It is estimated that around a third or more of South African homeowners are under financial stress and unable to maintain monthly bond repayments.
It is estimated that around a third or more of South African homeowners are under financial stress and unable to maintain monthly bond repayments.
Stuart Manning, Seeff chief executive officer says this is an ever-increasing stress for homeowners.
Manning explains that this is not a unique situation to South Africa, it is a global phenomenon rooted in the prolonged global financial crisis.
The most important consideration for such owners is to be informed about what their options are and to take decisive steps to minimise the risk of added financial stress and burden.
“It is also not unique to lower and middle class earners, it affects home owners across the income groups.”
While the distressed market imploded in the big USA and European markets, South African banks were particularly responsive to the potential fallout by developing rescue programmes and working with real estate agents says Manning.
These rescue packages aim to assist homeowners in a responsible manner by selling their homes quickly.
Some programmes provide discounts on loan amounts with the potential of restoring the financial standing of affected owners, he says.
Manning advises that there are options for owners to pre-empt distress.
Finding yourself in a position where you can no longer afford to pay your home loan or where you are unable to catch up on arrears does not need to lead to added financial stress, he says.
There is a window of opportunity in the lead up to foreclosure by the bank where real estate agents can assist the homeowner on a confidential basis to transact responsibly.
The agent can act as a facilitator and negotiate with the bank to assist in bringing about a pro-active solution rather than prolonging the financial crisis which accumulates with each week or month that a property remains in distress.
Understanding the current market dynamics and working with the estate agent to ensure the property is priced to sell is critical, he says.
There is a window of opportunity in the lead up to foreclosure by the bank where real estate agents can assist the homeowner on a confidential basis to transact responsibly.
Properties are taking between four and six months to sell and obviously much longer if they are not priced in line with what buyers are prepared to pay.
“It is important for owners to appreciate that homes are now selling on average at 20 to 30 percent below their values of five years ago.”
By taking decisive action, a homeowner can minimise the potential added financial risk.
He adds that the most immediate step is to consult an estate agent who works closely with banks, is skilled in dealing with distressed properties and has a thorough insight into the local property market to assist in transacting responsibly.
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