10 Things to know when purchasing a property
Buying a property, especially if it is your first home, is often an emotional and stressful experience. We have identified the top tips in making the process smoother and easier.
- GET PRE-QUALIFIED FOR FINANCING AND STICK TO YOUR BUDGET
Contact a reputable mortgage originator who will assist you with a credit check and will determine your affordability. In South Africa every person can check their credit record free of charge once a year. By checking your credit rating you will be able to identify any problems and take the necessary steps to rectify the issue. Your originator will, based on your budget and expenses, be able to determine the maximum amount you will be able to purchase for.
- BUDGET FOR COSTS
Ensure that you are aware of all the costs involved in the purchase of a property and that you have enough cash available to cover these expenses. Certain amounts (e.g. transfer duty) must be paid prior to transfer and ensure that you always have a buffer for unexpected costs (such as Home Owners Consents). Costs to consider include transfer fees (i.e. legal fees), transfer duty (i.e. property tax), advanced rates & taxes (pro rata portion depending on the municipality), levies and occupational rent.
Also take monthly costs into account that will be payable after registration to determine your budget available for bond repayments (e.g. rates & taxes, levies, insurance and connection fees of DSTV and wi-fi).
- INSPECT THE PROPERTY FOR ANY DEFECTS
When purchasing a property, you purchase the property with all latent defects. Latent defects are defects not easily picked up by a superficial inspection of the property e.g. leaking roofs, faulty geysers etc. In South Africa it is up to the purchaser to inspect the property to determine any visible defects but it is the duty of the Seller to disclose all known defects. If the Seller was therefore not aware of a defect you will not be able to hold them responsible for the damages.
Ensure that you receive a written list of all defects and that you thoroughly inspect the property before signing the contract. In fact, it is in your best interest to have the property inspected by a professional although this cost will be for the purchaser’s account.
- WHAT WILL BE INCLUDED IN THE SALE AND WHAT NOT
Disputes often arise between sellers and purchasers relating to fixtures and fittings removed after the purchase of a property. Ensure that all possible fixtures and fittings that can be removed (e.g. decorative items in the garden, DSTV Dishes etc) be included in the Deed of Sale.
- FINANCIAL REQUIREMENTS OF THE CONTRACT
Your transaction will be made up of a cash payment or a bond or a combination of both. Ensure that you have enough cash available to cover your deposit together with all other costs. Furthermore, as your deposit and transfer duty will be payable by a certain date you have to ensure that the money will be available timeously.
- COMPLIANCE CERTIFICATES
One of the important documents that the Seller will have to present prior to registration is the compliance certificates (e.g., electrical, plumbing, beetle, gas, electric fence etc). Most certificates are legal requirements and will certify that the installation meets the legal requirements. Ensure that you know exactly which certificate you must be provided with and what exactly they cover.
- GET YOUR DOCUMENTS IN ORDER
There is a lot of paperwork involved in buying a property. Ensure that you request these documents (house plans, guarantees for appliances e.g., air conditioners, stoves, ovens, garage door motors etc.) from the Seller. You will also be required to present your FICA documents to the agents and the conveyancer.
A very important question when purchasing your property is when you will be able to move in. In general, if your contract determines that you can take occupation prior to transfer, a date will be specified in the contract against the payment of occupational rent. The rent will be paid in advance i.e. you can only move in once the rent has been paid. If no date is determined in the contract you will be able to move into the property on date of registration.
- GET ADVICE BEFORE SIGNING ANY DOCUMENTS
Mistakes on contracts can be time-consuming and expensive – confer with one of our experienced conveyancers before you sign any contract.