Prospective home buyers get a lot of advice about how to choose the right home and the right home loan, and how to make a successful offer to purchase, but not enough about what happens next.
So says Gerhard Kotzé, who notes: “Even when your offer has been accepted and the bank has approved your loan, there are still several other important stages of the transaction to get through before you can settle into your dream home and invite your friends around for a tour, and it really helps to have a professional agent guiding you through the process.”
These stages include:
- Getting your finances in order. Your bond may cover the whole purchase price of the property but you are also going to need cash to pay the bond registration fee, legal fees, transfer fees, and any transfer duty that may be due. You will also have to pay half of the expected municipal rates and taxes for the transfer period, which is usually about three months, although you may get some or all of this amount back when the property is transferred. After that, you will need to pay for the municipal services such as water and electricity to be connected in your name.
“So you may need to transfer funds from a savings account or liquidate another investment or wait for an inheritance to be paid out before you can proceed, and a reputable estate agent will ensure that your sale agreement gives you a reasonable amount of time to do this, without infringing on the rights of the home seller,” he says.
- Obtaining additional insurance. “Your lender will certainly insist that you obtain home owners’ insurance (known as HOC) to cover the repair or replacement of the property in the event that it is damaged or destroyed by fire, wind, flood or another natural disaster,” says Kotzé
“Many banks will also insist that you take out credit life insurance (bond cover) to the value of the outstanding home loan balance. This is a good idea anyway because it means that your family will be able to pay off the bond and continue to live in the home even if something happens and you pass away. Some of these policies also cover several months of bond repayments should you be retrenched from your job.”
- Coping with any other contingencies. The whole transaction can be put “on hold” while you organise a report from a home inspector, or wait for an electrical compliance certificate, or for your existing home to be sold and the proceeds to become available. But while a good agent will ensure that such contingencies are also written into your sale agreement, he says, there will be a deadline for them to be fulfilled, so you should be ready deal with them as soon as possible “If you need to sell an existing property, for example, you should ensure that it is listed immediately and be prepared to accommodate viewings by prospective buyers.”
- Responding to requests. You need to respond promptly to requests from your bank’s attorneys or the attorneys attending to the property transfer to sign all the documents that are required to register a new bond and get the property registered in your name.
“Long delays or failure to respond can result in the sale being cancelled and you have to forfeit any deposit paid. However, a professional agent will be able to give you a schedule of all the deadlines to be met (by you and the seller), and the estimated time that each part of the process should take,” says Kotzé.
“In fact, the involvement of a reputable, knowledgeable estate agent benefits the home buyer as much as the home seller – and is an increasingly important factor in purchase decisions, especially among first-time buyers.”