Purchasing a property is one of the most significant financial decisions that anyone can make. Over the past eighteen months, first-time and seasoned investors have flooded the local residential property market in response to record low interest rates which has produced a favourable buyers and sellers’ market.
While every property buyer expects transparency and confirmation that all key legal, technical, and financial aspects of a property are in order, this is often taken for granted even though the deed of sale is usually quite clear that the property is sold as is i.e., ‘voetstoots’.
This process typically falls under ‘due diligence’ – a catch phrase in the property industry that affords all buyers the opportunity to investigate the condition and viability of a property to fully understand the risks, responsibilities, and the costs involved before signing on the dotted line.
However, due diligence is often tricky – “how long is a piece of string?”- and while most sellers tick the ‘due diligence’ box in the form of standard disclosure information, as well as ensuring the relevant compliance certifications are facilitated, many are still largely unaware of the importance of a thorough due diligence and how, if poorly executed or incomplete, this could cause serious and often costly complications further on down the line.
The outcome of a due diligence process largely depends on the level of cooperation between the buyer, seller, and estate agent, and a more thorough, comprehensive due diligence could speak to a greater chance of a successful sale for all parties involved.
Simply put, due diligence boils down to knowing exactly what information to look for and what information to provide.
The recently launched PropDD Residential Toolkit™ serves as the essential online due diligence resource. Catering to residential buyers, sellers, and estate agents, PropDD’s clear, concise, and easy-to-use interface offers a flexible step-by-step online toolkit that untangles this often-complex process.
Through a four-stage process, users can capture information and upload necessary due diligence documents via a secure toolkit vault which then generates and downloads a customizable and professionally compiled due diligence report.
“The PropDD Residential Toolkit™ is a repository for key information and documents that will bring into question any areas of a due diligence that are lacking, identifying areas that require additional input or investigation” commentsSean Godoy, co-founder of PropDD.
The toolkit also takes the pressure off completing a due diligence by allowing users, such as a seller, to securely share the information with third parties, such as the buyer or estate agent, via an email and a one-time pin (OTP) process. These parties will effectively be able to access the information during any stage of a due diligence process, increasing transparency and allowing for collaboration.
“PropDD will help all property buyers and sellers properly understand a due diligence process” says Justin Leve, co-founder of PropDD. “When we started, we had a very long string to begin with, but our objective was to ensure that the due diligence process was not complicated and overwhelming, particularly for first-time home buyers and sellers”.
The toolkit boasts numerous key features and functionalities that include supporting resources that add extra value to its users such the provision of a sales agreement for freehold and sectional title properties, an inspection checklist that allows for issues to be flagged and cashflow calculators for various purchasing strategies.
In partnership with ooba Home Loans, the PropDD platform pulls key information from ooba’s API platform, such as up-to-date interest rate changes, transfer costs and estimated bond repayments, which feed into the cash flow calculators. These calculators assist users that are buying-to-own, buying-to-let or buying-to-flip to calculate their different costs, as well as income and returns (where applicable).
“ooba’s purpose is to empower people to own their own homes” comments Dominique dHotman, Chief Strategy Officer at the ooba Group. “Home ownership and housing is a big problem in South Africa, and we believe it is important to incubate, invest in, and partner with innovative FinTech and PropTech like PropDD to transform the industry and to encourage home ownership”.
“PropDD’s services are not only for buyers looking to purchase property to reside in. It offers solutions to all classes of investors and the quality of thinking that has gone into the toolkit will assist people to make better investment decisions, particularly in our space where close on 50% of home loans are granted to first-time home buyers who are not familiar with a due diligence process. PropDD has identified a previously unaddressed need and innovatively solve this problem in the market”.
Information is king and the PropDD Residential Toolkit™ also assists valuers, estate agents and other stakeholders to boost their professionalism by offering the option of sharing their purchased toolkit credits with colleagues or clients.
Nina Vass is a Professional Valuer for Cape Town based Steer & Co who has used the PropDD Residential Toolkit™ in performing some of her market valuations for residential properties.
“A due diligence is just as necessary as a business plan, and I like that the toolkit was developed by property professionals who have covered all relevant areas of a due diligence process” she says.
“The PropDD Residential Toolkit™ is the smart and easy way to collate vital information. Although it is aimed at the residential market, it also speaks to lower-level commercial property investors who may be looking to invest in a sectional title unit in an industrial park, and it will assist them in identifying and asking for important information upfront”.
What better resource could a seller ask for when listing their property on the market or for a buyer who can use the full due diligence report to inform their decision making?
“The PropDD Residential Toolkit™ is like a full-service history for a second-hand car. It provides important information upfront and creates a greater level of transparency which could serve as a catalyst in speeding up a potential sale” concludes Justin.