PUBLISHED 10 APR 2019
So you decided you want to buy a house or you want to sell your current house looking for a new home. Many people are unsure as to what the starting point will be to find your dream home. In this article I will be looking at some pointers to give to you as a prospective purchaser.
For now, let’s assume you are a first time buyer who does not know anything about buying a property. So who are the people involved in the process?
Your first interaction when looking at buying a house will be with the Estate Agent, or the new term to be used by upcoming legislation, a Property Professional. What is important to know when selecting the right agent to assist you, is this Agent registered with the Estate Agency Affairs Board (EAAB)? The EAAB is the Governing Body for all Estate Agents as well as Agencies. As per current legislation all Agents should be in possession of a valid Fidelity Fund Certificate (FFC). Request your Estate Agent to provide you with a copy of his/her FFC as well as that of the Company. Why is this necessary? The short answer is, to protect you as the client. Should there arise any queries of the property you bought such as contractual issues, issues with undisclosed problems etc. you can call upon the EAAB to assist in this regard. So, the EAAB is there for your own protection. All Estate Agents should ascribe to the Code of Conduct as provided by the EAAB. The second agent involved in this process will be the selling agent. This can be defined as the Agent who has the stock and who represents the seller. In some instances the Agent selling the property and the agent assisting you in the purchase might be the same person. The duty of the Agent to both parties is to protect their client’s interest.
The second entity you will meet with is a Bondoriginator Firm such as Betterbond, Ooba, Multinet etc. Why will I as an agent rather refer you to one of these entities than to your own bank? Well, the answer is simple, these entities are known for the fact that they will submit your application to all the big commercial banks and do their best to ensure you are treated fairly and obtain the best possible interest rate. Some of these companies will even go the extra mile and submit your application to alternate funding institutions such as SA Home Loans. So a bondoriginator basically becomes a middle man between you and all the banks negotiating the best possible deal for you as the client. Remember that the person assisting you most probably work on commission and will to their best to ensure the success of your application. Another advantage to these firms are their ability to prequalify you as a client in terms of affordability. This will assist you in making a decision as to the price range you can afford to buy. It will also assist the agent in ensuring that you see the properties most suited for your price range. You do not want to drive around the whole day, lose your heart on the perfect home, and then be informed that this dream house is actually above your affordability rate. Some seller also requires from Estate Agents only to bring prequalified buyers to their homes, especially in the higher price ranges.
The third party involved in the process will be the attorneys. Worth noting is the fact that there might be more than one attorney involved in this process, and the attorneys will not necessarily be the same entity. The two types of attorneys involved in the process will be the Conveyancing attorneys as well as the Bond attorneys. In most of the cases the option of which conveyancing attorneys to use lies with the seller of the property as the seller is seen as the party in the process with the highest interest in terms of investment. In some instances, with negotiations of the offer, the seller will give the right of the choice of attorneys to the buyer. This happens in instances where the buyer has a family member or close friend, or in some instances, an attorney who they do business regularly. Just a word of caution. If you have an attorney friend in Cape Town and you live in Bloemfontein, it might not be the best option to make use of this friend. We have found that many times these friends do not specialize in conveyancing and it prolongs the process unnecessarily. But again, the right to choose is with the seller and it should be negotiated between all parties to transfer this right to the purchaser. The bond attorneys will be allocated by the bank and unfortunately you as a client will not have any inputs in this regard.
There are various other parties involved in the process as well such as the bank valuators, contractors providing various certificates etc. For the purpose of this article we will however just focus on the major role players as described above.
So what other factors are important to take into consideration when buying a property? The well-known saying “Location, Location, Location” remains the biggest and most important factor other than the price of the property. Did your agent provide you with details as to schools, places of worship, amenities as well as future plans of development in the area? This is extremely important as you will be making a long term investment in this area. What if there is a large shopping mall planned right next to your fabulous new house? What if you purchased the home for the marvellous view and a year down the line a 10 storey building is erected right in front of you? But should your Agent have known about this and disclosed it to you? YES. The function of an Estate Agent is far more than simply selling a property to you. It is expected of Agents to know what is happening in the area as well as future development plans. So as you can see Location plays an integral role as this will have a direct effect on future resale value as well.