KNOW YOUR GAME seminar examines the complexities of a buyers market and offers tips, tools and tricks to overcome these and SCORE with sales. In particular, KNOW YOUR GAME, focuses on the demographic and economic environments effecting the real estate industry.
A Brief History of Intangibles in Ad Valorem Taxation.pdf
KNOW YOUR GAME Seminar Notes
1. As presented by Dieter Deppisch
Head of Property Data Research for SAPTG
A division of Knowledge Factory (Pty) Ltd
2. Demographics:
What are demographics?
The classification of people by
Age, Sex, Race, Marital Status, Family Size, Education, Location, Income, Language, Religion and / or Occupation.
Figure 1: Land area by Province in SA Figure 2: Population of SA by Province
Figure 3: Density of Population in SA
3. Figure 3: Provincial contribution to GDP (Gross Domestic Product)
The Rainbow Nation
Our uncommon demographic profile:
A heterogeneous population base
Social issues (the legacy of apartheid)
Divisions within ethnic groups
HIV/AIDS
Emigration.
Blacks 79.7%
Whites 9.1%
Coloureds 8.8%,
Indian /Asian 2.4%
Emigration:
UK (200k),
Australia(100k),
USA/Canada(150k),
New Zealand (50k).
South African Culture
Awareness of culture or cultural differences ensures:
Professional & ethical service
Compliance with the EAAB Code and the Constitution
Understanding diverse clients
Effective marketing strategies
EAAB Code of Conduct States:
An estate agent:
2.6 shall not deny equal services to any person for reasons of race, creed, sex, or country of national origin;
2.7 shall not discriminate against a prospective purchaser of immovable property on the grounds that such purchaser
will not, or is unlikely to, make use of financial assistance made available by a specific person or financial institution
and which the estate agent offers to arrange on his behalf.
4. Demographic Risks
Figure 4: HIV / AIDS related deaths (left) and infection rate (right) is highest in the world!
Population Diversity
Set apart by gender, race, skin colour, language, physical appearance, religion, sexual orientation, education,
economic standing, age group and way of thinking.
Marketing strategies for diverse groups.
Figure 5: Race diversity - Percentage of total population
Black Coloured
White Indian/ Asian
5. Figure 6: Race diversity - Breakdown of Property Sales by Race
Demographics: Simple Answers
Suburb Demographics report on SAPTG
ClusterPlus Classification:
Known as a geo-demographic segmentation tool.
It reviews the geography (the “where) and the
demographics (the “who” and “what”) of the "birds of a
feather flock together" phenomenon. Housing
density, location, education, occupation and income
levels and are just some of the factors explored and
categorised. Each category is given a catchy name -
such as Fashion Café Society or Pram Pushers - and
a detailed demographic profile of the people you may
expect to find residing there.
CrimePlus uses crime statistics reported by South
African Police stations to help you determine the
expected crime level at suburb level. Our “gun” rating
is a scorecard of anticipated residential crime in the
suburb reported as low, low-medium, medium,
medium-high or high.
MarketPlus, CensusPlus and IncomePlus are all used
to give an indication of the estimated population,
predominant living standard measure (LSM), average
annual household income range and age distribution.
6. Trends and Development:
Development:
Adding, renovating or replacing buildings or improving the use of raw land.
Real-estate Trends:
• A change in the norm.
• A popular route or option, followed by the majority
• A pattern that emerges in the movement towards a certain product, area or price range.
• Trends result from changes in the economy, interest-rates, popular sentiment, politics etc.
Figure 7: Trend in Average Size of Household (shown by race)
More Real Estate Trends:
1970 - 1974 2005 - 2009
Stand Size 1067m2 586m2
Dwelling Size 200m2 160m2
Swimming Pools 44% 17%
Servants Quarters 48% 13%
What are the trends in YOUR area?
Suburb Trends: Simple Answers:
Suburb Trends report from SAPTG.
1, 3 and 5 year growth analysis in terms of median sales price.
Compare up to 3 suburbs at one time.
7. Property Sales:
Figure 8: Knight Frank Global House Price Index, Q4 „09
Rank Country Q4
1 Hong Kong 27.6%
4 Australia 13.6%
7 Switzerland 6.9%
9 New Zealand 6.4%
11 South Africa 5.6%
15 United Kingdom 3.4%
26 Germany -1.7%
28 USA - 3.1%
29 Greece -3.6%
36 Iceland -8.3%
37 Russia -9.1%
46 Dubai, UAE -42.1%
Figure 9: South African Property Sales
Between R300k - R5mil comparing the period January - December 2008 to January - December 2009.
2008 2009 Change
Full Title Total 105 952 69 668 34% ↓
Total Value R101b R70b 30% ↓
Median R700k R750k 7% ↑
Sectional Title Total 61 530 37 617 39% ↓
Total Value R46b R29b 37% ↓
Median R600k R616k 3% ↑
Cash Sales 28% 38% (ST 40%, FT 36%)
Figure 10: Reasons for South Africans Selling Property
Total High Mid Low
Downscaling (Finances) 24% 19% 29% 30%
Downscaling (Life Stage) 17% 19% 16% 12%
Emigration 9% 8% 6% 4%
Upgrading 13% 16% 12% 15%
Change in Family 16% 16% 15% 17%
Safety/Security 11% 11% 10% 9%
8. Urbanisation: IMPACT:
World‟s population: Emerging Nation Economies Climate
1950 (29%) 20% are overcrowded (more than 3 people/bedroom) Health
2000 (47%) 54% have no water in their homes Safety
2025 (60%) 25% lack adequate sanitation Natural Disasters
Economy
Politics
Socio-Economics:
The relationship between economic activity and social life.
Primary focus: The social impact of economic change.
Causes: Results:
New technology (cars, cell phones, internet access) Consumption patterns
Changes in law (right to abortion, RDP housing) Distribution of wealth
Changes of physical environment (urban densification) Behaviour (purchases, time)
Ecological changes (drought, floods or fish stocks) Overall quality of life
Competitive Environment:
WHO: WHAT: HOW:
Name, location and market share. Compare your listings and service Branding and Perception
Sort by Major, Up-Coming, Minor USP's and CPA's
DO:
Simple SWOT analysis
9. Economics 101:
INFLATION
The general increase in the price of goods and services
over time.
GDP (Gross Domestic Product)
The production of new goods and services during a particular period (the current production)
The production, sale and consumption of goods and services :
Non-Durable (food, drink, haircut) days/weeks
Semi-Durable (clothes, stationery) 2-10 years
Durable (appliances, vehicles) 10-20 years
Super-Durable (property) 20-50 years or longer
Figure 11: Differences between Command and Market Economies
Command Economy Market Economy
Supply and price regulated by government. Allocating resources based on market forces,
(e.g. North Korea, China) such as supply and demand.
Government planners decide which goods and Free of government influence, collusion or other
services are produced and how they are distributed. external forces.
Leftist politics here want a Command Economy.
e.g. Nationalization of mines, land expropriation etc.
Supply and Demand (in relation to real estate):
Supply: the number of properties that are for sale
Demand: the number of qualified buyers at any given time
Macro- Micro-
economy economy
Property Prices
Geo-
demographics
10. Scarcity and Choice:
Human wants/needs are unlimited
Available resources are finite or limited (“scarce”)
Immovable property is a product used to meet wants and needs.
Cost of the choice is important
Scarcity affects Choice affects Cost
If demand exists for real-estate in a specific area but no vacant land is available on which to build:
either change the use of an existing building to meet demand
or demolish an existing building to for the erection of a new property
Supply and Demand Scarcity and Choice
Buyer's / Seller's Market
Buyer’s Market: Seller’s Market:
An oversupply of desirable properties in an area. A shortage of desirable properties in an area.
Prices decline. Prices rise.
11. Technological Trends:
Online Selling:
Pictures, 3D tours
Online Enquiries:
Leasing, Buying, Selling
Online Applications:
Mortgage bonds, insurance
SMS Enquiries:
Leasing, Buying, Selling
Client Relationships / Media Changes:
Twitter, FaceBook, Blogging
Access to Data:
Websites: SAPTG
Mobile phone: EVALUATE
12. Common Business Blunders: Simple Answers
Management
Diversification
Human Resources
Management:
Basics:
Blunder: Have office, have stock, will sell
Market research. Sales volumes, Competitors
Price Elasticity of Demand (PED)
Relationships: Conveyancers, originators
Being creative:
Blunder: Cutting training, tools, advertising
Rather assess:
Admin staff/PA‟s
Tea/coffee
Office automation
Franchise fees
Office space and / or location
Accessorizing
Blunder: Advertising- Who’s fooling Who?
Assess print media efficacy
Measure online efficacy
Communicate (newsletters, blogs, social media)
13. Diversification:
Sales
Bond Origination
Rentals
Maintenance/Improvements
Referral business
Business brokerage
Property investment
Variety
Sectional Title:
Residential, Commercial
Full Title:
Residential, Commercial, Industrial
Special (Churches, schools, airports)
Farms:
Small holdings, Large Agricultural
Human Resources:
People Business Hiring agents
Blunder: Blunder:
Agents are cheap Feature dump
Commission only Rather: compelling value proposition
Financial Metrics: Blunder:
Cost per person Broker‟s skill-set lower than best agent
Goals per person Rather: Up-skill. Do both NQF4 & 5
Inexperienced
Experienced
KNOW YOUR BUSINESS GAME : SUMMARY
Management: Research. Relationships. Spend? Cut?
Diversification: Revenue sources. Variety.
Human Resources: Financial Metrics. Value Propositions. Up-Skill.
14. Online Marketing for
Real Estate
The Advanced Use of Online Property Marketing
As presented by
Sonja Steincke
National Accounts Manager: PropertyGenie.co.za
And
Laura Gibbon
Regional Accounts Manager: Gauteng, Limpopo, Mpumalanga, KwaZulu-Natal
15. Introduction
What is Online Marketing?
Simply put, Online Marketing refers to the application of standard marketing principles and techniques via
electronic media and more specifically the Internet.
Online Marketing, Internet Marketing and Online Marketing can be considered synonymous.
Online Marketing is the process of marketing a brand using the Internet. It includes both direct response
marketing and indirect marketing elements and uses a range of technologies to help connect businesses to their
customers.
Aim of Online Marketing:
o Attracting New Business
o Retaining Current Business
o Developing Brand Identity
o Supplying Information
Benefits:
o Reach – no limits to the Internet
o Scope – any business can use this medium
o Interactivity – customers can now respond to market offerings
o Immediacy – potential customers can reach advertiser immediately
o Demographics & targeting – marketer’s dream!
US Buyer Behaviour Research
Initial Action: (Secondary Action)
Researching online (36%) (20%)
Drive through neighborhoods (20%) (18%)
Contact Real Estate Agent (18%) (25%)
Print ads (8%) (11%)
Open Houses (4%) (11%)
Most useful tool
Researching online (42%)
Contact a Real Estate Agent (22%)
Drive through neighborhoods (10%)
Open Houses (6%)
Print ads (5%)
Least useful tool
Print ads (28%)
16. ARE YOU HAPPY?
NO
YES!!
CHANGE
SOMETHING!
DO YOU WANT TO
BE HAPPY
KEEP DOING
WHATEVER YOU’RE YES!! NO
DOING!!
Foundation of RE Online Marketing
80:20 Rule:
20% of the resources produce 80% of the result -
It's vital to understand that the reverse is also true-
things that take up 80% of your time and
resources, will only produce 20% of your results
o Own Website
o Property Portal(s) e.g PropertyGenie
THIS IS THE MINIMUM YOU
SHOULD BE DOING!!
Only consider investing time in additional initiatives once you have established this solid foundation.
17. Building of your Foundation
Social Media / Web 2.0
When people connect, the impact on marketing, advertising is significant
Facebook, founded by Mark Zuckerberg (25) six years ago, now boasts over
350 million subscribers and is available in 70 languages, making it the third-
largest most populous platform in the world. FB's ‘scary' statistics include
1.8 million chat messages a day, 150 million search queries per day, six billion minutes spent online
every day, 1.7 million downloaded per second and 70% of FB active users operating outside the US .
A Video Sharing Website on which users can upload and share video’s.
In November 2006, YouTube, LLC was bought by Google Inc for $1.65 billion.
With its simple interface, YouTube made it possible for anyone with an
Internet connection to post a video that a worldwide audience could watch
within a few minutes. The wide range of topics covered by YouTube has
turned video sharing into one of the most important parts of Internet Culture.
A Free Social Networking & Micro blogging service!
Enables its users to send and read messages known as tweets. Tweets
are text-based posts of up to 140 characters displayed on the author's
profile page and delivered to the author's subscribers who are known as
followers.
SO! YOU SHOULD HAVE a Facebook profile, post on YouTube AND have a blog…………
As long as you’re doing it RIGHT!!!!!
18. To Be Considered
LOCATION, LOCATION, LOCATION
Initial Action: (Secondary Action)
Researching online (36%) (20%)
Drive through neighborhoods (20%) (18%)
Contact Real Estate Agent (18%) (25%)
Print ads (8%) (11%)
Open Houses (4%) (11%)
Most useful tool
Researching online (42%)
Contact a Real Estate Agent (22%)
Drive through neighborhoods (10%)
Open Houses (6%)
Print ads (5%)
Least useful tool
Print ads (28%)
Become The Expert!
Provide Neighbourhood Information
o Write about it!!! Events, Developments, News!!
o Answer Questions
o Respond to Comments
Things people want to hear
o Within Top-Rated School Districts
o Close to Outdoor Recreation & Nature
o Near Entertainment & Shopping
o Economically stable Neighbourhoods
o Near Public Transportation, Health Care & Jobs
Where?
o On your website
o On PropertyGenie
o Establish a Blog
o Upload Videos
o Promote on Facebook etc.
o Always link back to your contact details.
19. Case Study
FACEBOOK
Aida Alberton
o Created a group on Facebook
o Results = 6 weeks later 2 UK
cash buyers
o 3.5 Mill & 4 Mill Value
Properties
ONLINE VIDEO
o Highly Consumed
o Cheap to Produce
o Free to Publish
o Massively Viral
o Currently no Competitors in that space!!!!!!!!
In Summary
Follow the 80:20 Rule
o Maintain your own Website
o Advertise on Property Portals like PropertyGenie
Establish yourself as THE expert in your area
o Neighbourhood information & news
o Allow for and answer questions
o Consider Video
Contact Details
Sonja Steincke
National Accounts Manager
Tel: 032 481 6167 / Cell: 083 949 1049
Email: Sonja@propertygenie.co.za
Laura Gibbon
Regional Accounts Manager: Gauteng, Limpopo, Mpumalanga, KwaZulu-Natal
Tel: 011-557 4036 / Cell: 084 604 6099
Email: laura.gibbon@propertygenie.co.za
20. Complex Finances – Simple Answers.
Helping to Understand your Customers‟
Creditworthiness
presented by Grant Briggs
T: +27(0)31 5765626
F: +27(0)866803675
C: +27(0)824489633
E: grantb@sahomeloans.com
W: www.sahomeloans.com
21. Some things to remember when assessing your clients:
The 7 C’s of Credit
Character
Displays the willingness of the person to pay.
Related to clients‟ honesty and integrity.
Information such as period in current employment, occupation, marital status is
important.
How often does client pay retail accounts, credit cards and other obligations?
ITC is important to scrutinize and understand.
Capacity
Reflects the consumer's ability to repay credit.
Does the consumer have the financial ability and means to repay on due dates?
Consumer's earnings should be high enough.
All obligations of the consumer should be taken into account in determining
repayment ability.
Capital
Denotes the financial strength of the consumer.
It is the net worth of the consumer when assets and liabilities are taken into account.
It is important because a consumers‟ net worth may enable the consumer to continue
paying should a financial crisis occur.
Collateral
This is the security offered by the client.
Is there sufficient security in the property – LTV is important.
Things such as area, type of property, condition of property, etc. are important.
Conditions
Conditions range from economic to political.
Conditions can be macro or micro.
Conditions can impact on a consumers‟ ability to repay debt.
Things such as interest rates and employment prospects can impact negatively.
Credit History
Past management of credit is a very strong indicator of future management of credit.
Poor payment records and judgments are a red light to a credit analyst!!
How many credit enquiries have been made on a consumer over a period of time?
Common Sense
The intuition that is not always backed up by tangible evidence.
An opinion may be formed (positive or negative) whether a default will occur
dependant on the credit providers experience and observation of a customer.
Credit is not an exact science.
22. Self Employed Clients
Improve your success rate at getting these clients approved for bond finance.
It is an irrefutable fact that home loan providers will be more cautious with self
employed clients and require more information to make an informed decision. It is also
unfortunately an irrefutable fact that self employed clients have a higher propensity to
default on credit agreements and are therefore more likely to be declined by the credit
provider.
Therefore, ensure that you are asking the right questions
• What legal entity do you operate your business in?
• Do you have audited financials?
• Can you supply at least 6 months business bank statements which show
business turnover in the account?
• Do you have personal bank statements reflecting income?
• Are you able to supply a copy of your latest tax assessment?
• What qualifications does the client have?
• How long has your business been in operation?
• Are there any partners in the business?
• Cash that the client claims to receive cannot be used as income; all income must
be verifiable.
• Turnover is vanity, profit is sanity!!
Remember:
• Manage your client's expectations.
• Supply as much information as possible.
• Never withhold any information which may be material to the application.
• Do not be scared to ask for information upfront, it alleviates delays and frustrations
later on.
23. Simple answers to Legal Issues
"Voetstoots"
- Does silence constitute fraud?
Content prepared and presented by Dykes van Heerden Inc.
At some venues where DvH were not able to present - this
section was presented by local recommended attorneys.
We would like thank the following for their contribution:
Angus Warren from Bate, Chubb & Dickson in East London
Liesel Greyvenstein from Greyvenstein's in Port Elizabeth
24. VOETSTOOTS CLAUSE?
“As is” / “As it stands”
PURPOSE: to protect the SELLER from any action by the Buyer, on discovering
any defects he was not aware of when purchasing the property, from doing
anything to jeopardize the actual sale contract.
PATENT: Detectable by reasonable inspection
LATENT: NOT detectable by reasonable inspection
Important:
Defect can be TANGIBLE, e.g. crack in wall, hole in the roof
or INTANGIBLE, e.g. bad tenant or soon to be raised special levy.
DUTIES:
PURCHASER
- to conduct a reasonable inspection BEFORE signing the OTP.
SELLER & AGENT
- to disclose any latent defects that they are aware of.
LIABILITY:
If the SELLER & AGENT were aware of a latent defect in the property and
failed to disclose it to the purchaser before signature of the OTP, then the
SELLER is liable.
Failure to disclose is like scoring an own goal!
PRACTICAL PROBLEM:
Factual disputes are difficult, costly and time-consuming
to litigate AND will delay the transfer process.
SOLUTION:
“Prevention is better than cure”
25. When taking the mandate, advise the SELLER to disclose ALL defects, and
disclose same in the OTP.
IMPORTANT CASES:
VAN DER MERWE vs MEADS 1991 (A)
Sets the benchmark for the Voetstoots clause:
The SELLER is deprived of protection by the clause where:
The Seller was aware of a defect; and
Intentionally conceals the existence of the defect with the intention to
defraud the Purchaser.
WALLER vs PIENAAR 2004 (C)
PURCHASER must be able to prove:
Defects were latent
Seller were aware at time of sale
Seller had a duty to disclose the defects
Seller fraudulently concealed existence of defects to conclude the
contract OR fraudulently misrepresented that there were no defects.
ODENDAAL vs FERRARIS 2008 (SCA)
Building Plans i.r.o car port were not approved
The Court held that:
Purchaser should check the physical AND LEGAL aspects of buildings on
the Property
Either employ a professional to thoroughly inspect buildings or have
the Seller guarantee building’s legal status
26. KNOW YOUR GAME:
The NQF4 and NQF5 Qualification for Real Estate
Presented by
27. The EAAB is on an exciting route and introduced new operating standards for Estate Agents to
professionalise the industry. The EAAB, along with the Services SETA, implemented the minimum
requirements of Qualifications for Estate Agents.
The Estate Agency Affairs Act, passed on 15 July 2008:
FETC: Real Estate, mandatory for Estate agents (NQF4 =150 credits)
National Certificate: Real Estate for Principals (NQF5=135 credits)
The “effective date” was set as 15 July 2008 and made law. It is a formal “cut off” date.
Before the DATE: RPL possible
After the DATE: 12 month internship + formal training by accredited training and assessment provider.
All existing agents have until December 2011 to obtain NQF4 or NQF5:
Full Training – 12 months OR
Assessment/RPL – 3 to 6 months
The Qualifications must be maintained - CPD
Compulsory Legislation – effective 15 July 2008
So how does it work?
NQF 4 = Matric Certificate NQF 5 = National Certificate
32 Unit Standards 28 Unit Standards
30% - theoretical (class room) 30% - theoretical (class room)
70% - practical assessment 70% - practical assessment
Learner builds own Portfolio of Evidence
Work is assessed & moderated for credits
Learner must be found competent, no specific % for a “pass-rate”
DITASA offers:
Accredited Learning Programmes
Campuses Countrywide
Learning Methodology
Practical approach (Learner involvement)
Integration with Business
Recognition of Prior Learning (RPL) & Assessment
Other Services: Learnerships
Internships
Other sectors (not just Real Estate)
Costs:
NQF 4 : Full training - R9000 ex. VAT ; RPL - R5400 ex. VAT
NQF 5 : Full training - R11000 ex. VAT ; RPL - R5960 ex. VAT
Payment options are available as well as specials for a limited time only!
Find your local campus at http://www.DITASA.co.za/campusses/contact
28. Certificate of Attendance
awarded to
The KNOW YOUR GAME content is based on the unit outcomes of SAQA 59097 unit standard
246735 entitled: demonstrate an understanding of the real estate environment.
This is the first of a 2 part seminar and covered:
Specific Outcome 1: the demographic environment affecting real estate, and
Specific Outcome 2: the economic environment effecting real estate.
Dieter Deppisch
Head: Property Data Research and Training SAPTG
Know Your Game: Part 1 - 2010