Buying property is a wonderful opportunity to change your life for the better, whether it's the excitement of moving into your first home, a chance to upgrade or downscale when the time is right.
But the process and paperwork can be confusing, and it's best to know upfront what to expect and avoid any pitfalls that could cost you money and time.
Here's a list of important considerations...
1. Voetstoots
When buying a home, emotions play a big role. You can envision yourself living in the house - which room each child will get, how the furniture will fit and whether the curtains are the right size. This is all very exciting, but we tend not to focus on any defects the property might have. Generally the serious defects are not noticeable, and only once you have moved in, do they show.
Defects may be visible or invisible, says Craig Hutchison, CEO Engel & Völkers Southern Africa. "Defects are typically rising damp which has been hidden under a coat of paint or may also be alterations to the house without the necessary approval from the local municipality, making them illegal structures.” Illegal alterations may result in the entire structure having to be demolished and reconstructed, in accordance with approved building standards.
As explained by attorneys MacRobert Inc, if you have bought your property with the voetstoots 'take as is' clause present in the sale agreement, you agree to buy the property in its current state and the seller cannot be held liable for any patent defects. For a buyer to escape the provisions of the voetstoots clause, he needs to prove that the seller deliberately concealed the defects or the lack of building plans approval with the intention to defraud the buyer. The purpose of the voetstoots clause is to protect the seller against liability for defects of which he or she is unaware.
2. Home loans
When an offer to purchase a property is accepted by the seller, the bond application should immediately be submitted to a bank because the transaction can fall through if the buyer does not comply within the period stipulated in the agreement of sale, noted as a suspensive condition. Once your application is approved the bank will quote you their terms, you sign the necessary documents and your commitment to them for your home loan is then official.
There are certain regulations applied by most SA banks, and some of these are:
3. Bond originators
Sandy Reddy, Head of EV Finance mortgage originators, is confident that when they apply to the various banks on behalf of a client, they will get the best offer on each home loan. This is due to their many years of experience and full understanding of the banks' requirements. There is no charge for this service.
“Whether you're buying your first home or your fifth one, you have a much better chance of being approved for a home loan if you apply through a mortgage originator than if you try to handle things alone,” says Shaun Rademeyer, CEO of BetterBond Home Loans.
If prospective buyers are preapproved by mortgage originators they will know more accurately in which price bracket they qualify to view properties and therefore speed up the search process. You may qualify for more than you think if you apply through a reputable originator.
4. Servitudes
In some instances, when buying land or a built property, there may be a servitude present on the property you have bought. The average property investor may not understand the nature and consequences of such servitudes in respect of their land.
As explained in a recent article by attorney firm MacRobert Incorporated, the general rule if a piece of land (blokland) is subdivided into more than one portion, is that the landlocked property/properties are automatically entitled to a right of way servitude over the adjoining subdivision in order to access a public road.
The caveat to this rule is that the property owner with the direct access to a public road may unilaterally alter the path of the right of way, provided that this does not amount to unreasonable conduct and does not prejudice the landlocked owners' common law right to access the public road.
As Wendy Williams, a director of Engel & Völkers Southern Africa cautions, always ensure that the wording in an Offer to Purchase is correct and protects your rights.
5. Mandates
A mandate means a written authority or permission given by a seller to a real estate agency, which instructs them in writing to sell their property. There are, however, a few different types of mandates, and the four most commonly used ones are briefly explained below:
Sole or Exclusive Mandate - Only one agency is awarded the exclusive rights to the market and sell your property.
Open Mandate - Any agency may market and sell your property on a first come, first serve basis.
Dual Mandate - Only 2 agencies are allowed to market and sell your property.
Shared Mandate - More than 2 agencies are allowed to market and sell your property.
There are fewer benefits to the seller when awarding an Open, Dual or Shared Mandate because of the following reasons, says Hutchison: