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Understanding Open or Sole Mandates

When it comes to selling your property, which is better; open mandate or sole mandate?

A mandate is the instruction to a real estate agent with regards the commission. When a seller instructs an agent to sell his property for commission and the agent agrees, a mandate has been formed.

The question then arises as to whether a seller should use more than one real estate agent in order to sell their property faster. There are pros and cons to whichever choice you make.

Open mandate

If your property is listed as an open mandate, this means that any agent who has received a mandate from the seller may market and sell the property in exchange for commission. A seller in their private capacity may also attempt to sell the property. If a property is open mandate, no agent may claim the sole right to sell and market the property.

With so much competition to sell the property, most agents will be incentivised to sell the property at a lower price, just to make the sale. The sale may often be rushed and low-profit which is not great for the seller.

There is also such a thing as ‘double commission’ whereby it is not clear to determine which agent effectively made the sale. Most agents will not go all out and advertise a property that is under an open mandate.

Sole mandate

As the name suggests, no one except the seller and the sole agent may market and sell the property. This gives a focused point of authority but unfortunately means that the house may take longer to sell.

A plus for the real estate agent is that whether the seller sold the house or not, they will receive commission. It is usually the agent who makes the sale anyway, but this is a nice perk. A sole mandated real estate agent may also informally share the listing with other trusted real estate agents for a cut of the commission. Do not fret; you will not have to pay double commission should another real estate agent make the sale, nor will you receive increased communication from other agents – you will still only communicate with your sole real estate agent.

One or many real estate agents?

So which one should you choose to sell your property? This can depend on certain circumstances. Do you need to sell the property immediately? Or do you have time to wait for the price you would like in order to make a comfortable profit?


A sole mandated listing saves you from having to pay double commission when it is not certain which real estate agent as in fact responsible for the sale. Likewise, if you make the sale in your private capacity (a rarity) you will still need to pay the real estate agent commission for all their efforts in marketing, show days and appointments in order to sell your property.

A real estate agent can market from anything from a couple days to two years, so ensure that you do your homework when selecting a real estate agent. Great real estate agents give your listing maximum exposure and waste no time in getting people through the doors to view your property.

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What is the voetstoots clause?

Most property buyers and sellers have a rather vague idea of what the voetstoots clause means and how it applies to them. This can lead to disputes if the parties don’t realise how it affects the offer to purchase and other property transaction documents.

What is the voetstoots clause?

In South African law the voetstoots clause is a standard term inserted into real estate – and many other – sale agreements. It says that the purchaser is buying the property or other item as it stands, whether or not it has patent or latent defects.

Patent defects refer to defects that are openly seen, discovered, or understood to be defects, whereas latent defects refer to hidden or dormant defects. Latent defects are more contentious because they often require a trigger to bring it to one’s attention, for instance roof damage that only becomes obvious after a bad storm.

The clause protects sellers in the event of latent defects coming to light after the transaction has been concluded. However, whether defects are patent or latent, if sellers know about them, they cannot use the voetstoots clause to protect themselves against repairing them or disclosing them to the buyers.

Sarah-Jane Meyer  says the voetstoots clause still applies to property transactions when the seller’s ordinary course of business is not property, such as individuals who are selling their own houses or apartments.

Common issues

Sellers are required by law to disclose any latent property defects they are aware of. For the voetstoots clause to be set aside, buyers would have to prove that the sellers knew of the latent defects and deliberately concealed them with the intention of defrauding the buyers.

However, it can be very difficult – and costly – trying to prove that sellers deliberately withheld the information if problems are only discovered after the sale has already been concluded.

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WHAT YOU NEED TO KNOW AS A FIRST-TIME LANDLORD

Building an investment property portfolio and becoming a landlord can be a great way of increasing your income or making a living, however being a landlord is not for everyone. While letting out property is a viable option for generating income, there is a lot more to being a landlord than signing lease agreements and collecting the rent.

Many landlords underestimate the amount of time and energy it can requires to ensure that a rental portfolio is maintained and tenants are kept happy. This does, however, largely depend on the tenants who are renting the property. There is also the matter of any legal issues and ensuring all legal requirements are adhered to and the right procedures are followed. This is especially important in the case where the tenant is not paying their rent. The correct steps need to be taken to deal with the delinquent tenant while protecting the landlord’s interests.

It is imperative for prospective landlords, as well as those who are already landlords to consider a few elements that will assist them along the way. There are five factors in particular that first-time landlords and those thinking about getting into the rental business should consider:

Plan and set a timeframe

Purchasing a rental property is not a get-rich-quick scheme. Property investment of any kind should be viewed as a medium to long-term investment. A property will appreciate over the long term and will generate a rental income, however, there might be costs that are not entirely covered by the rent, which is why the decision needs to be made with the future goals and plans in mind. There is a good chance that the rental property will pay for itself over time or when the market booms or when the bond is paid off, however in the initial stages there will probably be a cost involved. 

Crunch the numbers

The monthly bond repayment is only one of a few monthly expenses that need to be considered. Affording a rental property is not just being able to pay the bond. When it comes time to crunch the numbers, landlords need to factor in expenses such as property insurance, rates and taxes, utilities, possible legal costs or collection costs, rental agent’s commission and general property maintenance.

Ideally, landlords will also need to have a contingency fund in place to assist with any unforeseen circumstances such as issues that are not covered by the home insurance or for legal costs if the tenant defaults on the rental agreement. There are also general legal fees for drawing up lease agreements or advice on the landlord’s legal rights and responsibilities. A lettings management agency can also be a highly effective tool for landlords to make use of. A rental agent can assist with vetting potential tenants, collecting rent and general management of the property.

Selecting the right tenant is crucial

Each prospective tenant should be put through a vetting process before they can let the property because the tenant will largely dictate the financial success of the rental. The tenant selection process is where the services of a rental agent will really pay off, as they will provide the landlord with the professional vetting of potential tenants. Factors that will need to be considered are the tenant’s previous rental history, reasons why they are moving, their place of employment and income.  Agents should verify the information given by contacting the references provided by the tenant.

Contracts should be as detailed as possible

A highly detailed lease agreement that contains all the necessary stipulations upfront will help landlords to avoid any complications or misunderstandings regarding the responsibilities of each party. The more that is covered in the contract, the smoother the rental should run as each party knows exactly what is expected of them. No aspects of the rental agreement should be left open to interpretation, with the document covering aspects such as acceptable tenant behaviour, breakage costs, the preferred method of payment and date that the rental is payable.

Equally important is for the landlord to have a detailed agreement with the management agent should they decide to use one. The landlord will be able to sign a mandate with the rental agent which outlines all terms and conditions of the agreement, such as the commission structure and what is expected from the agent.

Having a checklist can save both time and money

The Agent should make a checklist of all the items that they need to look at and check before a new tenant moves into the property. The list will ensure that all potential problem areas can be sorted out and that a snag list can be drawn up with the tenant in a comprehensive manner.

Although owning a rental property and becoming a landlord can be hard work, it can also be the foundation to creating wealth over the long term. The key element to success is to always view property investment with the future in mind.

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Valuations vs Surveys

Buying a house… is a valuation sufficient, or should you opt for a full structural survey?

Buying a house is probably the biggest financial purchase you’ll make in your lifetime and at a time when you’re already spending a lot of money, a survey can sometimes seem like a big expense. However, knowledge is power and it’s better to be informed of any potential issues before proceeding with the purchase otherwise it may end up costing you further down the line.

When you’re at the exciting stage of buying a new property it’s easy to get seduced by the appearance of your potential new home, and risk ignoring any hidden problems which could cost you later on.

That’s where a survey can give you peace of mind to purchase your new home with confidence. But with a number of options available, which is the best type of survey for the property you’re buying?

Mgilija Properties has summarised the different types of surveys available to help you make an informed decision:

A summary of surveys
The type of survey you should go for depends a lot on the age and location of the property. For example, if you’re buying an older property it’s sensible to select for a more detailed report than perhaps someone who’s buying a new-build.

Basic mortgage valuation
The sole aim of the basic mortgage valuation is to satisfy the lender that your chosen property is worth the price you’re paying before they approve your mortgage. It doesn’t go into any detail on the state of the property.

It’s important to remember that this survey is for the benefit of your mortgage lender and doesn’t provide you with any guarantees about the state of the property.

Homebuyers report
This is a detailed report for ‘standard’ properties which are in reasonably good condition. It provides a more in-depth inspection that will help you find out if there are any structural problems, such as subsidence or damp, as well as any other hidden issues – inside and outside the property. It will also give advice on any defects that may affect the value of the property, along with recommendations for repairs and ongoing maintenance.

A homebuyers report excludes the cost of estimates for repairs.

Full structural survey
Now known as a Building Survey, this is a comprehensive report providing a full breakdown of the fabric and condition of the property, with diagnosis of defects and repairs and maintenance advice. Typically these types of surveys are more suitable for properties that are listed, have an unusual construction, or require significant renovation.

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Valuations vs Surveys

Buying a house… is a valuation sufficient, or should you opt for a full structural survey?

Buying a house is probably the biggest financial purchase you’ll make in your lifetime and at a time when you’re already spending a lot of money, a survey can sometimes seem like a big expense. However, knowledge is power and it’s better to be informed of any potential issues before proceeding with the purchase otherwise it may end up costing you further down the line.

When you’re at the exciting stage of buying a new property it’s easy to get seduced by the appearance of your potential new home, and risk ignoring any hidden problems which could cost you later on.

That’s where a survey can give you peace of mind to purchase your new home with confidence. But with a number of options available, which is the best type of survey for the property you’re buying?

Mgilija Properties has summarised the different types of surveys available to help you make an informed decision:

A summary of surveys
The type of survey you should go for depends a lot on the age and location of the property. For example, if you’re buying an older property it’s sensible to select for a more detailed report than perhaps someone who’s buying a new-build.

Basic mortgage valuation
The sole aim of the basic mortgage valuation is to satisfy the lender that your chosen property is worth the price you’re paying before they approve your mortgage. It doesn’t go into any detail on the state of the property.

It’s important to remember that this survey is for the benefit of your mortgage lender and doesn’t provide you with any guarantees about the state of the property.

Homebuyers report
This is a detailed report for ‘standard’ properties which are in reasonably good condition. It provides a more in-depth inspection that will help you find out if there are any structural problems, such as subsidence or damp, as well as any other hidden issues – inside and outside the property. It will also give advice on any defects that may affect the value of the property, along with recommendations for repairs and ongoing maintenance.

A homebuyers report excludes the cost of estimates for repairs.

Full structural survey
Now known as a Building Survey, this is a comprehensive report providing a full breakdown of the fabric and condition of the property, with diagnosis of defects and repairs and maintenance advice. Typically these types of surveys are more suitable for properties that are listed, have an unusual construction, or require significant renovation.

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Landlords: Your Student Accommodation Checklist

Pivoting your investment property towards providing student accommodation could prove very lucrative. Here’s how to get it right.

Student living

Think back to your tertiary education years, and you might consider them the best years of your life. Filled with learning, new experiences, friends, and fun, living the student lifestyle is one that you remember with fondness. You remember the all-night cram sessions and camaraderie over late-night pizza. Now that you’re older, wiser, and have used your knowledge to invest in property, you’re considering creating that environment for our country’s future leaders.

Investing in student accommodation

Off-campus, privately-owned student accommodation is a huge attraction for students. Free of the on-campus rules and regulations, students are keen to start their student life with the right type of facilities at home. This type of property is always in demand, so if you’ve bought an investment property that’s situated close to a tertiary education facility, you could create a good source of income for yourself. Alternatively, if you’re considering taking the leap into being a landlord, here’s how to get it right.

Play by the rules

Before you make that purchase, or adapt your investment property towards student accommodation, make sure your property is correctly zoned and has adhered to the right regulations in terms of facilities too. Your ability to turn your investment property into student accommodation will also be affected by your neighbouring properties, so make sure there have been no objections to your plans. It’s also a good idea to speak to your nearby tertiary education institution’s student housing office, and enquire about getting listed on their student accommodation database. They can be a great resource for finding out more about their students’ needs.

Converting your property

Turning your property into the ultimate student home will take some work. You may need to add a bathrooms, sub-divide rooms, or extend your property. Before you start planning that funky mural, and installing a pool table, decide how many people your property will accommodate, and build accordingly. Overcrowding is all too common in student accommodation facilities, and could land you in trouble with the law, so don’t be tempted to take on more students that you can.

Insuring your property

According to privateproperty.co.za, don’t forget: when you’re all set up and ready to welcome your first student tenants, you’ll need to update your property’s insurance policies. Chat to your financial advisor or insurance broker about your additional insurance needs.

Get your property student-ready

Location is a life essential when it comes to student accommodation. Make sure your property is situated along, or near to, public transport routes. If your investment property is a house, then creating common living areas, including a TV lounge, dining area, and perhaps a ‘chill spot’ is important. Make sure each room is equipped with at least one desk per student, and allows for everyone to enjoy some quiet time when they need to study. Of course, it’s 2019, and none of us could survive without WiFi. Invest in the highest speed internet connection you can, and ensure your network can easily sustain your residents’ needs.

The bonus features

Turning your investment property into the ultimate student abode will mean adding in a few bonus features. If it’s possible for you to add in selected extras, you will be able to demand a higher rental amount from your tenants. Consider adding in-house catering facilities, a swimming pool, or other recreational facilities, if you can.

Keeping an eye on things

As a landlord, you are legally responsible for maintaining the property, and ensuring that all rules and regulations are adhered to by your student tenants. Respond to their enquiries promptly, and deal with complaints as quickly as possible. Don’t forget to conduct regular property inspections, once you’ve arranged a convenient time and date for your tenants.

Mgilija Properties can assist with advice on how to go about with such management

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Does paying E100 extra on your home loan matter?

The substantial amount of debt owed on a home loan can often startle consumers making it seem pointless to pay anything extra, as it may take decades to settle the amount outstanding.

By paying E50 extra on a E500 000 Home Loan on a 10.25% interest rate for 20 years, you will be able to pay off your home loan in 19 years and three months, while saving over E26 111.86 in interest that you would have paid to the bank.

Dr Simphiwe Madikizela, says what many consumers don’t realise is that even paying as little as E50 extra on your bond, you can immediately start saving on interest.

By paying E50 extra on a E500 000 Home Loan on a 10.25% interest rate for 20 years, you will be able to pay off your home loan in 19 years and three months, while saving over E26 111.86 in interest that you would have paid to the bank.

He says that in order to understand the impact of extra payments, consumers should first be able to distinguish between payment towards their principal debt as well as interest paid on the principal debt.

For a home loan, the first payment you make would typically be paid towards interest. However, any extra payment you make enables you to lower the principal debt owed. As the principal debt decreases, so does the amount of interest you have to pay.

Madikizela demonstrates the impact of making an additional payment, every month, on a E500 000 home loan at an interest rate of 10.25 % for 20 years:

Recurring extra payment monthly Years to be paid off Savings on Interest
E100 18 years and 8 months E49 933.77
E200 17 years and 7 months E91 913.82
E300 16 years and 8 months E127 859.91
E400 16 years E159 093.56
E500 15 years and 3 months E186 545.30
E600 14 years and 6 months E210 921.07
E700 14 years E232 744.92
E800 13 years and 5 months E252 426.89
E900 13 years E270 280.29
E1000 12 years and 5 months E286 571.73

“You should also consider topping up your extra payments with a lump sum, either from your bonus or tax refund, etc. This will significantly reduce your interest over the loan period.

“Being aware of the impact of making extra payments will help you manage your bond repayments and ultimately ensure that you pay off your bond as quickly as possible,” says Madikizela.

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How to spot a property bargain in Eswatini

There are many factors besides price that astute buyers will consider before investing in property. Here are 6 factors to keep in mind.

Fortunes have been made by investing in property but, and there is a very big but, generally it’s only those who truly know how to capitalise on a situation that make pots of money.

So what is the secret to buying property at a bargain-basement price and more importantly, does it mean you’re guaranteed to make money simply because you managed to snap up a home for what you consider a ridiculously low sum? The short answer is no. There is so much more to buying a property than price, and there are several other important things to take into account before signing a sales agreement.

Research

It is vital to have a good understanding of the market you are buying into. Markets change from area to area and sometimes even from street to street. Don’t rush into something simply because the deal looks good – take a long hard look at the area, investigate what’s been sold there and at what price and then make an informed decision. Demand drives prices, so buying a property with a rock-bottom price tag in some far flung area where the demand is low will probably come back to bite when it comes time to sell. At the same time, expecting to make a serious profit from a sale in an area which has a glut of properties on the market could also backfire and you could end up losing out. Consult with local estate agents in order to get a clear picture of the local market conditions and only invest once you have all the facts at your disposal.

Keep your eyes peeled

Bargains come onto the market every day and are generally snatched up quickly. Scour estate agents’ websites daily and subscribe to their newsletters in order to receive instant alerts when something new comes onto the market.

Read the fine print

Keep an eye out for legal notices and note which homes are being repossessed. Go and view the home before the sale.

Handyman’s dream

Many ‘bargain’ properties are marketed as needing a little TLC and indeed there are properties which have been bought for a song because work needed to be carried out before the owner could move in. The big question here has to be how much work it’s going to take to get the home habitable, and at what cost. Do the maths before you buy.

Price is king

A listing that’s been on the market for a lengthy period without a drop in price is unlikely to be a good buy for those seeking a bargain. This is because these sellers are usually unwilling to negotiate – those who are desperate to sell will lower the price if there are no takers which generally makes them more willing to negotiate in order to get the property sold says www.privateproperty.co.za

Don’t delay

Once you’ve done your homework and recognise a good deal when it presents itself, act on it as soon as possible. Remember there are others who, like you, want to bag a good deal and those who dither could end up losing out on the bargain of a lifetime.

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