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Should you buy your childhood home?

There are all sorts of reasons why you might want to buy the property you grew up in, but you shouldn’t let your head rule your heart.

That’s the advice of Richard Gray, CEO of Harcourts Real Estate, who says that as the trend towards multigenerational living gains ground, young adults are now not only moving back in with their parents but increasingly, buying their parents’ homes with the intention of also raising their own families there.

“According to Professor John Graham, a co-author of ‘All in the Family: A Practical Guide to Successful Multigenerational Living’, this is consistent with the steady return to the interdependence of the extended family and the move away from the nuclear family model.

“And in our experience it is also consistent with the rising age of first-time buyers, who are now often in their mid-30s and watching their parents get close to retirement.”  However, he says, you should not buy your parents’ home for any sentimental reason. You need to think about it very carefully, decide if it is really the home you want, and seek professional advice from an experienced estate agent, a reputable mortgage originator and your accountant or tax attorney before you sign an offer to purchase. 

“For example, you need to consider the location, just as you would when looking at any other property. Is it close enough to work and does it offer reliable public transport? Does it have all the shops, schools and other amenities that you need? Is it safe, or would it perhaps be better if you all moved to another home in a more secure area or development?” 

In addition, Gray says, you need to evaluate the condition of the property itself. “If your parents are getting on, there may well be some deferred maintenance issues and to avoid the possibility of family disputes later, you will need to identify these and reach agreement about who will do the work and who will pay for any repairs that may be needed - before you buy. “And just as with any other property, you will need to keep the potential resale value in mind. Updates or alterations may be needed now to make the house work for your extended family but you will need to be careful not to overcapitalise and not to limit the appeal of the property for future buyers. 

“What is more, you will need to comply with local building by-laws and, if the house is in a security estate, you may also need to get the approval of the Home Owners’ Association before you can make any changes.” 

At the same time, he says, you will have to establish whether you can afford the property and how you will finance the purchase. “The biggest obstacle for most first-time buyers is the deposit, and your parents may be willing to help you with that, but then you must agree on how you are going to pay it back – especially if the loan came out of their retirement funds. 

“Similarly, you will need to agree on a fair purchase price, bearing in mind that if your parents set price that is too far below market value in an attempt to help you qualify for a loan, the SA Revenue Service could view the transaction as an attempt to avoid paying transfer duty. 

“You will also need to qualify for a home loan in the usual way, as the banks can’t make any allowances for the fact that it’s your parents’ home you are buying. In other words, you will need a good credit record, steady employment and enough discretionary income to afford the monthly bond repayments.” 

Then finally – and perhaps most importantly – you should think carefully about whether everyone in the extended family you are creating will get along, find out how other members of your family who live elsewhere feel about the arrangement and try to plan ahead for any change in your circumstances, Gray says. 

“An ageing parent may reach a stage where they need more intensive healthcare than you can provide at home, for example, or someone who is contributing to the bond instalment may lose a job, and it would certainly be helpful at that stage to have a written agreement in place that spells out what will happen in such cases.”

Cuppa Tea/Coffee & Cake for Cancer

Thank you to everyone who joined us on 27 October for the Cuppa Tea/Coffee & Cake for Cancer. Your support was wonderful, thanks.

Together we raised R7200 which will be split equally between CANSA and St Francis Home Care who provide an incredible service to our local community.

Your generosity with baking and donations were all greatly appreciated. An extra special thank you to Taryn Roper Kneen who helped put it all together.

Apple profiles Harcourts in a global business case-study

Technology giant Apple has profiled global real estate group Harcourts in a new video case-study placed on its website that reveals how the group is using Apple’s iOS technology to transform its business worldwide. 

This video (https://www.apple.com/business/harcourts/) shows how a collection of iPad and iPhone apps that were custom-built by Harcourts is helping the group be more efficient, win more business and build its brand as a leader in innovation and a great place to work. 

Harcourts is the first international real estate group to have its mobile business solutions featured on Apple’s website – which is an accolade reserved only for those who develop cutting-edge iOS apps and become game-changers in their respective industries. 

And Harcourts Head of eBusiness Gregg Toyama says the group’s suite of home-grown business apps has certainly transformed the way its agents do business. 

“By nature real estate is a mobile business. Agents are on the road, meeting clients, inspecting properties and showing homes,” he says. “So we developed apps that give our agents the tools they need to do their job in the field and make them more efficient. 

“They now have access to an unprecedented level of information wherever they are, including detailed client and buyer information, real-time data on for-sale and sold properties, and third party data and stats as well as an array of local and international marketing products.” 

The Apple profile notes that the iPhone and iPad apps enable Harcourts agents to immediately package custom marketing plans for sellers, streamline business and client communications and complete specialised property management tasks such as inspections much more efficiently. 

“This in turn is proving to be very significant for the productivity and profitability of our franchisees’ businesses,” says Richard Gray, CEO of Harcourts Real Estate in SA, “enabling them to re-direct thousands of rand into providing even better levels of client service. 

“Once-again we’re changing the face of real estate, by becoming more agile and able to deliver what our clients need faster and more effectively. This also gives us a competitive edge and further establishes our brand as a leader in innovation.”

A Guide to Buying Property Overseas

Regardless of why you are interested in buying property overseas, the following sections offer helpful suggestions that can make your purchase more successful.

Overseas travellers often feel the temptation to buy property in the foreign countries they visit, and it is no coincidence that many real estate agents have offices close to tourist attractions in order to market property to prospective clients.

Furthermore, the motivations for buying overseas property can vary considerably, although one common reason is that real estate could seem undervalued and therefore likely to appreciate in future. For example, if your local exchange rate is particularly strong relative to that of a foreign country, the cost of buying overseas property can be especially affordable, and could present a lucrative real estate investment opportunity over the long term.

Just as with any substantial long-term investment, you should research a foreign real estate market thoroughly before buying a property in that locale

In addition, some travellers attracted to a foreign country might want to spend more time there, and so they might consider purchasing a second home to facilitate an extended stay or regular visits. Australian residents are frequently interested in buying overseas property in nearby New Zealand, or even in more distant English speaking countries like the United Kingdom and the United States. 

Research the Market Thoroughly

Just as with any substantial long-term investment, you should research a foreign real estate market thoroughly before buying a property in that locale.

Different property markets can be in different stages of the property price cycle, so you should find out how prices have behaved over the last five to ten years. For example, a trend of rising property prices in South Africa does not mean that real estate values are also trending higher in the UK.

Furthermore, some legal restrictions may apply to your ownership of foreign property. Accordingly, in order to avoid fraudulent or disappointing deals, you will need to make sure that you can hold title in a way that makes you feel secure before you hand over any funds. 

Retain an Independent Lawyer to Represent Your Best Interests

While most local real estate transactions do not involve a lawyer, it can really make sense to hire an experienced, professional and independent legal representative to look out for your interests when buying overseas property.

Also, make sure that you clearly understand all legal documents pertaining to the transaction before you sign them. You might also need to hire a translator if such documents are written in a language you do not thoroughly understand.

Buy Through a Reputable Real Estate Agent or Developer When Buying Property Overseas

You might be able to make a successful foreign real estate purchase directly from an owner. Nevertheless, if you do not understand the overseas market thoroughly, it would make sense to buy property only via a real estate agent or developer with a good reputation and references.

They can often help you avoid costly pitfalls and are typically motivated to facilitate the transaction to your satisfaction.

Save Money on Bond Payments and Currency Transfers

Those who do eventually decide to buy overseas property will need to make appropriate arrangements for paying for it in the relevant foreign currency.

Whether this payment will be done in a large lump sum, or in a succession of regular bond payments, the purchase will very likely involve some form of foreign exchange transaction.

A better solution than approaching local banks — which often provide meagre foreign exchange services and charge very wide dealing spreads — would be to exchange your funds using a regular payments service, like those offered by OzForex

What to check when buying a newly-renovated home

As property prices rise, so does the number of people buying “fixer-upper” homes – not to live in, but to renovate and / or modernise as quickly as possible and then resell at a profit.

“They make their money by purchasing homes that are in a run-down state for less than the average market value for the area, revamping them and then putting them back on the market, hopefully to sell at somewhat more than the average local price,” says Richard Gray, CEO of Harcourts Real Estate.     

“And overall, we think the efforts of these property entrepreneurs should be applauded. They are generally willing to risk substantial amounts of their own money to do this, and at the same time are not only ‘rescuing’ and refurbishing older homes for re-use, but also helping to upgrade the neighbourhood and underpin property values.” 

What is more, he says, many other people see the benefit in buying a home that has recently had a makeover, especially if they are short of time or cash to spend on property maintenance. They would much prefer to buy a property with all-new fittings and fixtures and minimal to-do list, even if it does come at something of a premium initially. 

“However, that does not mean that they should let the smell of fresh paint and the gleam of new tiles go to their heads. As with all property purchases, they will need to do some homework and make sure that the improvements they will be paying for are real and not just cosmetic fixes. 

“For example, you may see what looks like a new renovated kitchen, but it is possible that the sellers just put in a new sink, cupboards and countertops without changing any of the original wiring or plumbing – and if the house was actually built 50 years ago, that could be a serious problem for you later on. So you should ask to see receipts for all the major work the seller says has been done as well as any certificates of compliance that are legally required.”

Similarly, Gray says, you need to establish whether any structural changes have been made – like taking out a wall to “open up” the living areas and create a more modern layout – and if these have been signed off by an engineer or architect. “And of course you should check for any cracks, leaks or damp patches that could signal foundation or roof problems, as these can also be expensive and tricky to fix.

“The property will most likely be empty, so you should also take the opportunity to ‘test drive’ it and gauge the renovator’s workmanship, by turning on taps to check for water pressure, flushing the toilets, checking that all the stove plates work, flipping the light switches, and opening and closing windows, doors and cupboards.”

In most instances, he says, everything will work really well – but if you do find small problems, the seller should be willing to fix them immediately in order to secure a sale. “For a renovator, every month that a finished house goes unsold equals holding costs that diminish the potential profit. So you shouldn’t hesitate to negotiate and make sure the property really will be move-in-ready – and that you will be able to enjoy your lovely new home without any worries.”

How to spot a worthwhile fixer-upper

With homes prices on the rise again in most popular areas of South Africa, more buyers are open to the idea of acquiring a “fixer-upper” property that will allow them to gain cheaper entry to their favourite area in return for some of their own labour or “sweat equity”.

“Indeed, buying a home that needs some work is a tried-and-tested formula for getting more house for your money — especially if you’re handy and enjoy DIY,” says Richard Gray, CEO of Harcourts Real Estate South Africa, “but you do need to be able to tell the difference between a property that is worth working on and one that would cost more to fix than it will ever be worth.

“Even if you plan to live in the home for several years, you need to evaluate it as if you were going to sell it immediately after fixing it up. In other words, you don’t want to have to spend any more on it than the amount that would bring it up to the current average market value for the area.”

So what you should be looking for, he says, are properties that require cosmetic fixes and have been somewhat discounted to allow for those, and homes that may require more work but are structurally sound and where the seller is really willing to negotiate a good deal.

“And this is where the help of a trained and experienced agent who is familiar with your chosen area can prove invaluable. Tell this agent what you would be willing to look at – or rather ‘look past’ – and he or she should be only too willing to help you. After all, shabby and neglected properties are the hardest to sell, and it’s not everyday they have someone specifically looking for just such a home.”

To help fixer-upper buyers, Harcourts has compiled a list of items that are relatively inexpensive to fix - and may just give you the leverage to acquire a hidden beauty of a home in your dream location. These include:

*Faded paintwork, worn carpets, scuffed and scarred countertops, old light fittings and an overgrown garden, which are all to be found in homes where the owners didn’t want to invest any more time or money prior to selling – and where all that is really needed are a few purchases from the hardware and home improvement stores, some spadework and a good clean to bring it up to standard.

*An ugly cloak over good structural “bones”. Sometimes all it takes is to get rid of badly-planned or executed additions and renovations to expose a well-designed home that you can return to its attractive original form. The seller will need to be willing, though, to discount the property considerably.

*Roof leaks and stained ceilings. Both these problems can usually be solved by putting on a new roof – that may also create an opportunity to open up a dated or dark interior by leaving the beams exposed to roof height and perhaps installing some skylights.

*Bathrooms that are more than retro. Provided the plumbing is sound, it is really easy to update a bathroom now with a huge range of shower, bathtub and vanity options on offer, and the cost of specialist tiling and flooring labour is relatively low.

*An old kitchen. Replacing a whole kitchen is one of the most expensive renovations you can undertake – especially if you have to make plumbing and electrical changes - but also one of the best in terms of return on your money and improving the liveability and appeal of an older home.

*Small rooms and dark interiors. You will need professional advice before you do this, but by taking out non-load bearing walls, you may well be able to create one modern open-plan living area out of two or three smaller rooms. And if it’s more light you need, installing bigger windows and sliding doors will usually solve the problem – provided, once again, that the purchase price is right.

However, says Gray, there are some problems that just can’t be fixed, no matter how much you spend, and you need to be sure that the fixer-upper you have your eye on has none of these or it will just become a money-pit.

“They include serious structural problems, cracks and shifts due to problems with the foundations or local geology; major fire, flood, wind or earthquake damage; drainage, flooding or damp problems due to poor sitting; and signs of serious soil erosion or land slippage nearby, especially if the property is on a slope."