Monthly Archives :

August 2020

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Prevance capital – Sellers Advance: Capitalising on the Buyer’s Market

The adage of “Cash is King” has never been more pertinent than in the year 2020. The Covid-19 global pandemic has left many investors digging the fleece out of their back pockets. As per Stats SA, the first quarter report for South Africa’s 2020 GDP is down by 2% for the period and the Consumer Price Index for April 2020 is showing a year-on-year increase of 4.6% for Housing and Utilities. This paints a pretty clear picture of the squeeze as South Africans are asked to do more with less.

As can be seen from the Lightstone prediction model below, these macro market forces are set to have a marked effect on the interest rate.

 Although the outlook on the property market is currently quite gloomy, the silver lining is that it is a great time to be bargain hunting. Property remains a sound long-term investment and your future self could very well benefit from a savvy move made in the present. If you’re looking to buy to rent, Sandton Central is a prime location to secure an investment property for future income generation.

In an era where cash flow is tantamount to a science, it can often give you the edge in any prospective financial dealing. Having liquidity on hand to capitalise on any opportunities that may arise could well be the difference between the winning offer-to-purchase, and the second-best offer.

Recent interest-rate slashes of 300 basis points in 2020 alone have led industry insiders such as Samuel Seeff, chairperson of Seeff Property Group, to believe that we may be seeing the start of the “best buyers’ market in over 35 years”. It is imperative that any would-be buyers are armed with the proper modern financial tools and knowledge for the job. Ignorance is not an excuse in the digital age, which is why we at Prevance, a specialist provider of short-term property finance solutions, are dedicated to ensuring that our products, such as Sellers Advance, are perfectly placed to meet our clients’ needs.

As we can see from the Lightstone property price forecasts below, the low value property range is set to drop substantially across the board. Music to the ears of prospective property investors looking to buy low and sell high into the inevitable upturn.

Whether you are looking to beat the rush to a hot, new-on-the-market property as an upgrade to your family home, or you are more concerned with increasing turnover efficiency by minimising costly delays in the transfer process of real estate, the Sellers Advance solution can give you up to 75% of your sale’s net proceeds on successful registration/transfer with minimal fuss and at an extremely low cost. The funds can be available as soon as the transfer bond documents have been signed and the transfer costs are secured.

Once the buyer’s purchase price has been secured, the process is seamlessly integrated into the transfer of ownership cycle. When we receive the undertaking from the transferring attorney and our agreement with the seller is secured, then the funds are immediately transferred into your designated bank account. Prevance will recoup their advance plus costs when the sale eventually goes through, often months later. But in the meantime, you are free to enjoy the fruits of your newfound fortune.

It is easy to see the benefits of having such a rapid cash injection i.e. to secure your next property purchase. You can rest assured in the knowledge that your capital will be on hand once you are done dealing with the stress of selling your home. There will be no administration nightmares awaiting you as you prepare for the next step of your journey.

 

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Property: Green Shoots, Agent’s Commission and Fidelity Fund Certificates

“Ninety percent of all millionaires become so through owning real estate. More money has been made in real estate than in all industrial investments combined. The wise young man or wage earner of today invests his money in real estate” (Andrew Carnegie, billionaire industrialist)

Dollar billionaire Andrew Carnegie said it a century ago, and it still rings true – wise property investment can be hard to beat when it comes to accumulating wealth. The exciting opportunity for buyers at the moment is of course the more attainable sale prices and the lower interest rates resulting from the pandemic and the lockdown. It is, by all accounts, still very much a buyer’s market.

On the other side of the coin, sellers and estate agents are no doubt heartened by recent signs that the first green shoots of a recovery are in the offing, and so the time is ripe for a reminder that, in terms of the Estate Agency Affairs Act (“the Act”) only agents with a valid and current Fidelity Fund Certificate (FFC) can operate and earn commission. 

The challenge for agents is that when it comes to the issue of FFCs, they are at the mercy of the Estate Agency Affairs Board (EAAB), which has reportedly struggled in the past to issue certificates efficiently and on time. This problem will presumably be exacerbated by the ongoing lockdown restrictions and the risk of precautionary office evacuations.

However there is some good news for agents (not such good news perhaps for those sellers or landlords hoping to save on commission!) in a recent Supreme Court of Appeal (SCA) judgment…

No FFC, but not the agent’s fault 

  • Two estate agencies (“S” and “A”) jointly brokered a lease agreement, but when S asked for its 50% share A refused, partially on the basis that S had no valid FFC at the time the commission was earned.
  • In fact S had done everything necessary to apply for its annual FFC, which was issued by the EAAB on 1 January 2018 in the wrong name (S had converted from a close corporation to a company). The EAAB acknowledged its error and in May 2018 issued a correct FFC to S, backdated to 1 January.
  • However the High Court dismissed S’s commission claim, holding that mere entitlement to an FFC is not enough – a valid FFC must have been actually issued at the time the commission was earned.
  • S appealed to the SCA, which reversed that finding and awarded S its 50%. The Court held that the Act’s strict and peremptory requirement for a FFC had to be interpreted in light of both Constitutional considerations and consistency “with what the Act seeks to achieve”.
  • On that basis, and commenting that “But for the error on the part of the Board, [S] was entitled to, and would have been issued with, a valid fidelity fund certificate for the period 1 January-31 December 2018” and that “the fault lies squarely and solely with the Board”, the Court concluded that “the estate agents were rightly considered to have been in possession of a certificate”. S is therefore entitled to its commission.

Agents – don’t lose your commission!

The Court was however at pains to point out that the particular facts of this case were “in a narrow compass” and it is clear that the general rule remains – hold a valid and current FFC or almost certainly forfeit your commission. Do not even try to rely on an EAAB mistake unless you have complied strictly with all the formalities for a certificate and can prove that you are entitled to one.

And as the Court put it, if something does go wrong with the issue of your FFC “…estate agents should not adopt a supine attitude in the face of the Board’s errors. They should do what is reasonably within their power to have the situation rectified. In the meantime their compliance with the requirements should be a primary factor in the determination of disputes that arise before the error is rectified” (emphasis supplied).

Source: Lawdotnews and Gerings Attorneys.

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