# Regulatory Compliance Category > Consumer Protection Act Forum >  Property evaluation...

## tec0

Upon looking at properties ages between 35 and 40 years old something unexpected turned up. All the evaluations was more than 3 times then what the houses where worth about 5 years ago some longer 

Then it hit me, the higher the evaluation the more money the bank stands to make, the higher the transaction commission AND because of the evaluation the property tax shoots up phenomenally.

The one property actually shot up *8 times* its original asking price! And it is also a very old property!  :Confused:  The aria went from bad to worse and the house is a scrapper...  :Confused: 

Considering the life-span of brick wood along with the electrical and plumbing how old can a house get before it becomes a condemned property? Are these factors considered upon evaluation of the property?  

Also can South Africans with normal earnings afford property? The truth is the answer is for the most part no. They simply cant 

*So the big question is; who do you complain too?*

It appears that there are no laws governing the sale of property at all.

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## HopeOnline

Good question. I so badly want to invest in property but with my salary I doubt its possible.

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tec0 (04-Aug-12)

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## tec0

> Good question. I so badly want to invest in property but with my salary I doubt its possible.


I just want the roof over my head to be mine renting is a dead loss when it comes to “investments” 

But I really don’t think we are alone, there are thousands of us that have jobs but we will never be able to afford a property of our own.

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## RvanEck

The stand size often determine the value of your older properties, where the structure has a negative value, but due the demand for development space, the value of the property may have increased, as explained in the comment. I believe that this is the only reason why this can happen. Supply and demand determine the value of property - it should not be governed by law.

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tec0 (06-Aug-12)

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## AndyD

The valuation a bank or an estate agent gives a property should be based on what similar properties in the same area have sold for so it's based on the market and not usually their wishful thinking. There are certain things that may manipulate prices artificially over the short term but in the longer term this is unlikely so there's nothing really to legislate.

At the moment there are quite a few bargain properties around so if you're looking at houses that have gone up radically in value over the last couple of years you're probably looking in the wrong area or maybe not looking as hard as you should be.




> *So the big question is; who do you complain too?*


You can complain to anyone who will listen.

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tec0 (06-Aug-12)

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## tec0

> You can complain to anyone who will listen.


Firstly Ouch!!!

Secondly lets extend the question a bit. Lets take for example a person working for company P and company P provides housing that you can buy. Now years past and finally after saving up the money needed company P Pushes up the houses price 10 fold! It is not really fair now is it...? 

Thirdly I think housing must become subject to rules and regulation to allow for a negative in the market. I say this because we effectively lost our right to own property *and that is in direct violation when it comes to our rights*. 

Fact is if no one can afford property anymore and the market appears to be artificial then this can become an indefinite problem for all South Africans.

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## AndyD

Maybe I'm missing something or not understanding where you heading. It's never been a right of all citizens to be financially able own property same as it's never been a right of people to be financially able to own a car so what are the rights that have been violated?

Your example of a company providing housing as part of employee renumeration is a labour contract. Maybe in the past the company allowed its long serving employees preferential purchase terms but more recently has found themselves in a financial position that means they can no longer do this. If the preferential purchase terms were written into the employment contract this would be a labour law issue, if it was at their discression they they would be able to review the policy. 

I'm not sure what you're suggesting, do you want the government to legislate the prices of housing on the market? What rights and whose rights are being violated under the present system?

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Blurock (05-Aug-12), tec0 (06-Aug-12)

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## wynn

I believe you can't be a snob when it comes to climbing on the property ladder, you can't expect to get champagne with beer money.

You have to be prepared to buy beer with beer money, there are houses on the fringes of all towns that are very cheap and in need of renovation, even town houses or flats.
All most of these need is a bit of modernising, say bathrooms, kitchen, carpets, floor tiles, light fittings and a good paint job, even offer them partly furnished with curtains, beds, lounge suite, TV, fridge, oven/hob.
Often a buyer will be swayed by the extras that can be bought using their housing subsidy

This is where you start, even if you don't live in the house, although living in it cuts your expenses considerably, buy it, renovate it, move on up, even if it takes you a year per property.

After five properties you will probably be where you want to be.

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tec0 (06-Aug-12)

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## Blurock

> Upon looking at properties ages between 35 and 40 years old something unexpected turned up. All the evaluations was more than 3 times then what the houses where worth about 5 years ago some longer


A property bought in 1990 in my suburb for R160k is now worth about R1.6million. That is 10 x the original price and in line with property prices in the area. As far as I know, there were no banks or agents or government involved in determining this price. The price is determined by the amount a willing buyer is prepared to pay a willing seller.

You may find that a house that was sold for R30k to R40k in the 70's will now sell for well over R1million. That is because of inflation and its effect on building costs and labour. A buyer will compare the cost of building a new house to buying an existing property. Because of the demand for housing, people are prepared to pay more for older properties which was mostly built with better materials than what is currently used.

In a communist state, the government will provide you with (substandard) housing. They will decide where you will stay and where you will work. I am sure that, as a free spirit, this is not what you want.

So how do you get into the property market? Start small. Buy an older and smaller property and move on to a bigger one when you can afford it. There are people who are very handy in property renovation. They would buy a run down property with potential, renovate it and sell it at a profit. The profit is then invested in a better property and so you move up the ladder as the process is repeated.

There are 3 things to remember when buying property; position, position, position. If you buy a run down property in a good area, your chances of getting a good return on your investment is so much better than if you buy a top property in a bad area. :Wink:

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DeonT (10-Nov-12), tec0 (05-Aug-12)

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## tec0

Right I never thought that the response would be so negative. Let’s take the beer example. Now you walk into every shop and they charge the same price for 1 can of beer then what they do for a  bottle champagne? Right now that is what is happening to property in general. It doesn’t matter if the property is in poor condition or new, they cost the same.   

What I would like to see is a market negative that will devaluate property that is older than 40 years. Secondly I would like to see a evaluation criteria that must factor in “zoning” “development” and building limitations. 

Now as for your right to own property, I would like to remind you that property is hooked on inflation, property tax and municipal services. All of these things are a perpetual negative thus making a 30 year loan almost impossible to pay back. Consider the cost increase of power and then factor in the growing property tax “thanks to property over estimation” an individual may actually lose the property in question because of these erratic increases.

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## Blurock

@ tec0, suppose you owned a 40 year old property which you wanted to sell because you have to relocate to another town. Would you lower the price below the market value just because it is an old property, or would you sell it at market value so that you can afford to buy another house? :Confused:

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tec0 (05-Aug-12)

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## tec0

> @ tec0, suppose you owned a 40 year old property which you wanted to sell because you have to relocate to another town. Would you lower the price below the market value just because it is an old property, or would you sell it at market value so that you can afford to buy another house?


I understand your reasoning and yes everyone is out to make a profit. The thing is I cannot expect to sell my home if I neglected it and did little to no maintenance on it. So as a good home owner I would make sure the property is worth the money.

And this is my case and point, some properties are in horrific condition and yet they still manage to cost the same as a new property? Or even double the price. How would you feel if you buy my property only to discover that behind the fresh paint are crumbling walls? 

Fact is I also wouldn’t know if the walls are crumbling because I only saw the old paint on it. Thus the need for proper regulations that must be enforceable by law.  The reality of the situation is people pay too much for neglected properties because the asking price is not regulated by a system. 

With a system one can identify problems that will devalue the property thus allowing the buyer the chance to finance the maintenance if needed. Secondly it will force the home owner to up the quality of her/his building thus earning the asking price. I don’t feel it is unreasonable to identify problems like weakening walls, electrical and plumbing problems as well as a collapsing roof and deduct value accordingly.

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## Justloadit

You can not solve all problems with legislation. In fact I already think there is too much legislation.

Simply, if you feel the property is too high in value, then either make an offer you think is right, or move on.You will be surprised how often they accept your offer. It's about negotiating the right price.

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Blurock (06-Aug-12), tec0 (06-Aug-12)

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## tec0

> You can not solve all problems with legislation. In fact I already think there is too much legislation.
> 
> Simply, if you feel the property is too high in value, then either make an offer you think is right, or move on.You will be surprised how often they accept your offer. It's about negotiating the right price.


I disagree; Fact is you don’t know what quality of brick was used, how long it will last and then there is a question about your electrics and plumbing alongside the structure and condition of the roof. All of these things will cost a lot of money to repair. 

With legislation they can enforce quality control and alongside it an evaluation system. If the home is in good condition you get your money's worth if not you can fix it or sell for less. I don’t think this is unreasonable. 

Unreasonable is not being able to afford or lose it by defaulting on the loan because of over evaluation and hidden costs.

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## adrianh

Buying and selling property is no different from buying and selling cars. A bank won't lend you R700K to buy a Golf I. The bank values the property to ensure that if you were to default of the loan that they will be able to recover the loan by reselling the property (ok, in theory)


The problem is not the value of the property per se, the problem is the replacement cost of the loan.

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tec0 (06-Aug-12)

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## AndyD

If a house is in poor condition it will be valued lower than a similar one in the same area that's in good condition.

When you buy a house you can get an engineers report, electrical report, bug report, plumbing report etc to highlight any quality of safety problems and avoid any nasty surprises.

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tec0 (06-Aug-12)

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## tec0

> If a house is in poor condition it will be valued lower than a similar one in the same area that's in good condition.


That is what is suppose to happen sadly I have proof that sellers will ask the same money for a bad house in the same aria as the good house. I know of a property that is not worth more than R150k and yet the asking price is equal and in some cases more than the other properties in the same aria. 

Now I know the history of the house and  you will basically only buy the property in the end. The structure is toast. 




> When you buy a house you can get an engineers report, electrical report, bug report, plumbing report etc to highlight any quality of safety problems and avoid any nasty surprises.


Now I feel we are in the same ball park. I feel that the inspections must be done by the seller not the buyer and that the fixing costs must be considered when an evaluation is past. Sadly this doesn’t happen, and that is why we need an enforceable system. Basically it will protect both the buyer and seller.

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## tec0

> Buying and selling property is no different from buying and selling cars. A bank won't lend you R700K to buy a Golf I. The bank values the property to ensure that if you were to default of the loan that they will be able to recover the loan by reselling the property (ok, in theory)
> 
> The problem is not the value of the property per se, the problem is the replacement cost of the loan.


The truth is if you have to pay the true value of a property and not the thumb-suck value the chances are that the property may become cheaper and you may even be able to improve on it since you paid less for it. However because houses are over evaluated you end up needing to take a bigger loan. 

So basically the evaluation system will protect you against over spending on a bad property. I don't think that is a bad thing...

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## Just Gone

> You can not solve all problems with legislation. In fact I already think there is too much legislation.
> 
> Simply, if you feel the property is too high in value, then either make an offer you think is right, or move on.You will be surprised how often they accept your offer. It's about negotiating the right price.


I agree with Justloadit above - if I want to buy a house, get it checked out by the relevant professional - I then adapt the house / rebuild portions to suit me, then it is my choice - I dont need any "regulation" to tell me that a brick is old.  In fact I would prefer to buy an older house - they built them better in those days.  

Go to Australia or the UK and see what a legislated nanny state is like ........... I do not want to live like that !

Valuations depend on the area, the demand, the condition of the house, the municipal value and input from the estate agent ! I dont think this govenment has the time to "legislate" the condition of houses - I think we are big enough to handle that ourselves ....... and if you are not then you must get a professional to help you.

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Blurock (06-Aug-12), Chrisjan B (06-Aug-12), CLIVE-TRIANGLE (07-Aug-12), Dave A (06-Aug-12)

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## tec0

> I agree with Justloadit above - if I want to buy a house, get it checked out by the relevant professional - I then adapt the house / rebuild portions to suit me, then it is my choice - I dont need any "regulation" to tell me that a brick is old.  In fact I would prefer to buy an older house - they built them better in those days.


I also agree with this, you must do an inspection in order to know what you are getting yourself into but in the end regardless of the inspections the prices remain very high for very poor quality properties. herein is my concern, the inspection get's "downplayed". Yes you can walk away from the property but this seems to become the statuesque.  





> Go to Australia or the UK and see what a legislated nanny state is like ........... I do not want to live like that !


An old property cost less in those countries as shown on the house and home chancel.




> Valuations depend on the area, the demand, the *condition of the house*, *the municipal value* and *input from the estate agent* ! I dont think this govenment has the time to "legislate" the condition of houses - I think we are big enough to handle that ourselves ....... and if you are not then you must get a professional to help you.


Sadly you have no room for negotiations anymore. Fact is the more money they can make of you the better of they will be so they have no reason to open any channel of negotiations. With legislation those channels remain open.

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## Just Gone

> An old property cost less in those countries as shown on the house and home chancel.


REALLY ........... ........... a simple little semi detached house in the UK will easily set you back .... 50 000 pounds plus ....... multiply that by 11 and do the maths !!!  Take into account the size of the property as well ............. it is def not "less"

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## Blurock

To build a new house costs more than buying an existing, established property. Consider the time, effort and cost to establish a garden and all the hidden costs related to building a new house and you can understand why people are willing to pay more for an older house.

If the house is run down and in a state of disrepair, it will not sell at a ridiculous price. There are always alternatives on the market, so walk away and look for something else, or sit and wait until the seller reduces his price.

Regarding protection for the buyer; it is up to you to see that you trust the people who issue certificates for wiring, borer etc. The bank or bond financier will also do their inspection, but do not rely on them to protect your rights as buyer.   :Smile:

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tec0 (06-Aug-12)

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## AndyD

Tec0, I think from what you're saying it sounds like you're confusing asking price with the actual value. There's lots of people around who'll take a chance with an over inflated asking price.

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## Dave A

Sellers can ask whatever price they like. The value is determined at the price point where the sale is made.

I'll concede there is some "institutionalised" influence as to where that price point should be, but it's pretty negligible and unsustainable compared to the natural forces of common sense and of supply and demand.

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## Blurock

The employer or the state can never be held responsible for providing housing. In a fluid and free labour market where people can choose where and for whom they want to work, you can never pin people down to just one address for ever. 

I have met a couple from an ex communist country who had to wait 9 years for a one bedroom flat in a crummy suburb. They are both doctors and decided to flee to South Africa when they had the opportunity.

In Italy it is common for boys to stay with their parents until well in their 30's, before they move out on their own. Obviously mama's cooking will have a lot to do with that decision. In many cultures it is customary for the family to stay together in the same house. However, changing economic cycles and markets have forced job seekers to relocate to where there are better work prospects. Migrant labour has also had it effects and appears to be an issue in countries such as China and Mexico.

Some people are fortunate to inherit property from their parents, others have to save up for their own.  Some of us are rich, some of us are poor. This is as a result of our own choices in life and how the dice has fallen for us. Unfortunately that does not entitle us to free housing. 

Once you own a house, the government will do its best to tax you out of the house. To own a place of your own is not a right, but a privilege. As the saying goes, "my house is my castle". :Cowboy:

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