Bond originators and Saving

Bond originators are saving clients and estate agents days of unproductive work

The reluctance felt by a small proportion of the South African home buying public to use bond originators is without justification, says Lanice Steward, MD of Anne Porter Knight Frank, the Cape based estate agency.

“Bond originators,” says Steward, “have played an important role in making the purchase of property in South Africa a great deal easier.

“No longer does the agent desperately have to try and make contact with two, three or more banks on behalf of the buyer: he can leave that to the bond originator in the knowledge that this person will come up with competitive quotes. This saves the agent, and in many cases the buyer, literally days of work.”

With fewer agents in the field these days and with the residential property sector picking up, this time saving, says Steward, can be crucial.

“If one accepts that even 15 minutes spent each day working on unproductive activities amounts to nine days lost over a year, the importance of being able to have time for other activities becomes very obvious. An almost incredible amount of time was previously spent trying to facilitate the gaining of bonds and we are all relieved that this is no longer the case.”

Agents endeavouring to help in the securing of bonds, says Steward, previously often found that this was the most frustrating aspect of their work.

“We estimate that 30% of the bank consultants with whom we dealt were simply not up to the job - and another 20% were extremely slow moving. Repeated telephone calls would not be returned, details would go missing and promises would not be kept. It was quite possible for a client and an agent to spend 20 or more hours hunting down bonds.”

Bond originators, says Steward, by contrast offer a one-stop service and get quick answers because they have formed invaluable working relationships with selected bank personnel.

“The originators’ input has been particularly useful in the current market where the global financial crisis has made the accessing of bonds infinitely more difficult than previously. A recent PropStats press release has shown that only 50% of buyers at the Cape were able to get bonds - all the rest have been paying in cash.

“Take the case of a young couple or a single person looking for a home at, say, entry level price requiring a bond of ± R300,000. With today’s credit rulings they would have to find a R30,000 deposit as well as a further R6,273 in fees (properties under R500,000 pay no transfer tax). This would amount to a total of nearly R40,000, a very large sum for someone in this wage bracket.”

The bond originators’ inside knowledge of the how the whole process works, adds Steward, enables them also to give the client sound advice and to ensure that their applications comply with the National Credit Act rulings for a person in their earnings category. What is more, says Steward, in her experience the bond originators can usually get larger bonds than agents and clients working on their own.

The banks, for their part, says Steward, should acknowledge that, although they have to pay their bond originators a commission, the work done by the bond originators saves thousands of rands in employing and training their own bank consultants.

“All in all,” says Steward, “bond originators are a major force in the residential property revival and in ensuring that clients get competitively priced bonds, which was certainly not universally the case before.”

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