome with a roaring fire and drink in hand.

Artists performing over the Festival include Laurie Levine, Andre Swiegers, Albert Meintjies, Albert Frost and the Blues Broers. They will perform at various venues and times throughout the town including Harries Pancakes (who are celebrating their 25 year anniversary), Mrs Simpsons Restaurant, The Mayfly Restaurant and the Cherry Grove Shopping Centre.

For golf lovers itching to get on to the exclusive Ernie Else Golf Course check out the Birchcroft Private School Fundraising Golf Day at Highland Gate with R30,000 worth of prizes (limited entries).

There will also be a flea market and a farmers markets every Saturday as well as competitions, artist exhibits and creative fun at icreate.

There will also be a stunning Abba evening with Christmas Carols by Birchcroft students, the famous DJ Wors at the Duck & Trout, Beer & Whisky Tours and Tastings, a family day atWalkersons (where Zest Property Group will be hosting a property expo), Cheese & wine tastings, artist exhibits, horse rides, Clay Pigeon Shooting and more.

Go to the official Dullstroom Winter Festival Official Website for an updated program, contact details, accommodation bookings.Or alternatively email

CPA = Protection For Property Buyers in Dullstroom & SA

I thought this article by Adrian Goslett was great and applies to all Estate Agency practitioners in SA. We at Zest Property Group Dullstroom hope that this will be the start to cleaning up the industry.

With the new Consumer Protection Act (CPA) now in effect, property professionals will be forced to look at the way they do business and how certain procedures affect both them and their clients.

blog103The act has been a work in progress for many years but now that it has been implemented it will change the way businesses operate in South Africa completely.  In certain cases, risks that were previously assumed by consumers will now be placed on the supplier.  This means that South African’s are now among the most protected consumers across the globe.

So what impact will this have on the real estate industry? Adrian Goslett, CEO of RE/MAX of Southern Africa, highlights important aspects of the act pertaining to property.

“With regard to the sale of property, the CPA will definitely have an impact on how property professionals draw up contracts.  All standard contracts will need to be reviewed and must be brought in line with the requirements of the act. Certain terms may have been ambiguous in the past but now the act calls for clear and understandable terms that are partial to both parties.”

Goslett notes that as the main objective of the CPA is to promote a fair, accessible and sustainable marketplace, all terms within the property sale agreement must be fair and reasonable for both parties.

Until now parties could agree to any term in the contract, even if it severely prejudiced one party, which in most cases was the buyer. Parties had the freedom to negotiate contract terms at will, but now the CPA will set out to restrict contractual rights and make sure that parties prescribe to specific, just practices in the negotiating and selling of property.

“The voetstoots clause for example, was a one-sided term designed to safeguard the seller from liability for any damages that arouse from any hidden defects in the property. Voestoots can be simply translated to “as is”, which is how property was sold before the Consumer Protection Act was introduced. When a property was sold “as is” it meant that it was sold in whatever condition it was in – this is no longer the case.  This has now been changed and any defects that the seller is aware of must be made known,” adds Goslett.

The Voetstoots clause cannot be inserted into agreements for any property sold to an individual or small corporation in the ordinary course of business and a list of defects must be included. The purchaser must be made fully aware that the property is offered in its condition with the defects listed and agree in writing to accept the property in that condition.

“Essentially what this will do is get the seller to make sure all necessary aspects of the property are in suitable working order and indirectly this will give the buyer an implied warranty of quality on their purchase,” explains Goslett.

It must be noted that the Consumer Protection Act does not apply to any private once-off transaction where the seller’s ordinary course of business is not that of selling property and these sellers will still be protected by the voetstoots clause.  However, if an estate agent is involved in the transaction by means of marketing or negotiating the sale of the property, this service will be covered under the ambit of the act.

When property professionals are involved in the marketing of any property or services that pertain to their ordinary course of business, they will need to make sure they adhere to the restrictions laid out in the CPA regarding direct marketing.  This is defined in the act as approaches in person, by mail or electronic communication, which is further defined as telephone calls, fax, sms, wireless computer access, email or any similar technology.  Consumers may request that suppliers do not contact them at all.

“Estate agents will need to have permission from prospective buyers before they engage in any form of direct marketing and the buyer will have the right to withdraw from any transaction that may occur as a result of this marketing,” says Goslett.

Transactions that result from non-direct marketing such as regular print adverting or show houses that are open to the general public will be exempt from the cooling off period.

“Although some aspects of the Consumer Protection Act may seem severe and will require certain suppliers to adjust their business practice, it is important to remember that this act will have a positive effect on the sentiment of consumers in the current market,” concludes Goslett.

Article By Adrian Goslett – 12 May 2011

SA House Prices Show Growth April 2011

Is this an anomaly or a return to positive price growth?

Property prices showed positive year-on-year growth in March, according to the latest results released by ooba – South Africa’s leading bond originator.

The March oobarometer price index reveals that the average house price rose 1.1% year-on-year to R860 492 from R850 864 a year earlier. The growth in the average purchase price amongst first time buyers also showed an increase, with year-on-year growth of 4.5% to R623 179 in March 2011 from R596 357 a year earlier.

According to Saul Geffen, CEO of ooba, the results are both positive and surprising. “Given the high levels of growth experienced in the first half of last year, and the negative growth recorded for the last consecutive 4 months, we did not expect prices to return to positive territory so quickly. We will have to wait until next month to see whether this is an anomaly or a return to positive price growth.”

According to other indicators tracked by ooba, the average approved bond size increased 7.4% year on year in March to R725 973, compared with R676 256 a year earlier. The average deposit as a percentage of purchase price also fell 23.9% year-on-year to R134 519, equivalent to an average deposit of 15.6% of the purchase price.

The average decline ratio during March also decreased by 8.1% year on year, from 52.8% in 2010 to 44.7% in 2011. An additional positive indicator is that the effective overall approval rate continued to show a year-on-year increase of 5.6% to 64.5%.

The number of bond applications in March through ooba was the highest level recorded for nearly three years (since May 2008) and was 36% higher than the average monthly application intake recorded throughout 2010. March volumes were however only 36% of the application volumes recorded at the peak of the market in May 2007.

The levels of approved home loans also reached a recent high in March 2011. ooba’s March figures was the highest value of approved home loans since October 2008, two and a half years ago.

Geffen says that he expects the growth to continue. “ooba has experienced consistent month-on-month increases in application intake since the beginning of 2011. February was already significantly up, and March exceeded February by some margin. We expect to see this growth continuing.”

“With interest rates currently at a 30 year low, improved affordability has enabled many would-be homeowners to take the leap, as the cost of servicing a bond has reduced considerably. The improved affordability, combined with subdued property price growth, low inflation rates and real wage growth, has combined to make this a favourable environment for homebuyers.

Geffen says the continued relaxation in lending criteria by the major lenders is also a contributor to this rise in applications and approvals.

Dullstroom Farms For Sale Are Attracting Strong Buyer Interest

Full oobarometer analysis:

Indicator Mar-11 Mar-10 Change yr on yr Mar 11 vs Mar 10  Feb-11 Change month on month Mar 11 to Feb 11
Avg purchase price 860,492 850,864 1.10% 832,105 3.40%
Avg purchase price of  first time buyer 623,179 596,357 4.50% 599,105 4.00%
Avg approved bond size 725,973 676,256 7.40% 666,836 8.90%
Avg deposit (as % of purchase price) 15.6% (R134,519) 20.5% (R174,608) -23.90% 19.9% (R165,269) -21.60%
Avg age of applicant 37 37 No change 37 No change
Avg initial decline ratio (first bank decline) 44.70% 52.80% -8.10% 45.90% -1.20%
Ratio of applications declined by one lender but approved by another 22.70% 22.10% 0.60% 23.30% -0.60%
Effective approval ratio 64.50% 58.90% 5.60% 64.80% -0.30%

This report was prepared by Ooba:

Occupational Rent Explained – The Ins and Outs

I thought this article written by Adrian Goslett was excellent and worth replicating on this blog.

Make sure you are covered.

Reading the fine print and ensuring that every eventuality is covered in an agreement of sale is one of the most crucial aspects of buying or selling property.

According to the laws governing property sales in South Africa, everything has to be reduced to writing and anyone who wants to conclude a sale without any complications should bear this in mind before signing any agreement.

Although a sales contract normally has a section discussing occupational rent, many buyers and sellers do not realise its importance.

Essentially, this clause is intended to protect both parties as it covers the seller when the buyer moves into the premises before transfer has taken place, or the buyer should the seller stay in the property after it has been transferred into the buyer’s name. The clause should clearly state how much occupational rental must be paid each month.

While a buyer may have no intention of moving into a property before it is registered in his/her name, situations may arise where early occupation has to take place. Delays at the Deeds Office and problems with obtaining rates clearance certificates are just two of the factors that may delay the transaction.

Likewise, a seller who initially didn’t plan to move out before the transaction has been completed may have to leave a property simply because they didn’t factor delays in transfer into the equation, or they might need to stay on for longer for a number of reasons.

Although frustrating, those who have foreseen such problems are in a far better position to deal with them than those who have simply chosen to ignore the occupational rent clause.

Both sellers and buyers who do not ensure that the required occupational rent amount is stipulated in the agreement of sale leave themselves wide open. Buyers do not call the shots in this area and the seller needs to ensure that the amount of occupational rental reflected in the sales contract covers the actual bond repayments that he has to continue making until the sale has gone through.

On the other hand, the seller cannot be unreasonable in these cases by demanding a figure well in excess of the market-related value of the property and the bond amount owing.

It is imperative for the buyer and seller to agree upon a figure that is fair to both parties. The main objective of any sales agreement is to clearly set out the intention of the parties so that there can no argument later on.

Generally speaking it is normal practice for an agent to insert an amount that ensures that the bond amount that the seller is paying is fully covered. However, some agents put in an amount equal to 1% of the purchase price. This can result in seller losing money in the event that he is servicing a high bond.

It is vital for both the buyer and seller to read the sales contract in its entirety, ensuring that every eventuality is understood and taken care of adequately. Buying and selling property is an emotional time for everyone and adopting a ‘things will work out for the best’ approach could end up in conflict, costing money and souring what should be one of the most exciting moments of your life.

*Adrian Goslett is the CEO of RE/MAX of Southern Africa.