Property Professional - Sep/Oct 2016

SEPT/OCT 2016

THE SOUTH AFRICAN PROPERTY INDUST

I N T E RV IE W

ADRIAN GOSLETT ON ATTRACTING ENTREPRENEURS AND TAKING THE TRANSFORMATION LEAD

12 ABOUT TRAINING THINGS INTERNS NEED TO KNOW

PP SepOct_Cover.indd 1

IS THERE A GAP IN THE AFFORDABLE HOUSING MARKET

?

Never consider reducing your commission

U S E XPE RT E D H ATC H

2016/08/25 10:30 AM

CONTENTS

02

INDUSTRY NEWS

18

ANALYSING FIRST-TIME AND METRO FORMER TOWNSHIP HOMEBUYERS

Catherine Davis PUBLISHED BY THE CREATIVE GROUP 6 Beach Road, Old Castle Brewery, Woodstock 7925 087 828 0423 facebook.com/PropertyProfessional twitter.com/Property_Prof

PP SepOct_EdsLetter+Contents.kw.km.lk.indd 1

22 35 32

ADRIAN GOSLETT ON MARKET CYCLES AND CHANGING THE FACE OF THE INDUSTRY

W

e’re fresh from a number of Olympics victories and feeling upbeat about South African achievements.

And how is local real estate making strides?

RE/MAX of Southern Africa regional director and CEO Adrian Goslett calls 2016 a “challenging” year within the real estate sector.

In our cover story (page 22) he describes it as “not a good market or a bad market – merely the market and business as usual”. He reminds us that all markets work in cycles.

A slower period offers opportunities for research. Meg ilson looks at rst-time buyer demographics in the affordable housing category (page 18) and where former township homes t into that mix. Anne Schauffer explores why semigration to the Western Cape is replacing emigration – with savvy agents cashing in (page 30).

Still on the research trail, which qualities about certain global cities appeal most to the international buyer or tenant as urbanisation increases (page 35)? Bringing it home, everything interns should know about new education regulations page 45 and tips from S expert Ed Hatch on negotiating commission (page 40).

Please join the debates on Property Professional’s Facebook page and don’t forget to sign up for the Property Professional e-newsletter turn to page 1 for details.

CAN YOU DEFINE WHAT MAKES A GOOD PROPERTY INVESTMENT?

40

US EXPERT ED HATCH ON HOW TO IMPROVE YOUR COMMISSION NEGOTIATION SKILLS

APPEALING ELEMENTS THAT GIVE SOME GLOBAL CITIES THEIR PULL

45

RELEVANT QUESTIONS FROM INTERN AGENTS ANSWERED

THE CREATIVE GROUP CEO Shaun Minnie shaun.minnie@thecreativegroup.info Editor Kim Maxwell Content Business Manager Catherine Davis Content Strategist Bridget McNulty Art Directors Mark Peddle and Leah de Jager Copy Editor Kirsty Wilkins Online Editor Andy Möller

ADVERTISING Sales and Marketing Manager Michèle Jones michele.jones@thecreativegroup.info 084 246 8105 Advertising, production and subscriptions Jackie Maritz jackie.maritz@thecreativegoup.info Printing Paarl Media | Disclaimer: the publisher of this magazine gives no warranties, guarantees or assurances and makes no representation regarding goods

or services advertised within. Information correct at time of printing. © Copyright The Creative Group. All rights reserved. No portion of this publication may be reproduced in any form without prior written consent from the publisher. The publisher is not responsible for unsolicited material.

2016/08/24 11:39 AM

LOCAL NEWS

LOCAL INDUSTRY NEWS % 6.7 % 15.2

National house price inflation in May 2016 from previous year

House price inflation for small sectional title properties in Q1 2016

9.4

%

House price inflation in the lower bracket (Jan-May 2016)

VAL DE VIE NAMED TOP ESTATE Val de Vie has been named the top estate for 2016 by global market research company New World Wealth in its Top 10 Residential Estates in South Africa report, released in August 2016 – this after the Paarl estate merged with Pearl Valley in March 2016. Highlights of the combined estate include vineyards, polo elds, an e uestrian centre, Pearl alley’s de nitive ack Nicklaus signature golf course, natural fynbos scenery, parks, lakes and mountain backdrops. House prices range from R5m-R40m.

Construction of phase one of a luxury ve-star Mantis Collection bouti ue hotel has started at Pearl Valley. Says Val de Vie Estate marketing director Ryk Neethling: “Having joined forces with Pearl alley, al de ie certainly has an offering like no other estate in the country or on the continent.

The top 10 residential estates are selected by New World Wealth annually, based on criteria including security, activities, facilities, uality and design of houses, space, views, scenery and wildlife, appeal to wealthy buyers, and resale and price growth potential.

Other estates on the New World Wealth 2016 list are Zimbali in Ballito, Fancourt in George, Steyn City between Fourways and Lanseria, and Pezula in Knysna.

02

87.4

%

Increase in the price of a freehold property in Soweto (2010-2015)

Source: July 2016 Pam Golding Properties The Study: Winter 2016

PROPERTY PROFESSIONAL

PP SepOct_Local_Industry_News.kw.km.indd 2

2016/08/24 10:15 AM

LOCAL NEWS

JUNE 2016 RETAIL BUILDING STATISTICS

661,140m

2

Retail space completed in the year to June 2016

NATURALLY ENTREPRENEURIAL AND AWARD-WINNING

K

im Faclier, GoIndustry DoveBid property division’s MD, has been in the business since 1991.

Her experience includes every real estate sector from commercial and residential to industrial and auctions.

Faclier is known as a connector of note, which has earned her numerous awards including the Five-Star Women in Property Network Award 2010. In 2012, Faclier won CEO magazine’s South Africa’s Most Influential Women in Business and Government Award, identifying her as one of the country’s inspirational achievers.

Faclier’s most recent – and, in her words, “greatest achievement” – came in November 2015 when she won South Africa’s National Business Awards Fast Growth Award for her company’s explosive expansion in the property sector.

GoIndustry DoveBid SA began operations under Faclier’s leadership in 2011 after the company recognised a gap in the market for auctioning properties online. In the past two years, the company has concluded nearly R1bn worth of real estate transactions. Faclier’s top priority remains ensuring business transactions are mutually beneficial, even if there is no personal or business financial gain.

04

25

%

Year-on-year growth

Source: FNB Property Barometer

DEMAND FOR PRIME RETAIL SPACE Convenience centres hold their own in a competitive retail environment as smaller stores mean lower rentals, high trading density and easier and quick access for customers – in other words, true convenience shopping Luke Anley, Ikon Property Group broker

PROPERTY PROFESSIONAL

PP SepOct_Local_Industry_News.kw.km.indd 3

2016/08/24 10:15 AM

1183_Remax Print Ads Full Page FA.pdf

C

M

Y

CM

MY

CY

CMY

K

1

2016/08/22

2:26 PM

LOCAL NEWS

TOM SALOMONE ON BUILDING CLIENT RELATIONSHIPS Tom Salomone was guest speaker at the recent Real Estate Business Owners of South Africa (Rebosa) event. He is the 2016 president of the National Association of Realtors (NAR), America’s largest trade association representing 1.2m realtors involved in residential and commercial real estate.

Drawing on more than 40 years’ experience as a licensed real estate agent, realtor and broker/ owner, Salomone offered insights about why estate agents need to work harder at their craft and at building relationships with their clients. Read the full feature in Property Professional’s November/December 2016 issue.

Back left to right NAR president Tom Salomone; Private Property CEO Simon Bray; Rebosa director Phumzile Makhosana; NAR past president Chris Polychron; NAR past president Dale Stinton; Seeff Properties chairman Samuel Seeff; Pam Golding Properties CEO Andrew Golding; Rebosa CEO Jan le Roux.

Front left to right IEASA president Lanice Steward; Janet Branton, senior vice-president global, resort, commercial divisions NAR; Shanaaz Bray-Parker, Evergreen Holdings principal and director NPF; NAR president liaison Nancy Macaluso; RE/MAX of Southern Africa chief operating officer Amanda Cuba.

Back left to right NAR CEO Dale Stinton; NAR past president Chris Polychron; Pam Golding Properties CEO Andrew Golding; NAR president Tom Salomone; Rebosa CEO Jan le Roux.

Front left to right NAR president liaison Nancy Macaluso; Tony Macaluso, NAR; Janet Branton, senior vice-president global, resort, commercial divisions NAR.

06

Get your agent to undertake a comparative market analysis to advise on a price that will see your property sold and not hanging around on the market. The first two weeks generate the most interest among buyers Charlotte Vermaak, principal, Chas Everitt Nelson Mandela Bay

PROPERTY PROFESSIONAL

PP SepOct_Local_Industry_News.kw.km.indd 4

2016/08/24 10:15 AM

1183_Remax Print Ads FA.pdf

1

2016/08/22

1:56 PM

LOCAL NEWS

How property owners can retrofit their homes With even small modi cations, homeowners can decrease their energy output, expand on the use of environmentally sustainable products, increase thermal comfort making the house cooler in summer and warmer in winter) and improve indoor air uality by removing toxins such as formaldehyde. Kerry Henning from Saint-Gobain explains the benefits of a retro t.

WHY SHOULD BUYERS CONSIDER RETROFITTING THEIR PROPERTY?

It is possible to save between 60%-90% of energy usage if the whole building is refurbished to meet legislative guidelines.

A consistent temperature means a decrease in the consumption of power and hence a decrease in the cost of heating or cooling the house, along with creating a more comfortable living space. fficient power usage saves clients money and the environment by reducing greenhouse gas output.

WHICH PARTS OF A BUILDING ARE LESS GREEN?

hen planning a retrofit, understand where heat loss and gain typically occur in a building: the roof and ceiling, walls, oors and

C

M

Y

foundations, and windows and doors. Good roof insulation, for instance, ensures comfortable thermal and acoustic bene ts, and oers the best cost-to-bene t ratio: higher energy e ciency can be achieved with minimal expenditure.

An insulated ceiling is often considered a luxury, but it costs less than 1% of the total per s uare metre building outlay. This should save an owner money for the lifespan of a home.

As a product example consider Saint-Gobain’s Isover Think Pink Aerolite for thermal and acoustic ceiling insulation.

CM

MY

CY

CMY

K

HOW DOES A RETROFIT AFFECT PROPERTY VALUES?

It makes sense that any home that uses less energy to run will be sought after as a property, as energy supply costs continue to rise. According to ndings from a Mc rawHill Construction study on green building trends, upfront investment in green building makes properties more valuable, with an average expected increase of 4%. By virtue of lowered maintenance and energy costs, the return on investment from green buildings is rapid: a green retro t project is generally expected to pay for itself in just seven years. upgrademyhome.co.za

JULY/AUGUST 2016

PP SepOct_Local_Industry_News.kw.km.indd 5

07

2016/08/24 10:15 AM

LOCAL NEWS

Sectional title AGM know-how The way the Sectional Titles Act currently stands, if a trustee wants to swing a vote in his or her favour by collecting proxies to vote at a general meeting, it is possible to do so. “If that owner has a particular agenda, whether good or bad, they have the means to go ahead with their plan,” says Michael Bauer, GM of IHFM property management company. “In a recent case we encountered, one owner managed to canvass throughout the complex and collect 19 votes via proxies, and was able to control 60% of the participation quota, which basically gave the owner the majority either way. The minimum quorum required would have been 35% in this instance.”

While that scenario will change when the new Act is promulgated, owners can use this voting structure in their favour now.

The new Act will control the voting block by limiting the numbers each person can hold.

Protection mechanisms exist for other aspects of sectional title scheme living.

Changing the conduct rules, for example, requires a special resolution. Changing management rules requires a unanimous resolution. If resolutions are passed that are seen to affect the proprietary rights of other owners, these can be taken to the High Court for relief.

The rub? Many owners don’t want to attend general meetings and will often hand over a proxy if the person canvassing for votes is convincing. Says Bauer: “Owners should communicate with each other to ensure there is a quorum present at their AGMs by issuing proxies and be mindful that these are given for the right reasons so the motives for wanting them will not jeopardise the management of the scheme.”

08

BRIDGET MCNULTY

PROPERTY TREND: DEMAND FOR LIFESTYLE ESTATES

With a host of features, good capital growth and high demand, lifestyle estates are becoming ever more popular, a trend that seems set to continue

A

lifestyle estate in South Africa is classified as one that has unique features to enhance the quality of life for residents. Whether golf, equestrian and polo, coastal, country or wildlife, each type caters to a specific lifestyle that appeals to buyers. These estates also include state-of-the-art-security, an attractive factor for many South African buyers.

Demand has certainly grown over the past few years, with more lifestyle estates being built and many of those selling out in a short space of time. Simon Bray, CEO of Private Property, foresees that high demand will result in good capital growth. Says Bray: “At the moment about 5% of the total property in South Africa

is found in estates, but that property accounts for about 15% of the total market value. The average price of an estate home is R2m, almost three times the national average of R700,000 for a home. Continued demand for estate property will result in good capital growth, even in a challenging housing market.”

Buyers in estates come from across the board, with an emphasis on families due to the amenities on offer and the fact that children can play outside homes in relative safety.

Must-haves include access to good recreational facilities, amenities and green spaces, as well as top-class security and a convenient location close to roads, business hubs and schools.

Most popular lifestyle estates on Private Property • • • • • • • • • •

Midstream Estate, Centurion East Silver Lakes Golf Estate, Pretoria Houghton Estate, Rosebank Waterfall Estate, Midrand Palm Lakes Family Estate, Ballito Midlands Estate, Centurion East Heuwelsig Estate, Centurion West Lombardy Estate, Pretoria Eagle Canyon Estate, Roodepoort Burgundy Estate, Table View

PROPERTY PROFESSIONAL

PP SepOct_Local_Industry_News.kw.km.indd 6

2016/08/24 10:16 AM

LOCAL NEWS

IMAGES: iSTOCK BY GETTY IMAGES, SUPPLIED

WHY AGENTS SHOULD SWITCH FOCUS WHEN LISTING When showing a potential buyer a property, which do you consider more important: a second bedroom or an internet connection? While extra space is always a drawcard, a 2016 study by UK broadband provider Hyperoptic discovered that three in ve of the 3,000 people polled would rather opt for fast broadband. About 60% would even forfeit having decent neighbours and a garden. And about half don’t mind if there are no transport links, restaurants or gyms in the area, as long as they can get online.

When listing a property, it’s essential to promote an internet connection to maximise interest. ith bre to the home increasingly being introduced in South Africa, this can add value and appeal, especially if you take a millennial audience into account.

Aside from the inclusion of i-Fi and bre, consider these listing points to attract attention from a si eable audience: • Invest in a video walk-through or virtual tour. These can be featured across platforms, including portals (Property24, Private Property and your social media pages.

Professional images set a property apart.

Forget the happy snaps a photographer

C

M

Y

CM

MY

will capture the best angles and understand what to look for when setting up a shot no pets accidentally lurking in the background .

Having high-resolution images on hand for print titles Your Neighbourhood, eal state is essential forget the low-res, pixelated pictures.

• Consider your website’s keywords. hile SEO can be intricate, keywords allow your listing to rank higher on search engines.

On real estate site Zillow content specialist Catherine Sherman includes luxurious, captivating, impeccable and landscaped among her top-ranking words. Potential, bargain, opportunity and nice have the lowest rankings.

Analyse your mobile site. “ ith oneuarter of global web searches conducted on a mobile device by over a billion users worldwide, mobile websites are just as important, if not more so, than desktop versions,” says Magicdust web design agency co-founder Ian Mills, in a Hu ngton Post article. Does the content load uickly is it clear enough to read and navigate on a smaller screen is the call to action obvious?

CY

CMY

K

JULY/AUGUST 2016

PP SepOct_Local_Industry_News.kw.km.indd 7

05

2016/08/24 10:16 AM

south africa

WHAT’S ON All you need to know to stay plugged in to the property industry in South Africa

SEPTEMBER

20 21

WHAT 2016 ENERGY EFFICIENCY FORUM SITE TOUR WHERE The Vineyard Hotel, Cape Town CONTACT bit.ly/29hxdUB

WHAT PROFESSIONAL DESIGNATION EXAMINATION LEVEL 4 PREPARATORY WORKSHOP WHERE IEASA Training Centre, Pinelands, Cape Town CONTACT bit.ly/29d1Ueb

C

M

OCTOBER

4 11 20-21

WHAT GBCSA ACCREDITED PROFESSIONALS NEW BUILDINGS: FACE TO FACE WORKSHOP WHERE Cape Town CONTACT bit.ly/1tXxxcF

Y

CM

MY

CY

CMY

K

WHAT RENTALS AND EVICTIONS WORKSHOP (CHAPTER FIVE) WHERE IEASA Training Centre, Pinelands, Cape Town CONTACT bit.ly/29d0ImA

WHAT GLOBAL REAL ESTATE AFRICA SUMMIT WHERE Hyatt Regency, Rosebank, Johannesburg CONTACT bit.ly/2brHRpG

NOVEMBER

1-2 2-3 16

WHAT IEASA NQF4, LEARNER UNIT 2 WHERE Haasbroek & Boezaart Building, Val de Grace, Pretoria CONTACT bit.ly/2bqYUbq

WHAT AFRICAN REAL ESTATE SUMMIT WHERE Cape Town International Convention Centre, Cape Town CONTACT bit.ly/29e3uYZ

WHAT ENERGY EFFICIENCY FORUM 2016 WHERE Cape Town CONTACT bit.ly/29d3sEO

PP SepOct_Whats On.kw.km.indd 11

2016/08/24 10:36 AM

INTERNATIONAL NEWS

BOSTON

SAN FRANCISCO

BEIJING

RENTALS 30% OF INCOME

WORLD’S HIGHEST RENT

PRICIEST RENTALS TO INCOME

Let’s hear it for Boston KIM MAXWELL

SPENDING POWER

Source: FNB Foreign Buying of Domestic Residential Property Estate Agent survey Q2 2016

12

8.5%

EARN A BETTER SALARY OR MOVE CITIES In a 2016 Global Cities Business Alliance report examining the effect of high housing costs in relation to earning potential, Beijing was the least affordable city in which to live. In China’s capital, average housing costs account for more than 100% of net earnings, suggesting that it is impossible for a worker earning an average salary to live alone in typical city accommodation.

Where in the world do you pay the highest rent? Surprisingly, it’s not Tokyo or Stockholm but San Francisco. Of the 15 cities examined in the report, titled “Housing for Inclusive Cities: the economic impact of high housing costs”, San Francisco’s 2015 monthly rentals rated as the world’s most expensive, averaging at $2,824.

New York and Abu Dhabi followed closely with average rents of $2,629 and $2,460 respectively.

The report examined the economic impact of

African foreigners (of all foreigners) buying homes in South Africa in Q2 2010

high housing costs and income, and its knockon effects on businesses and social wellbeing across 15 cities. High housing costs in global cities often contribute to longer commutes. The report found the cheapest monthly rentals in Mexico City and São Paulo at $385 and $480 respectively. At 113 minutes per round trip, those living in Mexico City also had the longest average commute among the cities studied. Second and third places went to Beijing and Shanghai, with daily commutes running to 104 and 101 minutes respectively.

Only one of the 15 focus cities – Boston – has normal rentals swallowing no more than 30% of average net income. The difference? Although the average cost of housing in the city is relatively high, Boston wages are correspondingly high.

Beijing, Abu Dhabi and Hong Kong are at the opposite end of the spectrum. Although the amount spent on housing in these cities is lower, average wages are lower, too.

27.5%

African foreigners (of all foreigners) buying homes in South Africa in Q2 2016

Find more international industry news at propertyprofessional.co.za

PROPERTY PROFESSIONAL

PP SepOct_Internat_Industry_News.kw.km.indd 12

2016/08/24 11:32 AM

Africa in a costeffective light A

PLE

frica has made headlines again. In Mercer’s 2016 Cost of Living Survey, Luanda, Angola ranks as the second most expensive city for a company to deploy an expatriate to.

Mercer’s costliest city for expats is Hong Kong, where a population of 7.2m live in a 1,104km2 space. Zurich and Singapore take third and fourth positions.

On the plus side, the world’s least expensive cities for expatriates are Windhoek – ranking last in terms of cost of living – and Cape Town, taking position 208.

The Mercer survey helps multinationals and governments to determine compensation for expat employees. New York City is used as the base for all comparisons, with currency movements measured against the dollar. The survey includes more than 375 cities. The 2016 ranking included 209 cities across five continents. It measured the comparative cost of more than 200 items in each location, including housing, transportation, food, clothing, household goods and entertainment.

Despite dropping from the top spot on the list a year ago, Luanda remains Africa’s highest-ranking city – in other words, its priciest. Kinshasa, DRC is next, rising seven places since 2015. Lagos, Nigeria takes 13th spot.

SAFEST COUNTRIES FOR WOMEN The 2016 Wealth Migration Survey’s top five safest countries for women to live in are: • AUSTRALIA For its strong sense of community and solid value system, plus effective social services and policing of female abuse. Australia’s immigration policy is also stringent, excluding possible woman abusers.

• NEW ZEALAND For a strong value system and police force.

• CANADA Slightly safer for woman than the US, with an efficient police force and less crime in urban districts.

• USA Women, child and animal abuse is heavily frowned upon by the public and by a vocal media. Many US women also carry a firearm as a deterrent to abusers.

• SCOTLAND The safest European country for women.

Source: New World Wealth

One of the top factors motivating H HERMANUS PS PROPERTY SALES the wealthy to migrate was the PROFESSIONAL PROPERTY PEOPLE

search for a safe environment for women in their families, according to the 2016 Wealth Migration Survey.

If that checks out, countries with a good level of safety should start outperforming those with lower levels. Sri Lanka’s good safety levels for females flags it as a country that should grow in popularity as a migration destination over the next decade.

ALES

HERMANUS VACANCY FOR A PROFESSIONAL ESTATE AGENT

Independently owned, 3 superb offices, best admin back up, top market share.

Live and work in paradise.

WHAT’S NOT TO LIKE? H PS

HERMANUS PROPERTY SALES

PROFESSIONAL PROPERTY PEOPLE

DAVID LEPPAN PRINCIPAL 082 455 6439

EOPLE

hps@hermanus.co.za

SALES

www.hpsrealty.co.za

eople

ALES

EOPLE

PP SepOct_Internat_Industry_News.kw.km.indd 13

2016/08/24 11:31 AM

TOOLS OF THE TRADE

3

GOODIES AND GADGETS FOR WHEN YOU’RE ON THE GO RYAN SCOTT

Make these your go-to products and places for online industry tech and stylish appeal

iPAD PRO YOU NEED IT BECAUSE The viewing experience on a screen as advanced as this adds tremendously to the way you immerse yourself in video content, such as YouTube clips from industry professionals (see box opposite). Add its portability to the mix and you’ll wonder how you ever managed without this dynamic mobile screen.

THE NITTY GRITTY There are two options: 9.7in or 12.9in.

The former is the least reflective screen in the world; the latter has the highest resolution of any Apple device. Both automatically adapt to the light of your surroundings.

Speakers in all four corners create optimal sound.

X-FACTOR For an interactive experience, include an Apple Pencil to take notes, draw sketches and create reminders. iPad Pro from R11,499, Apple Pencil R1,999; myistore.co.za

14

PROPERTY PROFESSIONAL

PP SepOct_Tools of the trade.kw.km.indd 14

2016/08/24 11:33 AM

ADVICE FROM VLOGGERS AND PODCASTERS

IMAGES: SUPPLIED

While paid-for courses and programmes are invaluable, access to information needn’t be costly.

Some of the best in the business are sharing their knowledge on YouTube and via podcasts, allowing you to pick up trends and industry-specific advice free of charge.

For podcasts, Tim and Julie Harris from Real Estate Coaching Radio provide weekly updates on industry news, along with interviews and coaching advice, which you can find on iTunes. On YouTube, upskill yourself with the Top Agent Interviews channel: topics include lead generation ideas and how to approach asset managers. realestatecoachingradio.com

BEATS BY DR DRE SOLO 2 WIRELESS

MOLESKINE CLASSIC HARDCOVER

YOU NEED THEM BECAUSE These on-ear headphones immediately direct your focus to the task at hand, while limiting audio distractions.

They’re Bluetooth-enabled, allowing you mobility to stand up to 9m away from your listening device (sans a cable) should you need to perform other tasks and still stay connected.

THE NITTY GRITTY They weigh just 215g and feature a design that suits a sophisticated environment. Twelve hours of USB rechargeable battery life – as well as an indicator to show when it’s running low – means you needn’t run out of power halfway through a podcast.

X-FACTOR They’re foldable and wireless, so you can transport them easily, and they don’t get tangled up in your bag. They fold out quickly and provide a custom-fit feeling as soon as you put them on.

R5,599; shopandship.co.za

YOU NEED IT BECAUSE While listening to invaluable tips and industry experiences, this stylish red notebook is essential for taking notes about various authors, techniques, reading material and points of interest.

THE NITTY GRITTY A choice of lines, squared and pocket-ruled will help you organise your thoughts on paper. The cover is the perfect blend of hardiness and soft tactile feel. Helpful additions such as an index, numbered pages and detachable sheets can prompt you into more efficient note-taking.

X-FACTOR This classic notebook can be inspiring just by bringing it out. The special aesthetic cultivated by the brand over the years also complements the online world, when used to take down notes from YouTube and podcasts.

R255; justmoleskine.co.za

PP SepOct_Tools of the trade.kw.km.indd 15

2016/08/24 11:34 AM

REBOSA is calling on all estate agents to

TAKE THE REBOSA EQUALITY PLEDGE TODAY REBOSA has a zero tolerance approach to all forms of discrimination in the real estate industry and in society.

DISCRIMINATION

STOPS WITH ME

Go online to www.rebosa.co.za and show your support by taking the ONLINE PLEDGE and saying “NO” to discrimination.

WWW.REBOSA.CO.ZA REAL ESTATE BUSINESS OWNERS OF SOUTH AFRICA

Rebosa_Property_Prof_Mar_Apr.indd 1

2016/02/25 4:14 PM

5 reasons to sign up to the Property Professional newsletter right now

WANT TO BE A BETTER AGENT? HAVE PROPERTY INDUSTRY NEWS DELIVERED TO YOUR INBOX EVERY MONTH STAY IN THE LOOP

We bring you exclusive industry insights, expert commentary and video interviews, plus up-to-date residential and commercial property news.

BE AMONG THE FIRST TO KNOW

Read the newsletter on your desktop, tablet or smartphone so you always know what’s happening and who’s who in your industry.

STAY ON TOP OF TRENDS

Receive balanced analysis of the latest market trends and industry affairs, including need-toknow facts and stats.

EXPERT ADVICE AND TIPS

You’ll receive practical business advice and useful how-tos to streamline your company and make more money.

JOIN OUR COMMUNITY

• Sign up at propertyprofessional.co.za • Click on the NEWSLETTER tab

PP SepOct_PPOnline.kw.km.indd 17

IMAGE: iSTOCK BY GETTY IMAGES

Sign up to become part of our network of 20,000 real estate agents.

2016/08/24 11:36 AM

SOUTH AFRICAN

CLIMBING

THE PROPERTY LADDER MEG WILSON

While metro former townships are the most affordable for those looking to purchase their first house, there remain certain barriers to entry. How can first-time buyers start out in the property market – and where do these metros fit into the picture?

MONTHLY INCOME REQUIRED BY FIRST-TIME BUYERS

INCOME REQUIRED BY FIRST-TIME BUYERS BY REGION

% of bonds granted to first-time buyers

Average purchase price (June 2016)

Year-on-year % increase in price

Average deposit recorded or estimated*

Estimated average income required**

Absa affordable homes (40-79m2)

–

R415,905

5.5

0

R13,840 pm

FNB township homes

–

Absa (small homes 80- 140m2)

–

R359,980

R924,790

9.8

8.2

0

R93,000

R11,980 pm

R27,680 pm

BetterLife Home Loans first-time buyers

28

R730,299

6.2

R86,698

R21,420 pm

FNB (small homes 20-80m2)

21

R619,244

12.5

R62,000

R18,543 pm

Ooba first-time buyers (May 2016)

–

R820,155

3

R82,156

R24,560 pm

*Deposit estimates = 10% of purchase price except for affordable and township homes **Assuming a 20-year bond at interest rate of 10.5% and bond repayment max allowed = 30% of monthly gross

18

% of first-time Average purchase Estimated buyers per area price (Absa small average income (FNB Barometer) homes 80-140m2) required* Cape Town

16

R1,304,467

R39,070 pm

East London

–

R722,156

R21,630 pm

eThekwini

24

R787,375

R23,583 pm

Johannesburg

22

R903,816

R27,070 pm

Nelson Mandela Bay

25

R658,611

R19,726 pm

Tshwane

20

R851,038

R25,490 pm

Free State

–

R998,976

R29,920 pm

Mpumalanga

–

R732,082

R21,927 pm

North West

–

R726,233

R21,767 pm

Northern Cape

–

R707,858

R21,200 pm

Limpopo

–

R669,110

R20,040 pm

*Assuming a 20-year bond at interest rate of 10.5%, deposit of 10% and bond repayment max allowed = 30% of monthly gross

PROPERTY PROFESSIONAL

PP SepOct_South African.kw.lr.km.indd 18

2016/08/24 11:55 AM

As FNB household and property sector strategist John Loos has pointed out, buying a home in a township usually means a long and often costly daily commute to work

W

hen buying a rst property, much depends on the deposit saved by potential new homeowners, how much they earn and, of course, where they decide to buy their rst home. According to the FNB Major Metro Former Townships House Price Index 2 2016 Property Barometer uly 2016 , the previous township areas in South Africa’s six biggest metros eThekwini, Cape Town, Nelson Mandela Bay, kurhuleni, oburg and Tshwane are still the most affordable areas in which to buy property. This is despite the fact that house prices in these areas are currently increasing at least twice as fast as those in the suburbs see the FNB Property Barometer graph overleaf .

As the rst table on monthly income re uired by rst-time buyers shows, the current average price in these areas is 359,980. The average household income re uired to ualify for a home loan here would be just less than 12,000 a month. This is assuming that the buyer was approved for a 100% loan through one of the special bank lending programmes for rst-time buyers or was able to access a F ISP subsidy from the National Housing Finance Corporation see nhfc.co. a .

These gures correlate reasonably well to those given for affordable housing in the latest Absa Housing eview, which de nes this type of property as “homes of 40m to 9m and priced up to 600,000 in 2016. The monthly income re uired to ualify for a 100% loan in this category would be just under 14,000.

THE SUBURBAN APPEAL

As FNB household and property sector strategist ohn oos has pointed out, buying a home in a township usually means a long and often costly daily commute to work. This signi cant compromise means that, for the foreseeable future, these areas are probably destined to remain less favoured among rst-time buyers.

In other words, he says large numbers of upwardly mobile buyers from the townships are happy to trade off a higher home price and monthly repayment in the suburbs against the time and money they will save by living closer to work. asier access to shops, schools and other amenities are also attractive factors in these areas.

It usually means, though, that they will need to save a deposit of at least 10%. ven then they will be facing a substantial jump in monthly income to be approved for the re uired home loan.

SEPTEMBER/OCTOBER 2016

PP SepOct_South African.kw.lr.km.indd 19

19

2016/08/24 11:55 AM

SOUTH AFRICAN

TOWNSHIP PROPERTY GROWTH IN MAJOR METROS JULY 2016 Source: FNB Property Barometer Major metro former township house price growth

60% 50%

30% 20% 9.8%

10%

4.4%

0% Q1 2000

Q1 2003

Q1 2006

Q1 2009

Q1 2012

Q1 2015

-10% -20% Major metro former townships: year-on-year percentage change Major metro average house price index: year-on-year percentage change

HOW MUCH IS ENOUGH?

Using Absa’s small homes (properties of 80m2 to 140m2 in si e as a proxy for those that rst-time buyers are likely to target in the suburbs or, increasingly, in South Africa’s regenerated inner-city precincts, the second table on the income re uired by rst-time buyers by region see opening spread) shows that even in Nelson Mandela Bay – currently the metro with the lowest home prices – the monthly household income required would be almost R20,000.

Meanwhile in Cape Town, the metro with the highest home prices, first-time buyers currently need to earn almost twice that amount – or close to R40,000 a month – to get into the suburban market.

This no doubt accounts for the fact that rst-time buyers make for a much lower percentage of total home sales in Cape Town than in other cities and regions, where the average income re uired to buy a rst home generally falls somewhere between 20,000 and 30,000 a month.

Higher prices mean that buyers require bigger home loans – and bigger incomes to qualify for those home loans. Lenders generally require that the monthly home loan repayment does not exceed 30% of the buyer’s gross monthly income the gure used to calculate the estimated income re uired in different areas. For cities where gures for the percentage of rst-time buyers are available (courtesy of First National Bank), there is a clear correlation with the average purchase price and the estimated average income required to qualify for the necessary bond.

However, the repayment-to-income ratio is only a guide: other factors can affect a buyer’s ability to qualify for a home loan and thus to purchase property. These include the amount of existing debt when applying for a home loan as well as credit history (see comments by Amanda Cuba, chief operating o cer at MA of Southern Africa . Both of these can and usually do affect the lender’s decision to approve a home loan application and interest rate charged.

A slight change in that rate can make a big difference to affordability. To buy a small home in ohannesburg, for instance, the rst-time buyer who is regarded as high risk and can only obtain a loan at two percentage points above the prime rate of 10.5% would need to earn almost 4,000 more a month to qualify. On the other hand, the buyer who the banks regard as low risk and who is able to save for a higher deposit could be approved for a loan at prime.

20

Too much debt, too little savings

A lack of income is often not the biggest problem facing prospective homebuyers at the lower end of the market, says Amanda Cuba, chief operating officer at RE/MAX of Southern Africa.

Says Cuba: “Many people see homeownership as a milestone they would like to achieve and believe they are earning big enough salaries to do so. But we have found that agents working in the affordable sector often have to sell the same property five times to find a buyer who can actually qualify for a home loan because of the problems with debt and damaged credit histories in this market.

“Consumers often get caught in a debt trap early in their careers, which has a negative impact on their ability to buy their first property. There needs to be a change of mindset, with consumers first learning how to prepare themselves for home ownership by paying off as much of their debt as possible, cleaning up any black marks on their credit records and building up their savings.

“South Africa has one of the worst savings rates in the world and I believe it’s because we don’t do nearly enough to provide youth and new entrants to the job market with proper financial education. Teaching first-time buyers to save early and build a clean credit record would be a major step forward in furthering home ownership. Estate agents can help with this – as well as assist potential buyers to access FLISP and HiP subsidies.”

IMAGES: iSTOCK BY GETTY IMAGES, NOVOS

Year-on-year %

40%

PROPERTY PROFESSIONAL

PP SepOct_South African.kw.lr.km.indd 20

2016/08/24 11:55 AM

SALES FRANCHISE RENTALS FRANCHISE

We’ve got the cutting-edge tools you need to succeed

NOTEBOOK LICENCE

As a business owner, you know how much goes into making every day a success.

So do we: we’ve built our brand on doing just that. Convert your existing estate agency to a Chas Everitt Sales and/or Rental franchise and you’ll experience all the cutting-edge marketing and support you need to reach your full earning potential.

To take your business to the next level, contact Barry Davies 083 644 0001 bdavies@everitt.co.za

WWW.CHASEVERITT.CO.ZA

Chas_Everitt_PP_Sept_v2.indd 1

2016/08/24 3:38 PM

Adrian Goslett doesn’t chase media coverage.

The fact that collectively his businesses fetched R23bn in sales in 2015 means he doesn’t need to

LEADING THE

CHARGE CATHERINE DAVIS

22

PROPERTY PROFESSIONAL

PP SepOct_Cover_Interview.kw.lk.km.indd 22

2016/08/24 12:31 PM

COVER STORY

About 70%-75% of RE/MAX transactions are repeat or referred business and we don’t take that for granted. We work that specifically

E

arlier this year I attended a RE/MAX awards event where the broker/owner of RE/MAX Independent Properties in Nelson Mandela Bay, Kobie Potgieter, distinguished herself as the recipient of the Circle of Legends award. Her total commission earned was in excess of $10m.

I’m not sure why this resonated so loudly – I’ve met other agents and brokers who have earned millions. Maybe it was because she was a mother of two, like me ... Maybe it was because she was selling in Port Elizabeth, not Camps Bay and Clifton ... Whatever it was, the fact that she had earned more than $10m in total commission stuck with me.

So when it came to interviewing Adrian Goslett, regional director and CEO of RE/MAX of Southern Africa, I asked him about Potgieter: what did he think she was doing so right? And did he wish all his agents were similar to her?

PICTURE OF A TOP PRODUCER

“There are a few agents like Kobie. Wherever you go, with whichever brand, you’re always going to have Pareto’s 80/20 Principle: 20% of agents are responsible for 80% of the revenue. And you try and increase the 20% and educate the remaining 80% through training and support to increase their productivity.

“What Kobie and agents like her have is a vision and a bigger picture. It’s not just about the money, because if it was, everyone would be successful. But there’s another emotional driver – for her, maybe it’s to send her kids to a great university. It starts with a larger dream than merely selling houses.

“These brokers work out the cost of their dream and devise a business plan and strategy to achieve exactly that. They know exactly how many appointments a day they need to make in order to sell the required number of houses to earn the commission.”

Goslett describes that type of agent as speci c, entrepreneurial and business-driven.

“When you ask someone like that how business is going, they don’t say I’ve had a good month or I’ve had a bad month. They don’t think month to month,” he says. “They take a long-term view.”

THE 100% COMMISSION MODEL

Goslett believes the RE/MAX model attracts the Kobie Potgieters of the industry and it has done so from day one when RE/MAX of Southern Africa was founded in 1994. The 100% commission model didn’t exist at the time in South Africa. But it made perfect sense to entrepreneurial brokers who realised their xed costs were capped, so they were only too happy to take 100% commission and pay a service fee back to the owner.

If the RE/MAX model was the original attraction for brokers and agents, the support in terms of training and technology are now equally appealing drawcards.

Says Goslett: “The majority of our money as a business is spent on our people – training, services, technology ... About 70%- 5% of MA transactions are repeat or referred business and we don’t take that for granted. e work that speci cally. It sounds easy to do – just get your clients to tell people about you – but agents don’t know where to start. So we have programmes on how to contact people, what to say and how to say it.”

CHANGING LIVES

Goslett recognises the Pareto Principle and the fact that there can only be so many top producers. But where he really nds inspiration is in the kind of stories where the property business completely changes lives.

He tells this story: “An ADT security guard, Clifford Nxasana, used to service the MA o ce in Pinetown, Durban. He was struggling to make ends meet. His kids weren’t going to a good school; his family lived in a shack. He often helped to open and close the Pinetown o ce, and started asking the franchisee about RE/MAX and the industry. Over time, she gave him a lot of information and he was keen on getting involved. He put what little he had aside to get into the business.

“The upshot is that because of his entrepreneurial spirit, Nxasana joined that o ce as a rookie agent. After two years he received the Platinum Club award, which means he earned more than R600,000 in commission. He bought his own car, his kids are going to a good school and he has built his own house.”

SEPTEMBER/OCTOBER 2016

PP SepOct_Cover_Interview.kw.lk.km.indd 23

23

2016/08/24 12:33 PM

COVER STORY

Watch Adrian Goslett talk about market cycles and the changing industry face online: propertyprofessional.co.za

The property market “While we foresee 2016 to be a challenging year within the real estate sector, with the interest rate hikes and a declining economy, opportunities will open up.

It is not a good market or a bad market – it is merely the market and business as usual.”

“It’s been a seller’s market but it’s moving to a buyer’s market. But it’s unlikely that it will become a distressed property market.”

LEADERS IN TRANSFORMATION

24

“Markets work in cycles and through the economic ups and downs in the property industry over the past few years, the people in the RE/MAX network have been able to perform above industry norms because of the extensive resources and training available to them.”

Wherever you go, with whichever brand, you’re always going to have Pareto’s 80/20 Principle: 20% of agents are responsible for 80% of the revenue

RE/MAX of Southern Africa in numbers 2,400 160 R23bn 30,000

agents

offices in sales in 2015 RE/MAX homebuyers in 2015

IMAGES: IAN ENGELBRECHT

From changing lives to changing the face of the industry – or at least starting to – it’s fair to say that RE/MAX took the lead on the industry transformation road.

In anuary 2015, it became the rst company to conclude an empowerment deal with Capital Properties.

Says Goslett: “We had willingness to take the rst step.

MA was born out of the post-apartheid era we weren’t allowed to bring RE/MAX to South Africa until the 1994 elections.

Peter and al ilmour’s vision was to start a company that serviced all markets, from 3,000 to 30m. That was the big picture, along with equality across the board at a national level.

Hence Amanda Cuba came in with Capital Properties with a 45% ownership interest.

It doesn’t appear to be a box-ticking, uota- lling move that Cuba is now the chief operating o cer speaks volumes.

“I was looking for someone who would be more than just an investor I was looking for someone who was going to help to grow the business.

PROPERTY PROFESSIONAL

PP SepOct_Cover_Interview.kw.lk.km.indd 24

2016/08/24 12:32 PM

BetterLife’s 1 Million Rand Dream Machine MAKES AN

INSTANT MILLIONNAIRE Albertus Myburgh from RE/MAX estate agency became an instant millionnaire on the 20th of July 2016, walking away with the 1Million Rand Dream Machine prize at an event held at the Protea Hotel Fire & Ice Melrose Arch in Johannesburg.

This is the first industry initiative of its kind with 32,970 entries received from agents. One scratch card was awarded to the BetterRewards member for every qualifying Offer to Purchase submitted to BetterLife Home Loans. A qualifying Offer to Purchase is an Offer to Purchase submitted to the main applicants’ bank.

Then 471 golden ticket holders secured places in the nine regional draws which were held to narrow down the pool of finalists and ultimately increase the agents’ chances of winning the million Rand. 10% of names drawn (rounded up) per region moved on to the final draw receiving an exclusive boarding pass to attend the main event in Johannesburg.

At this event the names of the 51 finalists were printed onto the Dream Machine Wheel which was spun by BetterLife Home Loans CEO, Shaun Rademeyer, and whomever’s name the wheel stopped on, won.

“In April 2015 we launched our 1Million Rand Dream Machine initiative, for all agents in the industry. To qualify to enter they had to register with the BetterRewards programme and send Offers to Purchase,” says Shaun Rademeyer, CEO of BetterLife Home Loans, SA’s biggest mortgage originator. “The initiative was born out of our first BetterRewards initiative, Dream Bigger, Live Better Dream Lottery with the purpose of making a difference and changing lives as well as promoting our intake of Offer to Purchase applications.”

“We believe in making dreams come true. We do it for our customers every day by making their dream of owning a home a reality,” he explains.

One in every 4 South Africans have successfully obtained their bond through BetterLife Home Loans. Over 1 million people now live in their dream home thanks to BetterLife Home Loans which achieves a 75% approval rate on home loan applications.

“We also believe in realising the dreams of our estate agent partners because without them we can’t make our clients’ dreams come true and we launched this initiative to award 1 lucky agent with a million Rand,” says Rademeyer. “Recognition and reward is a core value in our organisation, so we wanted to show our appreciation to the agents for their business and support as they are instrumental to our success and the reason we have become the company we are today.”

Commenting on his win, an elated new millionnaire Albertus Myburgh says that it is unbelievable, it’s a dream come true.

He was thrilled with his win and will spend some of the money on finishing the build on his dream home.

DLA - Print Ads.indd 10

2016/08/11 2:50 PM

DLA - Print Ads.indd 11

2016/08/11 2:50 PM

AGENT DEVELOPMENT

HOW TO MEET INCREASED RESPONSE TIMES

Find more useful training and industry advice on propertyprofessional.co.za – click on ‘tools of the trade’ in the top navbar

Survey results: response time on e-mail enquiries

39

%

of agents took 6 to 24 hours

6 28

%

of agents took 24 hours to 5 days

33

%

22

%

of agents took less than 1 hour

of agents took 1 to 6 hours

PROPERTY PROFESSIONAL

PP SepOct_Agent Dev.kw.km.indd 28

2016/08/24 10:34 AM

AGENT DEVELOPMENT

WAITING A DAY OR TWO TO REPLY TO AN E-MAIL WAS ONCE CONSIDERED ACCEPTABLE. HOWEVER, WITH FASTER LIFESTYLES, COMMUNICATION EXPECTATIONS ARE HIGHER.

Why the sudden urgency?

In a recent survey conducted by Private Property, 53% of e-mail leads and 27% of phone enquiries were never answered. Clients expect more. The internet and our enhanced connectivity means that we’re more used to instant gratification than we used to be. Think of how quickly we can order online and have goods delivered to us or the ease with which we can call a taxi or book a flight. But buyers also have an added sense of urgency when looking for a home to buy or rent and a fear of missing out if they can’t get in touch with the agent fast enough.

PRIVATE PROPERTY OFFERS TIPS ON HOW ESTATE AGENTS CAN MEET THEM

Tips to respond more quickly • Answer the phone whenever possible, even if it’s just to acknowledge the call, or phone back as soon as possible.

• Use your cellphone to respond to e-mails when you’re on the go.

• Set aside time in the day specifically for responding to queries.

• Forward calls to the office if you know you won’t be available.

Expectations on response times are certainly getting shorter, but I don’t think we’ll get to the stage where 10 minutes is the norm. People generally understand that estate agents are busy professionals who are often out of the office and will make allowances for that

Risks of a slow response 1.

2.

3.

4.

Lost sales Lost mandates Irritated clients Damaged reputation

Maximum response times

SIMON BRAY, CEO, PRIVATE PROPERTY • • • •

Telephone: answer immediately or call back within an hour Voicemail or SMS: between one and six hours e-mail: 12 hours Social media: within a few hours

SEPTEMBER/OCTOBER 2016

PP SepOct_Agent Dev.kw.km.indd 29

29

2016/08/24 10:33 AM

NEWSWORTHY

WHY EMIGRATE

WHEN YOUR CLIENTS CAN SEMIGRATE? ANNE SCHAUFFER

The Western Cape’s appeal to South Africans seeking a better lifestyle within the country is driving semigration to the province. Scenery and good schools are all lures, spurring more property trading

T

he somewhat tongue-in-cheek word semigration, for South Africans, is used to describe the migration of those who do not want to, or are nancially unable to, leave their beautiful homeland, so they move to a place within the country’s borders that offers a better lifestyle.

That may be a reference to improved schooling, a sense of security, a more cosmopolitan, even international avour, a country setting, political stability, a cleaner environment or all of the above. For the past few years, semigration has been the descriptive term for those who move south to the Cape and environs and it has spawned some wry commentary and jokes of secession.

Bluntly, the estern Cape is almost considered another country yet not. hen semigration was rst integrated into the local lingo, the move Capewards appeared to be driven by retirees. Areas such as Somerset est became retirement paradises. Although it is still a trend, it is no longer the driver for semigration. The current cost of property alone may be the wet blanket for cash-strapped retirees. In recent years it has been young families who, instead of cutting ties and building a life for their children in another country, y south. Schooling and tertiary education is superb, lifestyle outstanding, landscape glorious and generally, tomorrow is more predictable.

ACHIEVABLE REALITY

It is largely those from auteng who are arriving, injecting massive funds into the Cape property market, and everybody has been reaping the nancial rewards. In a Moneyweb article on emigration semigration, Magnus Heystek, investment strategist for Brenthurst ealth, pointed to the latest FNB Property Barometer: “During 1 2016, the estern Cape house price

30

index rose 12% year-on-year, compared to the astern Cape, which increased by .6%, Kwa ulu-Natal by 5.6% and auteng by 3%. This increase can be attributed to the rising demand for property in the estern Cape, driven by the increasing rate of semigration among upcountry buyers.

Some semigrators move lock stock and barrel. Others make their Cape holiday destination into permanent homes and some breadwinners commit to the weekly commute. ith anseria adding to the airport offering in ohannesburg, along with the autrain, commuters settle the family in the Cape and either work full time in ohannesburg Monday to Friday or access it whenever necessary. Sophisticated communication and easy transport links have made this a feasible option.

INVESTMENT APPEAL

There is no arguing the beauty of Cape Town, compounded by the fact that the metro is deemed highly functional. For the national and international investor, it has been the jewel in the South African property crown.

Seeff Properties chairman Samuel Seeff says: “The Cape lifestyle is obviously appealing, but more so, it is seen as well-managed by the DA, the city and surrounds are clean, and there’s good governance. The fact that it not only attracts people to the metro, but that buyers are prepared to pay more for property, illustrates that property buyers people want to live in a clean and well-managed area.

“As many as one in ve buyers across the Cape metro 20%-30% depending on area emanate from outside the city, most from the north especially auteng, ohannesburg and Pretoria , but even from Durban. It’s not just the

PROPERTY PROFESSIONAL

PP SepOct_Newsworthy.kw.km.indd 30

2016/08/24 10:31 AM

NEWSWORTHY

Cape metro, but areas as far a eld as the inelands mostly Stellenbosch and Franschhoek, but also Paarl and the arden oute, especially eorge, are seeing an in ux of buyers from other provinces boosting activity. This is, in part, why the estern Cape property market continues to perform better than, say, auteng, from a price and even demand point of view, when you look at percentages.

“Prices in the Cape are surging ahead of other metros, again especially those of ohannesburg’s northern suburbs. In top-end areas such as the Atlantic Seaboard Clifton, Bantry Bay, Fresnaye, Camps Bay and the aterfront , top-end properties can sell for 30%-40% more compared to the top-end ohannesburg Sandton areas of Sandhurst, estcliff, Dunkeld, Morningside and Bryanston.

Schalk van der Merwe, awson Property roup’s franchisee for Somerset est, says semigration is no sudden flash in the pan. “It is an ongoing phenomenon that has been evident for some time and one which is giving a huge boost to Cape property. ast year, a staggering 46% of the homes sold by our franchise were to upcountry buyers. Discussions with our eorge and Knysna franchisees con rm similar numbers of buyers coming to them from the north.

Stephen ubbe, awson Property roup’s eorge franchisee, concurs: “Semigration into eorge from around the country is now conservatively estimated to be about 50 families per month signi cant enough numbers to have a real effect on the property market. New construction is also speeding up, with developments such as Kraaibosch Country state, Kraaibosch Manor and Blue Mountain ifestyle state growing at pace.

CAPE DEMAND

Semigration is an ongoing phenomenon that has been evident for some time and one which is giving a huge boost to Cape property

IMAGES: SUPPLIED

Schalk van der Merwe, Somerset West franchisee, Rawson Property Group

Says Andrew olding, C O of Pam olding Properties: “It’s obvious that Cape Town’s coastline and mountains act as a major constraint on the city’s ability to expand, which goes some way towards explaining the outperformance of the Cape housing market.

He adds: “Another contributing factor appears to be the net in-migration of homeowners from other provinces. According to FNB analysis, the percentage of repeat buyers moving between provinces has risen from just 6.4% during the 2008-09 recession to a high of 12.9% last year. Typically periods of strong economic growth generate an increase in interregional migration as people move to areas experiencing greater economic activity and generating employment opportunities. “ ith the national economy entering its fth consecutive year of stagnant growth, one would have anticipated that this mobility would be slowing. Yet the FNB study suggests that it remains relatively high. This, it is argued, is due to a structural change, which has taken place in recent years, seeing the Cape greatly enhancing its relative appeal, olding says.

“A healthy economic growth rate and perceptions of a high- uality lifestyle offered by the City of Cape Town and its surrounds appear to be attracting both wealth and skills to the province. As a result, the estern Cape has the lowest percentage of repeat buyers leaving the province, as well as by far the strongest net inward migration of repeat buyers from other provinces.

Semigration to the Cape is a reality and it will be interesting to see how this trend plays itself out in the light of current local and global variables.

SEPTEMBER/OCTOBER 2016

PP SepOct_Newsworthy.kw.km.indd 31

31

2016/08/24 10:32 AM

THE PERFECT INVESTMENT PROPERTY PATRICK CAIRNS

Why are some properties easy to sell while others are infinitely harder? Some put it down to buyer’s instinct and experience of the market. But it can be about more tangible factors

32

F

or many, property is a compelling investment that generates both monthly rental income and capital growth. That doesn’t mean it will automatically be a good investment, however.

Taking this into consideration, an estate agent can add value by identifying the best possible opportunities for clients.

Agents who can earn the trust of investors by nding and selling gooduality investments can also build longterm relationships. How, then, can you spot properties that will be the best for buy-to-let purposes?

VALUE

The investment costs relative to returns are probably most critical. With property, take into account the potential for growth in value as well as the likely rental income.

Help potential investors understand the yield they can expect and the long-term outlook for property prices in the area.

The real prizes are those properties selling at a slight discount, but which are still likely to attract tenants willing to pay competitive rentals.

PROPERTY PROFESSIONAL

PP SepOct_Finance.lk.km.kw.indd 32

2016/08/24 10:30 AM

FINANCE

An ideal investment property should be attractive to a wide range of tenants, from young working adults to students attending nearby institutions to the elderly Lesiba Mooka, founder and CEO, Cobalt Blue Properties

Calculating yield

Anyone buying property to let should understand yield – effectively the return on investment. There are two ways to calculate it.

1.

It is also important that the property won’t be too di cult to sell if and when the buyer feels it’s time to exit. “Property is uite a concentrated investment, says ick Briers-Danks, certi ed nancial planner and partner at eritas ealth. “The investor is taking a lot of money and making a call on a single asset, so it’s essential they do their homework on the area in which they are buying.

IMAGE: SUPPLIED

SIZE AND LOCATION

The best property investments tend to be smaller ats and townhouses, where demand is higher and yields are better. “ enerally investors are looking for oneor two-bedroom apartments in better buildings, says agent Bianca utteridge of Tyson Properties, who has been selling along the Atlantic Seaboard for more than a decade. “They also want secure parking and to be close to amenities such as bus routes, shops and restaurants.

Another factor to consider is the proximity to tertiary institutions such as private colleges and universities, which ensures a demand in the area from students.

WIDE APPEAL

For the best chance of securing tenants, the property should appeal to more than one type of person. “An ideal investment property should be attractive to a wide range of tenants, from young working adults to students attending nearby institutions, to the elderly, says esiba Mooka, founder and C O of Cobalt Blue Properties. This emphasises the importance of location: the more amenities in the area, the broader the potential tenant base becomes.

LOW MAINTENANCE

Many investors opt for older properties in less than perfect condition because they think they are getting a good price. The costs of repair and maintenance uickly add up, however. “The owner should be able to do little or no maintenance to keep the property in a presentable state, says Mooka.

“Newer properties are generally better as few things as possible should go wrong, says Briers-Danks. “You want xtures that can’t break or don’t need to be maintained, and you probably don’t want additions such as swimming pools.

The first is gross yield, the annual rental income as a percentage of the purchase price: gross rental yield = (annual rental income / property price) x 100. As an example, if a flat costs R500,000 and the monthly rental earned from it is R3,000, the calculation would be (36,000 / 500,000) x 100 = 7.2%. Depending on the location, a good gross yield in South Africa is anywhere between 5% and 9.5%.

2.

The second calculation is perhaps more important: net yield. Additional factors are required, some of which will need to be assumed if done before the property is bought. The formula is net rental yield = [(annual rental income – annual expenses) / total property cost] x 100.

Annual expenses include bond repayments, repairs and maintenance, council rates and insurance. The total property cost includes the purchase price, transfer duties, legal fees and prepurchase inspections.

Using the above example again, if monthly expenses average out to R2,000 and additional property costs R20,000, then the net rental yield would be: [(36,000 – 24,000) / 520,000] x 100 = 2.3%.

MAY/JUNE 2016

PP SepOct_Finance.lk.km.kw.indd 33

23

2016/08/24 10:30 AM

Don’t overdue it.

PAYPROP – MAKING THE COMPLEX SIMPLE All PayProp clients have access to our integrated letter of demand service. At the click of a button, you can now select a tenant in arrears and request that a legal demand letter be sent to them.

To find out how PayProp can change your letting life, contact us today by visiting www.payprop.co.za or e-mail us at support@payprop.co.za.

INTERNATIONAL

CREATING

GLOBAL CITIES GEORGINA GUEDES

As urbanisation accelerates, cities will be ranked by – and desired for – elements such as business activity, information exchange and human capital. We unpack some of these trends

M

ore than half the world’s population live in cities. The UN projects that by 2050, two-thirds of the global population will live in urban areas. As cities continue to swell, so their reach will expand. According to real estate consultants Knight Frank, the UN forecasts that the world’s urban population will expand by 380m people by 2020, which means that demand for real estate in cities will surge, too.

Every year global management consulting rm AT Kearney examines 125 of the largest, most in uential cities in their annual lobal Cities

report. In May 2016, AT Kearney released its sixth annual lobal Cities Index, ranking 125 of the most in uential cities for their level of global engagement. In a second related ranking, their annual lobal Cities Outlook list measured the future potential of 125 cities primed to have an impact.

AT Kearney de nes a truly global city as one that is “measured by its ability to attract and retain global capital, people and ideas, as well as sustain that performance in the long term”.

SEPTEMBER/OCTOBER 2016

PP SepOct_International.kw.km.indd 35

35

2016/08/24 10:26 AM

INTERNATIONAL

GLOBAL CITIES INDEX: PERFORMANCE

The Global Cities Index is an examination of a given city’s current performance in ve areas: business activity, human capital, information exchange, cultural experience and political engagement.

These areas are then broken down into subcategories and rated. For example, the cultural experience aspect looks at whether a city offers museums, visual and performing arts, sporting events and culinary offerings. Human capital considers the extent of a city’s foreign-born population, citi ens with tertiary degrees and the number of international schools, among others.

A Global Cities Index is supposed to provide insight into the global reach, performance and development levels of the world’s largest cities. ondon, New York and Paris take the top places this year.

GLOBAL CITIES OUTLOOK: POTENTIAL

On the other hand, the lobal Cities Outlook is a projection of a city’s potential measured by its rate of change and policies that could shape future competitiveness. Four evaluated areas include personal wellbeing, economics, innovation and governance. San Francisco, New York and Boston top this index in 2016.

AT Kearney also identi es the lobal lite, that is, cities ranking in the top 25. They tick all the boxes in both Kearney’s Index and Outlook rankings.

This year, 15 cities ualify as “well-known hubs of culture and politics, as well as true global economic hubs”. It isn’t hard to imagine why London and New York top the lobal lite list. Other cities with positive 2016 rankings include os Angeles, Tokyo and Paris.

The Global Cities Index is an examination of a given city’s current performance in five areas: business activity, human capital, information exchange, cultural experience and political engagement WHY THE GLOBAL FOCUS?

Knight Frank also produces an annual lobal Cities report, which looks in detail at the extent to which globalisation in uences the way that cities are structured, worked in and lived in.

Rapid population growth and innovative infrastructure projects are “creating new business hubs and “transforming the geography of global cities, too. These hubs are increasing in importance as investors cast their nets wider when pursuing real estate opportunities to increase “cross-border money ows .

Changing current workplaces into a “series of meeting places and companies needing to redeploy to meet market needs in new global outposts are just some of the factors that could affect how cities expand or are built.

Knight Frank’s authors say that in Sydney, a “growing number of rms are no longer providing desks for all workers.

THE TOP 25 CITIES ON THE INDEX AND THE OUTLOOK Global Cities INDEX, rank and score

Global Cities OUTLOOK, rank and score

2016 rank

2016 rank

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

2015 rank 2 1 3 4 5 6 7 8 9 10 11 12 16 15 19 17 13 14 18 21 20 25 22 23 29

City

Scoring breakdown

London New York Paris Tokyo Hong Kong Los Angeles Chicago Singapore Beijing Washington DC Seoul Brussels Madrid Sydney Melbourne Berlin Toronto Moscow Vienna Shanghai Buenos Aires Amsterdam San Francisco Boston Istanbul

62.7 62.5 54.5 46.7 44.2 38.2 38.0 37.9 36.0 34.7 33.6 33.1 33.0 32.7 32.4 31.7 31.7 31.7 31.0 30.4 29.1 29.0 28.9 28.8 28.3

Bold city names indicate top 25 in both Index and Outlook.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

2015 rank 1 4 3 2 6 16 8 9 7 5 17 11 19 13 15 12 14 20 18 29 21 24 28 23 27

City

Scoring breakdown

San Francisco New York Boston London Houston Atlanta Stockholm Amsterdam Munich Zurich Chicago Sydney Paris Berlin Melbourne Geneva Singapore Toronto Tokyo Dallas Los Angeles Brussels Taipei Copenhagen Vancouver

70.6 70.4 67.8 67.1 61.0 61.0 60.6 60.4 60.1 59.4 57.2 57.2 57.1 56.4 55.7 55.5 55.0 54.8 54.8 54.7 54.4 53.3 53.3 53.2 52.9

Source: AT Kearney Global Cities 2016

BUSINESS ACTIVITY (30%)

CULTURAL EXPERIENCE (15%)

PERSONAL WELLBEING (25%)

INNOVATION (25%)

HUMAN CAPITAL (30%)

POLITICAL ENGAGEMENT (10%)

ECONOMICS (25%)

GOVERNANCE (25%)

INFORMATION EXCHANGE (15%)

36

PROPERTY PROFESSIONAL

PP SepOct_International.kw.km.indd 36

2016/08/24 10:26 AM

INTERNATIONAL

POPULATION ACCELERATION

There are further aspects with which future urban hot spots will have to cope. It’s why Knight Frank identi es diversi cation and exibility as key concepts for anybody investing in or selling property in years to come. “Cities in high-income countries are projected to increase in population by 34m by 2020, the equivalent of three cities the size of Paris. City populations in middle-income countries are forecast to increase by 290m people over the same period, which is about 12 cities the size of Shanghai.”

a growing data revolution and research collaborations, to securely protect residents’ safety and privacy.

AT Kearney looked at some of the world’s smart city leaders and analysed their performance to help determine qualities that make a city smart. Of 14 cities analysed, their nal list included New York and ondon, as well as Amsterdam, Barcelona, Tokyo, ancouver, os Angeles and Melbourne.

Five traits stood out: information exchange, human capital, business activity, governance and personal wellbeing – all clues to the factors that will help current cities transform into smart cities of the future.

IMAGES: iSTOCK BY GETTY IMAGES, SUPPLIED

BUSINESS TRAVEL SURGE

One of the practical implications of this urbanisation and globalisation surge is an increase in business travel. Correspondingly Knight Frank researchers believe there will be a marked increase in the popularity of short-term serviced apartment rentals.

The company predicts that globalised companies will increasingly look for outlets in multiple cities around the world. Real estate agents will have to facilitate these rental agreements and provide local knowledge about markets and customers, as few international businesses and retailers may have rst-hand experience of property practices and idiosyncrasies.

While many globalised businesses and retailers might automatically be drawn to capital cities, estate agents can and should make a good case for provincial towns and cities as alternatives to provide “far greater potential at lower costs”. Of course, businesses may need educating about these opportunities, which is where the property market could gain traction.

THE SMARTEST CITIES

AT Kearney’s 2015 report focused on innovation as a crucial differentiator between developed and emerging economy cities’ performances. This year, the report broadened the innovation theme to encompass the idea of “smart cities. Many de ne a smart city as one that places technology at the core of its development strategy. In other words, where communities build infrastructure to improve the lives of their residents by harnessing

HOW DOES SOUTH AFRICA RANK?

No African cities are near the top in AT Kearney’s 2016 ranking of 125 global cities. ohannesburg ranks only 60 on their lobal Cities Index and 102 on their lobal Cities Outlook results. Cape Town ranks 0 on the Index and 108 on the Outlook results. Both South African cities fall behind Cairo, Mumbai and Milan, but rank ahead of Nairobi, Bangalore and Ho Chi Minh. In an international scenario, Africa has work to do.

WHAT ARE THE PRACTICAL APPLICATIONS?

The AT Kearney report predicts that global cities and metro regions will play an increasingly important role in geopolitics and macroeconomics of the future. The big metros showing in South Africa’s national elections are already a case in point. Some experts suggest that cities are starting to overtake traditional nation-states as economic and political drivers. What is undisputed is that the performance of cities can in uence strategies of business leaders and city government improvement plans.

Highlighting those areas in which cities perform will continue to be indicators of global competitiveness. In South Africa in particular, the goal should be to provide an engaged network of information-sharing, specialist talent, a vibrant economy and policies that enable technology adoption and experimentation a uest towards smarter cities that appeal to local and global and investors, business communities and property buyers.

SEPTEMBER/OCTOBER 2016

PP SepOct_International.kw.km.indd 37

37

2016/08/24 10:26 AM

“If you want to go fast, go alone. If you want to go far, go together.”

AFRICAN PROVERB

Rebosa invites you to join together in the best interests of the South African real estate industry.

WWW.REBOSA.CO.ZA

FP Rebosa Advert - 07/15 - Prop Prof.indd 1

REBO SA 2015/06/29 2:45 PM

INSIDER’S VIEW

COMMISSION: YOUR BARGAINING CHIP? ED HATCH

Mastering the principles of influence, persuasion, leadership and commission negotiation will help you sell property – and your service

O

ne of the most important negotiations you’ll face as an agent is the one where a client wants to negotiate commission.

Along with price, it can be a highly sensitive topic.

These skills and tips will help you to connect with, convince and ultimately win the cooperation of your clients.

CONNECTING CAN MAKE OR BREAK YOU

Most of us are bombarded with about 35,000 messages a day. Everywhere we look or go someone is trying to get our attention, be it a billboard, a newspaper, Facebook, e-mail, a family member,

Most people raise a few objections before they settle The average person says no three to five times before settling for a deal. If your client raises objections at the final stage, acknowledge their objections by listening to them, then move on to getting the

PP SepOct_EdHatch.kw.lr.km.indd 40

colleague, client, the radio or TV. How do we choose which messages to tune out and which to tune into? How do you make sure your messages get across?

Effective communication, persuasiveness, leadership: the ability to convince is all about connecting. Your ability to do these things increases in direct proportion to your ability to connect, to identify with people and relate to them in a way that increases your in uence.

Consider how much improved your personal and professional relationships would be if you mastered the ability to connect. According

agreement signed. You can address their objections once it’s signed. As an example: Agent “You appear to be satisfied so far.

Shall we list the property?”

Client “No.” Agent “No? What’s holding you back?”

Client “We’re not really comfortable with the fact that you won’t advertise our home every weekend.”

Agent [Repeat the objection] “So you’re concerned about the advertising policy? [Pause, then say ...] “Well, if it weren’t for that, would you like to go ahead and list the home?”

to the Harvard Business Review, the number one criterion for advancement and promotion for professionals is the ability to communicate more effectively.

TO CONVINCE YOU MUST FIRST CONNECT

You will never win over others if you don’t treat them with respect and importance. To do that, you must sincerely, respectfully listen to their point of view first. People are more likely to listen to your point of view later if you build a relationship of trust, and see it from theirs rst.

Adopt the attitude that you can always learn from

“No.” “Really? Well, there must be something else that is bothering you.

May I ask specifically what that is?”

Client “We don’t like the fact that you don’t do an open house every Sunday.”

Agent [Repeat the objection] “So it’s about open houses …” [Pause] “If I could make you feel better about that, would you want to move ahead with the listing agreement?”

Client “Yes.” Client Agent

2016/08/24 10:46 AM

Adopt the attitude that you can always learn from asking your clients questions asking your clients questions. This will help you meet their needs in the best possible way and build a strong relationship with them. Request permission to ask questions (about what they want in an agent, their preferences in a property, why they are selling or buying . xplain the bene ts: “If you have a couple of minutes, there are a few questions I would like to ask, questions to help me put together speci c information for you and save you some valuable time.”

Adopt active listening strategies when your clients respond. Give them your full attention and don’t use the time when you are listening to formulate a response. Be patient and selfdisciplined enough to resist interrupting, even if you don’t agree. Let them know you are paying attention by maintaining a position of active listening, paraphrasing and asking for corrections throughout. se words such as: “From your point of view …”

“So what you are saying is …”

“Do I understand correctly? You feel as though …”

NEVER NEGOTIATE FROM A POSITION OF WEAKNESS

Real negotiation begins long before an untrained person thinks it does. Always be proactive in creating more and better options. In that way, you will have so many alternatives that you can walk away from a deal if the terms are not reasonable.

Create this situation by constantly undertaking good, focused marketing – discovering your customer expectations (by asking) and exceeding them so that you build a large quantity of quality repeat and referred clients who are predisposed to respecting and trusting you.

Many sellers ask for a cut in commission because they think they should Many sellers may ask you to reduce your commission because they know that some agents do. A simple no may be enough. Do not assume that you have a confrontation on your hands and in so doing, create one.

One response may be “no … and sign right here”. Instead be creative and form sets of questions you can use to lead the client to the correct outcome: Client “Annie said she would list at the same price but cut her commission by 1%.”

Agent “Just so I am clear, all things being equal between Annie and myself, are you saying you would prefer that I have the listing?”

Client “Yes.” Agent “Why is that?” [Let them tell you why you’re a better choice and then summarise what they have said.] “It sounds like you are more comfortable with my service, my marketing plan, my way of doing business. The real question here is what price tag do you put on your personal peace of mind?”

Agent

OR

“I’m curious. If Annie said she would cut her commission by 1% she must have started by saying her services were worth more and asked for more. Is that right?”

Client Agent

Client Agent Client Agent

Agent

Client Agent

Client Agent

“Yes.” “Do you think she believed her services were worth that higher figure when she asked for it?”

“Yes.” “How long did it take before she agreed to reduce it by 1%?”

“About 10 minutes.”

“So, in 10 minutes she reduced her professional fee by 1%? Well, I could do that too. I wonder though, how you will feel when you realise you have hired an agent to protect the value of your property based on their ability to negotiate. And then right in front of you, she demonstrates her inability to do that very thing?”

OR

“Mr and Mrs Seller, if I reduced my commission by 1%, could you do something of equal value for me?”

“Which would be?”

“Well, we have agreed on a R2m list price for your home and my professional fee is 6%. What you would like to do is cut my commission to 5%. I would do that for you if you did something of equal value for me: list your home for R1,660,000. What do you think?”

“What do you mean?”

“I’m glad you asked. Most sellers think of 1% as very little to ask for.

After all, it is only 1%. But that is not true unless it is 1% of 100%.

When it is 1% out of 6% it is 17% of the gross fee. The equivalent of 17% of the gross list price is R340,000, which, when deducted from R2m is R1,660,000.”

IMAGE: SUPPLIED

NEVER CONSIDER REDUCING YOUR COMMISSION

That said: • Make sure you are worth your fee • Demonstrate it at every point • Be capable of communicating it

Ed Hatch is the president of Ed Hatch Seminars and a senior instructor for the Council of Residential Specialists in the US, UK, Europe, Africa and Asia.

Based in the US, Hatch has addressed international audiences since 1990 on topics including negotiation, business and strategic planning, customer service and leadership.

SEPTEMBER/OCTOBER 2016

PP SepOct_EdHatch.kw.lr.km.indd 41

41

2016/08/24 10:46 AM

TOP TIPS GRANT REA

1 ENSURE REASONABLE SECURITY MEASURES ARE IN PLACE

While landlords are only obliged to ensure doors and windows can be adequately locked, escalating crime levels may deem it fair for tenants to expect a security gate or access control measures. When tenants cover that expense, it is also unreasonable for the owner to deny the request.

State-of-the-art alarm systems are not the landlord’s responsibility and are not legally essential for tenancy. If the landlord incorrectly guarantees the current installation is functioning, however, he or she can be liable for security breaches.

2 TAKE RESPONSIBILITY FOR DAMAGE AFTER A BREAK-IN Since this damage is beyond the tenant’s control, landlords cover the repair costs and can approach their individual insurer.

Tenants are advised to insure their personal belongings, however.

3 OUTLINE PAYMENT OF UTILITIES IN WRITING

A written lease detailing who pays utilities and how they are paid is critical to avoid disputes. Rising electricity costs means that, if the rental property does not have a prepaid meter, landlords should consider installing one. Historically, tenants registered their own electricity accounts and were liable for payment, but the landlord held the ultimate 42

responsibility for the bill. Where tenants absconded, unsuspecting landlords took the knock.

Municipalities now insist the owner’s name be on the account. If it is delivered to the rental property, landlords should request a copy and simply take the tenant’s word that the account is being settled each month.

Ideally, landlords should redirect the account to their home address and bill the tenant for utility costs – or convert to an e-billing option if the municipality offers one. Tenants are entitled to view the original bill and utility readings.

4 ASK FOR A DEPOSIT UPFRONT

The initial deposit, typically one month’s rental and an amount to cover unpaid utilities, covers damages to the property. Tenants cannot use their deposit in lieu of the last month’s rent.

When moving into the property, the tenant and landlord jointly inspect it for damages.

During the rental period, landlords must hold the deposit in an interest-bearing account and tenants can request statements showing their capital and growth.

When moving out, the parties repeat the inspection tour and, if no damages are found, the deposit plus interest must be returned within seven days. If there are damages unrelated to normal wear and tear, the deposit less the repair costs must be paid within 14 days of the property being returned to its initial condition.

The Rental Housing Act and Unfair Practices Regulations outline landlords’ responsibilities when ensuring the habitability of a rental property. To advise clients correctly, take note of this outline Critical to every tenant-landlord relationship is a properly constituted, legally sound lease

5 DRAW UP A SOLID LEASE AGREEMENT

Critical to every tenant-landlord relationship is a properly constituted, legally sound lease. This means it has no modi cations, speci cally legally binding verbal agreements, without written back-up. Leases must adhere to national legislation and consumers cannot be contracted out of their basic rights – the lease cannot allow owners to remove doors or cut off utilities for unpaid rent.

The Consumer Protection Act also allows tenants to cancel leases with 20 days’ notice, but landlords can specify a reasonable penalty clause.

Grant Rea is a RE/MAX Living certified residential rentals specialist. RE/MAX is a leading global real estate franchise company that operates in almost 100 countries.

IMAGE: SUPPLIED

5

things agents wish landlords and tenants understood

PROPERTY PROFESSIONAL

PP SepOct_TopTips.kw.km.indd 42

2016/08/24 10:44 AM

A real estate business in your sales consultant’s pocket.

As profiled by Apple.

Our mobile solutions for our team allows them to be more agile and responsive to your needs, wherever they are. Your sales consultant is empowered to market your property through a fully integrated system giving them the ability to manage contacts, open inspections and customise marketing campaigns from the one point. Through use of the apps, our property managers can produce fast, efficient and thorough inspection reports in minutes, instantly syncing all information back to the office.

Looking to make more sales? Join Harcourts.

082 568 0782 | harcourts.co.za

“Tools that streamline workflows, drive better productivity and help deliver even better service to customers.�

Apple Inc. press release, October 2015.

w w w.r e a l n e t . c o. z a

We’re extending a hand to Top Principals Convert to the real estate brand that focusses on the Franchisee: P P P

Competitive royalty fee structure Nominal mandatory marketing fees Tick all the boxes: Comprehensive systems and support

Enjoy business-to-business support by a devoted and focused Franchisor.

We make it happen!

For real estate franchise opportunities, contact: Anri Human Tel: 0860 460 460

LIFE HACKS JO-ANNE STRYDOM

Your intern agent training starts here

T

here is much confusion among new intern agents and principals as to the updated education requirements of the state Agency Affairs Board AAB . Any interns joining the real estate industry should become familiar with the Standard of Training of Estate Agent Regulations that came into effect in uly 2008.

These say that all newcomers to the industry will be registered as interns, even if they are exempted from the academic uali cations Further ducation and Training Certi cate F TC and National Certi cate NC eal state N F 4 and 5 due to having existing higher degrees. All interns those registered from 1 anuary 2013 will have to comply with requirements on completing a practical workplace logbook during the rst 12-month internship.

WHAT DOES IT MEAN TO COMPLETE A LOGBOOK?

It means showing proof of your workplace experience in a number of practical tasks, such as: • Listings completed • Inspections done • Show houses arranged with registers • Mandates negotiated • Sales/lease contracts concluded • Property values established • Agendas for and meetings/training attended • Proof of time management and time/ log sheets Interns also need proof that they were trained and introduced to the basics of real estate. The

prescribed AAB logbook re uires there to be a minimum of one week of real estate industry and o ce induction.

WHAT IS COVERED DURING THE INDUCTION AND ONE-YEAR INTERNSHIP? These workplace sections as indicated in the logbook are included: 1. Compulsory induction: industry and o ce 2. state Agency Affairs Act and Code of Conduct 3. eal estate product and services 4. egal environment acts 5. egal environment contracts 6. Financial process FICA tax accounting . Marketing and selling leasing immovable property 8. state agency management 9. Agency administration and systems 10. Paralegal environment

WHO PARTICIPATES IN THE LOGBOOK?

You – as the intern agent – as well as your principal. The principal has a signi cant role in the completion of the logbook. He or she has to take the lead and mentor the new intern.

The success of this process depends on having an intern and principal who are committed and motivated. They should both believe in and understand the value of the process.

A full-status agent with a minimum of three years of consecutive valid Fidelity Fund Certi cates FFCs can also ful l the role as mentor.

Find answers to key questions interns ask about the industry’s new education regulations

The success of this process depends on having an intern and principal who are committed and motivated

WHICH TASKS ARE INCLUDED FOR INTERNS?

There are 10 recommended projects that tie in with the intern’s workplace experience. The intern may take on additional work but may not do less than these 10 projects: 1. Show product knowledge in a PowerPoint presentation 2. Develop a business plan 3. Develop a marketing plan using advertising 4. Compile an individual plan goal 5. Draft an activities schedule 6. Analyse policies and procedures of real estate . Develop a proposal to enhance team performance 8. Undertake a research project on understanding nancing options 9. Design a brochure on regulatory registration process and bonds 10. Complete a research project on Code of Conduct and ethics

SEPTEMBER/OCTOBER 2016

PP SepOct_LifeHacks.kw.km.indd 45

45

2016/08/24 10:44 AM

nt

S

ur

e ss, e s will onal

%, 10% , ils oor

TALS

portals tos love

WHAT SHOULD THE PRINCIPAL DO?

The principal needs to be familiar with the logbook re uirements and then meet with the intern to plan activities and provide opportunities for workshops and training.

The principal has to sign off logbooks activities weekly and monthly. As per the logbook re uirements, monthly appraisal reports should be completed to certify the intern’s readiness at the end of the internship year.

WHAT HAPPENS AFTER THE INTERNSHIP YEAR?

Ideally the intern agent registers with a Services S TA-accredited service provider to start the academic real estate uali cation F TC: eal state N F 4.

The ideal scenario is to complete the academic uali cation simultaneously with the practical logbook in the workplace.

The timeframe for completion is one year for the logbook and two years for the academic uali cation.

IS THERE AN EXAM AFTER THE QUALIFICATION?

Yes. The Professional Designation xamination PD 4 and 5 will be the nal examination to prove that an agent is ready to operate in real estate. This four-hour openbook exam tests the application of knowledge, as well as the academic uali cation completed.

CAN AN INTERN BE EXEMPTED FROM THE LOGBOOK AND EXAMS?

No. After the introduction of the state Agent Training egulations in uly 2008, there was a period where an agent who held an FFC in that capacity for instance, an agent or principal could apply for exemption dating ve years back until 2003. But as of une 2015, all new interns have to follow the new procedure, keep a logbook and write the re uired exams PD 4 and 5 .

46

CAN I BE EXEMPTED FROM THE FETC AND NC REAL ESTATE ACADEMIC QUALIFICATION?

Yes, if you have studied at a higher level before. ith certain subjects and experience, you might be able to apply for exemption there is an xemption Matrix and procedure on the AAB’s website that will give you an indication.

Only the AAB may grant exemption if procedures are followed . It will be at the AAB’s discretion to decide if you are eligible.

This will not grant exemption from the logbook or PD however.

DOES LOCAL REAL ESTATE HAVE A REAL FUTURE?

Yes. Finally we are becoming a professional industry it’s no longer considered a weekend job. As entry re uirements are costly and getting tougher, agents need to commit to making this their career of choice. They will have to spend time and expense to become properly uali ed, but with hard work and perseverance, the opportunities in real estate are endless.

WHAT IS THE TIMEFRAME FOR A NEW QUALIFIED AGENT OR PRINCIPAL TO BECOME OPERATIONAL?

For a new agent, it will take between two to three years to complete the whole process and for a principal, three to four years. An intern agent may sell property in the meantime, but no legal documentation mandates or contracts may be signed off without the presence of the principal or full-status agent. The new process to become a uali ed agent is much more costly and takes longer to become fully operative.

But it’s a step in the right direction, with professional, registered designations as follows: PP Professional Practitioner in eal state PD 4 MP Master Practitioner in eal state PD 5

WHAT OPTIONS EXIST AFTER THE EXAMS?

Continuing Professional Development CPD is the future in real estate, as it is in most other professional industries.

This happens via road shows and seminars presented by the AAB across South Africa on relevant topics including new legislation, changes, updates and amendments. It helps all agents and principals to stay abreast of ever-changing industry regulations relating to real estate, as well as new laws and acts.

Agents need to commit to making this their career of choice

Jo-Anne Strydom has 21 years of real estate experience, initially as a sales agent before moving to training. She studied Real Estate Advanced Practices in Miami and is an accredited real estate assessor and moderator in South Africa.

IMAGE: SUPPLIED

een l ality uently

LIFE HACKS

PROPERTY PROFESSIONAL

PP SepOct_LifeHacks.kw.km.indd 46

2016/08/24 10:44 AM

MOTIVATION PAM MULLANY

How to land a sole mandate

BE STRAIGHTFORWARD AND HONEST

Talk about the pitfalls of overpricing and the positives of selling within a short period of time. There’s strong evidence to support the view that sole mandates result in faster sales and higher prices. It’s my experience that about 80% of sales come from sole or joint sole mandates I share that information with the client.

UNDERSTAND THE SELLER’S FEARS

When giving a sole mandate to one agency, sellers tend to feel they are relinquishing their rights. No-one likes to sign documents without thorough scrutiny and a sole

48

mandate can be a little daunting. Like most legal documents, it de nes what the outcome will be if you don’t abide by the rules.

To ensure the seller feels more comfortable, take a different approach: I let homeowners know that I am there to sell the property and not to put obstacles in their way. Reassure them that the document is purely protection against expending effort without reward.

By including the homeowner in the process, they feel far more confident and happy with your efforts

WORK AS A TEAM

The seller should feel like you are with them: they want to be involved and don’t want to relinquish what is usually their biggest asset into a stranger’s hands. That’s why creating a relationship is so important.

By including the homeowner in the process, they feel far more con dent and happy with your efforts.

Let the homeowner know that you have their back. Give 110% to selling the property and work with the current owner.

Communicate regularly when it comes to feedback from buyers – even if the market response is nil, provide honest observations.

At any stage, I will relin uish that mandate to assist the seller further.

Underpromising and overperforming is the secret: the seller should know that you did your utmost, with – ideally – the right result.

Pam Golding Properties’ Pam Mullany has been a property consultant in KwaZulu-Natal’s Upper Highway region for 30 years. She lists product knowledge, and care for sellers and buyers, as key job requirements.

IMAGE: SUPPLIED

SELL YOURSELF FIRST

While you are ultimately representing your company, it’s important to promote yourself when you initially meet homeowners looking to sell. While discussions about sole mandate packages, company policy and marketing tools are important, they have a place. The rst meeting isn’t it. Instead, I share my passion for my job, my successes and my experience in the area. Listening is also essential: by doing so, I nd out more about the homeowner and why they are looking to sell. There is often a hidden agenda – and compassion goes a long way to building a relationship and trust.

A sole mandate is the Holy Grail for estate agents and agencies – but there are ways of approaching the topic with potential sellers

PROPERTY PROFESSIONAL

PP SepOct_Motivation.kw.km.indd 48

2016/08/24 10:44 AM

“How can you help us realise our vision?”

“We’re geared for it.”

In the real estate sector you need a partner with fortitude, experience and know-how to see you through.

With our capabilities and deep local sector insights we have innovative solutions to meet your needs. Let us be your partner for wherever your ambition takes you. standardbank.co.za/business

Authorised financial services and registered credit provider (NCRCP15).

The Standard Bank of South Africa Limited (Reg. No. 1962/000738/06). Moving Forward is a trademark of The Standard Bank of South Africa Limited. SBSA 230709 – 1/16

Search property on every device.

A home for everyone www. p r iva t ep ro p er t y.c o .za