How to buy your dream home wisely

It no secret that current property market conditions are enticing for aspiring homeowners and investors, but purchasing a house can be daunting for first-time buyers.

Did you offer enough or perhaps too much? Or are you too nervous even to make that first offer? It is perfectly normal for those navigating the ins and outs of property for the first time to feel mildly panicky, especially after submitting an offer, says Carlo Mariani, founder of The Property Coach.

“There’s no doubt that buying a property in South Africa can be a daunting experience for most people especially when considering the amount of money involved.” To avoid expensive mistakes and tap into the endless power of property ownership without the risks, he offers a few practical tips:

1 KNOW YOU CAN AFFORD IT

Before you start looking seriously for your property, Mariani says it is critical that you establish what you can afford by approaching a money-raising expert and finding out your creditworthiness.

“Take this action three months in advance to avoid nasty surprises. This will allow you to approach sellers and agents with the confidence of knowing what you can afford.”

2 INVEST IN A PROFESSIONAL INSPECTION

Once you’ve found the property, get it professionally inspected. You don’t want to discover unexpected problems, latent defects, structural issues, shoddy electrical installations and leaking plumbing after you’ve signed your offer to purchase.

Do not rely on agents’ and sellers’ promises or even written declarations. “This is not the time and place for DIY. Engage the services of a professional property inspector. This is guaranteed to be your best investment in avoiding expensive surprises.”

3 DO YOUR OWN “FACT FINDING”

“Any claims by seller or agents that are not in writing are just that – claims,” Mariani says. So, ensure that you have a good idea of the actual market value of the property, and that the property has been built in accordance with approved building plans. “I am a big fan of using tools like Lightstone Property...”

If you are purchasing in a sectional title unit, you should also ask for the body corporate’s financial books. “Check they are in good shape by obtaining a copy of the latest audited accounts and by having a telephonic interview with the chair of the body corporate.”

4 THE THREE-VISIT RULE

Mariani recommends that you visit the property – or at least the complex or area – on three different days and at different times. “Make sure you visit at weekends, after sunset and at rush hour. This is a powerful way to ensure that there are no safety and crime issues as well as unforeseen problems.”

5 CONSIDER THE AMOUNT OF YOUR FIRST OFFER

FNB’s Property Barometer for July says, on average, the sale price is 12% below the asking price. However, the asking price is a “marketing trick” and so you have to be careful of using it as a yardstick for negotiation. Importantly, you should establish a “walk-away” price before even starting the negotiations, Mariani advises.

“I also suggest you give yourself some time between one round of negotiations and the next to reflect on whether you really want the property. It can also create a bit of fomo (fear of missing out) on the parts of the seller and agent and make them more negotiable. Do not negotiate in a rush.”

6 NEGOTIATE IN WRITING

“The best – and only – way to negotiate in a professional manner is to submit a written offer to purchase,” Mariani says. It will also give you the chance to engage in serious discussions with the seller and / or the agent.

“Once you have done so, expect reciprocity and do not engage in counter-offers unless they are also in writing.”

7 CREATE URGENCY IN THE SELLER

Specify in your offer that it is valid for 24 hours only, no matter what you are told. “The reality is that agents and sellers are always in close contact and you want to establish urgency with both of them, rather than allowing them to use your offer to seek competing offers from other prospective buyers.”

8 A STANDARD PURCHASE AGREEMENT DOESN’T EXIST

Mariani says you should beware of any claims by sellers and agents that you should sign the offer without any worries because it is a “standard agreement”. “I often come across a number of really nasty clauses in agreements that are designed to reduce your rights and boost those of sellers and agents.

“Ask for a copy of the agreement, take it home, read it with care and ask for advice if you do not understand something.” He says an offer to purchase is a legally binding agreement that can cause problems, such as having to pay agent’s commission, even if you never take transfer of the property.

9 DON’T WAIT FOR A “BETTER”

TIME Property ownership remains the most proven and resilient way to build wealth and cash flow for generations to come, and while you should exercise caution and build your specific knowledge, you should not let fear stop you forever. “Ask those people who have been waiting for the perfect time since 1999, or even 2007, whether they wish they had bought a property back then,” Mariani says.

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