First time home buyers

The first time home buyers in South Africa are a market in which all real estate agents need to concentrate on immensely. They are the people who will do most of the business (buying property) in the future. The average age of first time home buyers are between 30 and 35 years old. The average property owner owns a home +- 7 years before they sell and move on. This makes the time these clients have in front of them to do more property related transactions much more than other potential buyers. This give the agents assisting a first time home buyer a client for many years, should their home buying experience be a pleasant one. If you do the sum, you could possibly have a client buying from you at least 5 times again and this does not include any possible investment properties. This is only the statistic for main residence.

First time home buyers are the ones who are more excited about the future. They are the ones who do their home work thoroughly and will know a lot before making contact with estate agents. These days buyers in general know much more about the home buying process and everything that goes with it, because of tools like the Internet, mobi-sites and general knowledge about the property industry. They are also the ones who have seen the property boom in the early 2000's and also the property crash there after. They have gained valuable experience in seeing what can happen, hence making sure they do their home work properly before buying.

Information for us originators are very important and should you be interested in buying a property for the very first time, it is advisable to make contact with a mortgage origination consultant. The basic supporting documentation that we will need in order to process your bond application is the following:

For salaried individuals - Copy of your ID, copy of the signed and accepted offer to purchase, proof of income (latest 3 months salary slips), if commission is earned your latest 6 months salary slips and your latest 3 months non-Internet bank statements (latest 6 months for commission earners).

For self employed individuals - CC's or PTY Ltd's - Copy of your ID, copy of the signed and accepted offer to purchase, confirmation of income/drawings from accountant/auditor, signed audited business financial statements for the past 2 years, latest 12 months personal and business non-Internet bank statements and your signed statement of assets and liabilities.

I would like to share some interesting statistics regarding the first time home buyers in South Africa. These are information I gathered from the recent FNB Property Barometer for first time buyers, by John Loos:

• First time buyers remain strong at an estimation of 27% of total buyers for the 4th Quarter of 2014, slightly higher than the previous quarter of 26%, and means as a whole it reached 26.5% for 2014, well higher than the 22.5% estimated for 2013.
• This elevated 2014 percentage would suggest that first time buyers are not overly concerned with a slight deterioration in residential affordability in 2014.
• The average estimated house price purchased by 1st time buyers inflated by 7.5%, above the overall average and significantly higher than the 5.2% inflation rate in 2013.
• The first time buyers are a confident group, and see the current time as "the time to buy".

In the Western Cape:

THE BIG IMPLICATION OF STRONG HOUSE PRICE INFLATION? A POSSIBLE 1ST TIME BUYER AFFORDABILITY CHALLENGE

The Western Cape’s big residential stock constraints and strong house price growth may be taking their toll on aspirant 1st time buyers with their affordability constraints.

The FNB Estate Agent Survey estimated that, in the 4th quarter of 2014 only 12% of buyers were 1st time buyers. This represents a noticeable decline from a high of 27% back in early 2012.

In addition, the declining trend of the past few years stands in stark contrast to the national average trend in the 1st time buyer percentage, which measured 27% by the end of last year, and had been rising.

The Western Cape percentage being far lower than the national average may hint at a now more noticeably less affordable market than is the case in Gauteng, whose 1st time buyer percentage reached a massive 34.5% by the end of 2014, after having out-inflated the Gauteng property market recently.

This apparently mounting 1st time buyer affordability challenge can affect the Western Cape’s ability to retain young skills in the province in future, although the province does seem to compensate for this by attracting older more established repeat buyers from other regions.


My view on first time home buyers climbing onto the property ladder:

It is a great time for first time home buyers to get onto the property ladder as interest rates are still very low. House price growth will improve in 2015 off the back of expected stronger local and international economic growth and the expected drop in inflation driven by the fall in fuel and food price makes disposable income more for interested buyers, making their affordability better.

I am BA Frank and the owner of a Bond Gallery franchise in the Western Cape. You can contact me on +2784 312 6797 or on e-mail at ba@bondgallery.co.za. Please feel free to make contact should you have any queries or need any assistance regarding the home buying process.

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Bond origination / Mortgage origination / Home loans

Bond origination or mortgage origination or broking (as it is called in many other countries) is a relatively new industry in South Africa. Bond origination really only started to become popular in the early 2000's and really came to it's own during the property boom. During this +- 15 years it has become a major part in the every day lives of estate agents country wide. Bond origination is beneficial to the client (property buyer), the estate agents and the banks.

What is the benefit for the client (property buyer) to work with a bond origination consultant?

The property buying process is a very emotional time for a client to go through. Even more so should the client be a first time home buyer. Many of the terms used between estate agents, attorneys, bond originators and the banks will be very confusing to the client. The hassle to go to each and every bank separately, sitting and waiting in the queues, completing a home loan application form of each bank, compiling all the supporting documentation each bank needs and making sure that the home loan application gets submitted can be a very stressful and time consuming process. Not to even mention all the phone calls, e-mails and waiting to go through in order to get the correct feedback. By working with a bond origination consultant the client will benefit in the following manner:

• Bond origination services are FREE OF CHARGE! We have contracts with the major financial institutions and receive a service fee from the chosen financial institution where the bond has been granted and accepted by the client. We only receive this fee on registration of the bond.
• We hold the client's hand throughout this daunting process, from starting with the bond application until the bond has been registered in the client's name.
• The client completes one application form and collate one set of supporting documentation for the bond origination consultant. The bond origination consultant submits the application electronically to all major financial institutions simultaneously.
• The client will receive regular feedback during the whole process directly from the bond origination consultant.
• The client has one contact to follow up on all applications submitted.
• The client will end up with the most cost effective home loan, at the best possible rate, in the fastest possible time.
• By using a bond origination consultant the success ratio of the application is much higher than going to only your own bank directly.
• Bond origination services save the clients time and money.

What is the benefit to the estate agent to use a bond origination consultant?

At the estate agent is where all the action starts. The estate agent is the main contributor in the whole property value chain, as everyone feeds from them. Each estate agent has their own business partners they use in order to do a transaction and ultimately finalising the sale. The bond originator plays a major role in this value chain and in the lives of estate agents.

• The majority of the bond origination companies have experienced, bank trained, home loan consultants who are able to assist the estate agent in doing more successful sales.
• The estate agent have more control over the home buying process. Feedback during the home loan process is critical for any estate agent. The bond origination consultant will give daily feedback to the estate agent during the bond application process.
• Bond origination consultants are able to do pre-qualifications to make sure that a potential buyer can afford the property he is interested in. It is highly recommended to use a bond origination consultant from the start of the process, once the client is introduced to the estate agent, to make sure that the estate agent does not show properties to clients, which they can't afford.
• The success ratio of an application is much higher using a bond origination consultant.
• Bond originators give the clients more choices. They will present the quotations from the financial institutions to the client to choose the best option.
• And again, the service is free of charge.

What is the benefit to the banks to work with bond originators?

All the banks and financial institutions play a major part in the life of a bond originator. Bond origination companies have contracts with the banks and introduce clients to them in order to have a chance to give the client the home loan they need. Bond originators have access to regional and national management at the banks to discuss possible applications, should there be any challenges. Banks and originators are big business partners and play a critical role in the property industry value chain.

• It is a great channel through which the banks can access new home loan clients onto their books.
• Bond origination plays a valuable part in the property industry by adding value to the bank and the client.
• The knowledge and expertise of a bond origination consultant has become invaluable to the banks.
• The banks are able to process the applications seamlessly as the bond originators establish the client's needs in terms of products available by the specific bank and compiles the relevant application on behalf of the client.
• All of the above leads to greater efficiency and cost saving for everyone.

Bond origination is a valuable part of the home buying and home owning process. The whole value chain, every industry involved in it, benefits from it.

I am BA Frank and the owner of a Bond Gallery franchise in the Western Cape. You can contact me on +2784 312 6797 or on e-mail at ba@bondgallery.co.za. Please feel free to make contact should you have any queries or need any assistance regarding the home buying process.