Many South African first-time homebuyers and sellers remain surprisingly ignorant of the basic legalities surrounding any property transaction.

So says Lanice Steward, MD of Anne Porter Knight Frank (APKF), who adds that in our training sessions with agents, it has become necessary to insist that they give clients a short educational rundown.

She says first-time homebuyers, in particular, tend to have absolutely no idea how property is bought and sold and how to go about getting a bond.

When the deal looks as if it will go through, one of the most common mistakes is to fail to appreciate that a signed contract is legally binding: If a better offer or prospect comes up the buyer cannot simply change his mind. Some young buyers have heard about the cooling off clause and think it applies across the board. In fact, it applies only to properties valued at under R250k.

Another common first-time buyer mistake is to underestimate the extra? costs of a transaction: transfer duty, attorneys fees and Deeds Office costs. Good agents, said Steward, will draw a buyers attention to these early on.

Some clients, said Steward, are scared of any documentation and try to avoid putting matters in writing until the eleventh hour.

This can be disastrous when it comes to submitting an offer because, quite apart from the fact that a written offer will put the agent in a far stronger position to negotiate, it is in fact illegal to make such an offer verbally.

Inexperienced buyers, added Steward, often show a marked reluctance to invade a home owners privacy?. As a result they fail to inspect homes carefully and never fully appreciate the partially latent defects and flaws.

A good agent will, of course, insist on faults being listed in written form but there is nothing which can replace a hands-on inspection.?

When buying a property always ask for the home plans. It is essential to see these.?

Once you have them, said Steward, hold onto them. Some years ago a fire at the Deeds Office destroyed several hundred plot plans, leaving owners, who did not have copies, with no option but to bring in a draughtsman and have them redrawn.

Then, too, many of those planning to buy a property using a trust, a close corporation (CC) or a company as the holding vehicle, should take note not only that this vehicle must have a tax number, but that the taxes must be fully paid up.

As soon as money is paid to achieve a transfer, there will automatically be an investigation into the holding vehicles tax status. If any money owed is still outstanding, the sale will be blocked.

If the tax defaulter is the seller, SARS may be prepared to take the outstanding sum from the money paid. If, on the other hand, it is the buyer, SARS will insist on the money being paid up before any further transactions take place.

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Property investing: Timing is key

An investment in the housing market remains an excellent long-term investment as long as investors time it right. www.mortgagepluscc.co.za

The ideal is to buy when the market is at a low point and sell when it’s peaking, which is rarely possible, say property analysts.

Fresh research done by property analyst Lightstone shows that home buyers that bought and sold in the period between January 2008 and January 2009, have probably suffered a loss.

However, it is unlikely that buyers who have a five-year view will suffer the same fate, says Jacques du Toit, senior property analyst at Absa.

Hayley Ivins, property analyst at Lightstone, says a home buyer who bought a house for R1m in January 2008 when the market peaked and sold it in January 2009 when the market tanked, probably achieved a price of R960,995. This represents a drop of 3,9%.

But a buyer who bought a house for R1m in January 2008, and sold it in May this year, would have received R1,053m – an increase of 5,3%. A buyer who bought a house for R1m in January 2010 and sold it in May 2010, would have achieved a price of R1,096,500m, a rise of 9,65%. www.mortgagepluscc.co.za

Ivins says it shows that the housing market has made progress as far as prices are concerned, but the transaction volumes are still low.

Lightstone’s house price index looks at where the market is at right now in terms of total transactions, distressed sales and houses that have been sold for a lower price than the previous sales price. This index is regarded as a reliable measuring stick as it compares the prices of houses sold to the price that was previously paid. It is based on Deeds Office data.

Du Toit says to get the timing right will be nearly impossible, but buyers and sellers have to make their decision in light of trends in the market at a given point as well as the future expectations. “If the expectations are that prices will fall in the near future, the buyer might want to wait a little bit. But if it is expected that prices will rise, he has to jump in and buy.”

He says for the seller it is imperative to look at current prices and compare this to what he paid.

It is important for the buyer to look at where the level of the price currently is compared to a while ago. “For the buyer it is about affordability and if he’s getting value for his money.”

He says the current information available in the market can be used for this. This includes broader economic data and the house price data, which indicates broader trends in the market. – Elma Kloppers, Sake24

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Speak to a home loan consultant about financing your new property or reviewing your existing . We are able to assist in lowering your bond repayments and securing attorney discounts.

Complete this short form online
Call us on 011.327.4489
Email: morne@mortgagepluscc.co.za

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