Buyers Guide

Thank you for allowing me to be of service to you!

My function is to assist you in your efforts to find a property that meets your needs. Because of my experience and expertise, I am able to offer you many services to help you through the decision-making process.

Here is what I do for you as we work together :

• Explain the steps involved in purchasing a property
• Qualify your buying power so that you won’t waste time viewing
  properties which you cannot afford.
• Create a shortlist of properties that meet your needs and set up
  appointments for you to view them
• Provide information on the area to help acquaint you with the
  community
• Arrange for a Home Loan Consultant to discuss your financing
  alternatives
• Prepare and present your offer
• Breakdown all applicable costs, including up front and delayed
  costs of ownership
  

I look forward to giving you uncommonly good service !

Where to Start

First things, first. Ask yourself why you want to buy a home …

• To stop paying rent?
• To start building equity?
• To have a place of your own?
• To move up to a bigger home?
• To scale down to a smaller home?

Next, list what kind of home you would like and where you would like it to be. Be specific. Separate the “must have’s” from the “want to have’s”. Rate both lists on a scale from 5 (high) to 1.
Think of yourself as zeroing in on a target, going from the general to the specific. Consider:

• How far are you willing to commute to work?
• Think about home styles (1 storey, double storey, townhouse, etc)
• How much space do you need, and how much will you need in the foreseeable future (number of bedrooms, baths rooms, living rooms, size and style of property\
• Do you want a new home, or an older one to fix up?
• Is the community a good area for resale? Someday you or your heirs will want to sell
• Consider how long you expect to live in the particular home
• Keep going with whatever you want to add…

Knowing exactly what you think you want, makes house hunting and later decisions easier where you get into the nitty-gritty aspects of buying.

Helpful Hints when looking at Homes

• Is the price in keeping with other homes in the area?
• Is the house near schools, work, shopping centres and bus routes?
• How old is the house? Has it been well maintained? If not, what will it cost to renovate?
• Check the hot water system and the size of geyser.
• Check to see if the electrical wiring is in order.
• Open the taps and see if the water pressure is strong.
• Check to see if there is sufficient cupboard space in the kitchen and bedrooms. Is there space for appliances such as fridge, deep freeze, dish washer, and tumble dryer?
• A north facing house is cool in summer and warm in winter.
• Are there burglar bars on all windows – is there a security system?
• If there is a telephone – ask if you could transfer it into your name.
• If there is a pool, check to see if the pool equipment works.
• Ask what the annual rates/ monthly levy is on the property?
• Remember to keep money aside for transfer costs – work on + 7% of the purchase price for transfer and bond costs.

Budgeting for Your New Home

There are a number of costs to pay before you can move into your new home. Therefore, you need to budget for the following costs :

Once Off Costs:

 Deposit on the house
 Transfer Duty
 Transfer Costs
 Cost of registering the home loan
Municipal deposits for water and electricity

Other Costs – You Decide:

 Cost of moving
 New Curtains and carpets, etc.
 Total cash needed before you can move in

Regular monthly Costs

There are also monthly costs involved in owning a home in addition to your normal monthly expenses such as food, clothing, entertainment, transport, school fees and hire-purchase.

These payments are;

 Repayment of the home loan
 Insurance on the house
 Municipal rates (if you buy a house)
 Refuse removal
 Monthly levies (if you buy an apartment or townhouse).
 The levy usually covers Rates, Refuse, Electricity, Water,
insurance etc.

Other Monthly Costs:

 Life insurance to repay the home-loan
 Insurance on home contents

MOVING DAY DIARY

• Booked the Movers
• Organized Insurance for your possessions while in transit
• Given notice in accordance with your lease agreement (if necessary)
• Applied for a new telephone, arranged that the Telephone department re-directs your calls to your new number, and arrange for your telephone to be disconnected and re-installed on moving day.
• Left a forwarding address at your old home
• Changed your postbox (if necessary) and arranged for the Post Office to re-direct your mail.
• Paid electricity and water deposits to the local authority, and arranged
that they are connected on the correct date.
• Arranged that electricity, water and telephone meters are read on moving day.
• Organized keys for the new house, and to hand over keys for the old one.
• Bought curtain runners, stoppers, hooks, globes and plugs.
• Keep a Tool kit handy with screwdrivers, pliers, hammer, scissors, globes and the like
• Keep a First Aid kit handy
• Advise your change of address to:
• Receiver of Revenue
• Motor licensing Department
• Insurance Company
• Bank
• Home Affairs for your Identity documents
• Employers and Schools
• Friends, Relatives and Neighbours.
• Newspaper and Magazine Subscriptions
• Sports clubs and children’s activities
• Credit Card and other accounts
• Last, but not least, pack a basket with tea, coffee, cups, teaspoons, milk, sugar and a light snack! Just the kind of help you would expect from the

Things I like about my present home

Costs when buying a Home

Remember to make provision for the following costs :

1. Transfer Fees
These are the fees charged by the conveyancing attorney & includes 14% vat.

2. Bond Registration Fee
A charge by the bond attorney as nominated by the Bank and attracts 14% vat.

3. Transfer Duty
A once off property tax payable to the Receiver of Revenue

4. Valuation Fee
All financial institutions charge a valuation fee, which attracts 14% fee

5. Share of Rates
The buyer is liable for rates from the date of transfer or occupation/possession
depending on the sale agreement.

6. Stamp Duty
Charges by the Receiver of Revenue for stamps used on the Bond deeds.

7. Posts and Petties
Charges made by the conveyancing and bond attorneys, which also attract 14% vat.

8. Insurance
Comprehensive Insurance covers all permanent improvements on the stand and the
bond value is insured on your life. Sufficient property overage is your duty.

9. Interim Interest
Interest due from the date of registration to the end of the month before the first
payment on the bond. Normally capitalized and redeemed over 20 years.

10. Electricity / Water Deposits
These items can be costly especially if the cost of telephone installation is also
included. Rates paid monthly can be added to the water/lights bill on request.

11. Curtain allowance, Stove etc
These items and others such as fencing for children, dogs, and pools add to overall
cost and must be allowed for.

12. Furniture Removal
Although rates vary widely it would be wise to make allowance for this sometimes
costly item.

Frequently Asked Questions

What kind of deposit is required to purchase a home ?
The payment of a deposit upon signature of the agreement is usually an indication of the purchaser’s serious intent. No amount or percentage is specified, but if bonding is required, the financial institution may require a minimum deposit of between 10 – 20% of the purchase price.

Can I buy a home with another person, if we are not married?
Yes, you can. Property will be registered in both applicants’ names, provided they have contractual powers etc.

What about credit? What if I had some problem in the past?
Your credit record is very important. However, Financial institutions treat each case on its merits and the client will normally be asked to justify or explain any diverse credit records and whether any amounts are still outstanding. The period lapsed since the last adverse information also plays a very important role.

What if I am self-employed?
Financial institutions are lending to self employed persons in the same manner as salaried employees. The difference comes in with confirmation of income and afford ability. The client will be requested to supply his audited Balance Sheets on the business, together with auditor’s proof of income.

How much deposit will I need?
This varies from client to client and depends what amount is being applied for. It is normally10% on an average home, but should the client apply for a package, i.e. Cheque account, credit card and home loan, then a 100% loan up to certain pre-determined amounts may be granted. This criteria varies from Bank to Bank.

I do not have any credit. Can I get a home loan?
Yes, you can. What happens to the deposit ? The deposit is paid into the trust account of the agent or the attorney. The purchaser should stipulate that the interest that accrues thereon must be for his account.

How is the balance of purchase price paid ?
The balance is usually paid in cash on registration of transfer and will be secured by delivery of acceptable guarantees within a specified time period. The guarantee is an undertaking by a recognized financial institution to pay a specified sum of money on the transfer of his property into the purchaser’s name. The guarantee system ensures that both parties are protected. It is desirable that the date on which a purchaser is obliged to furnish guarantees precedes the date of occupation.

Is it possible to inflate the purchase price to secure a higher bond?
This practice is regarded as fraudulent and carries the risk of prosecution.

When is transfer duty payable?
This sum is payable to the Receiver of Revenue, but is usually collected by the Conveyancers. Transfer duty is actually only required to be paid within a period of six months from the date of transaction, or on registration, whichever is sooner. On what date should occupation be given, and what is occupational rental Occupation should be agreed upon mutually. It will often occur, however that one of the parties is in occupation of the property whilst it is registered in the other’s name, thus requiring the occupier (who may be either buyer or seller) to pay a rental to the owner. Entitlement to such rent is not automatic and should be specified in the agreement of sale. The amount of the rental is usually agreed at the level commensurate with rentals available in the market.

What if a tenant has a lease that overlaps the transfer date?
Once a tenant has taken occupation of the property he acquires a real right thereto for the duration of the lease and will be protected by the “huur gaat voor koop” principle. The new landlord steps into the shoes of his predecessor who in turn is relieved of his obligations toward the tenant. Once the lease expires, the new owner may move into the property.

How do I make an offer on a home and negotiate with the seller?
You, as potential buyer, start the process by putting an offer, with price and terms, in writing and presenting it to the seller through your agent.

Financial Aspects

What price home can I afford?
The overall price is achieved from adding how much you can afford to borrow
to how much you have available for your deposit.
Your agent can help you translate your affordable monthly payment into a total
loan amount. Add this loan amount to your desired deposit and you get the
approximate range of home prices you can afford.

Should I shop for a Home Loan before, or after, I find a home to buy ?
It’s a good idea to let an agent help you look for financing before you find a home. The agent is in constant contact with their Mortgage Originator who will obtain the best possible rate and package for you, without any obligation whatsoever. This leaves you free to contact your own Bank manager, and Compare rates.

If you are actively house-hunting but have not found the right home yet, ask your agent to arrange for you to be “pre-qualified”. This may be done in a few minutes over the telephone with the Agency’s Mortgage Originator, Bond Choice. Knowing where you stand concerning how much money a financial institution will lend you (based on your income and credit rating) puts you in a good bargaining
position. Sellers faced with deciding between two buyers, one who is “pre-qualified” by a financial institution, may favour the offer of the buyer for whom getting a loan is
almost a sure thing. The Bank will require all your personal particulars including a copy of your identity document. Please see the section headed “National Credit Act Check List” for full
particulars and requirements. In terms of the new “Credit Act” the banks will qualify the person applying for a bond differently from in the past. The qualifying criteria will no longer simply be
a repayment of no more than 30% of the applicant’s gross monthly income, but will also require that the application has sufficient net surplus income in order to pay the monthly loan repayment.

The Seller has three basic options:

1. To accept your offer;
2. To counter offer on specific details; or
3. To reject your offer

Keep up the communication open until you arrive at the price you can pay and the price and terms the seller can accept. This is where an agent’s help is invaluable. The agent keeps the
negotiating process running smoothly. With knowledge of both your situation and the sellers plus a complete understanding of financing options, an agent can suggest strategies that bring about a satisfactory transaction.

Legal Aspects of Your Purchase

The Offer to Purchase is the document you sign which presents your price and terms to the seller. This purchase offer must be completed in full, because when the seller signs it, the document becomes the binding Sales Contract which contains the conditions of the sale. If you forget something in the offer, an Addendum to the contract will be drawn up, however the seller will have to agree to these changes before it is valid.

Terms and conditions of the contract vary depending on the situation. Following are typical matters you and a seller may negotiate and agree on:
• What items go with the home, such as chandeliers, curtains, appliances, swimming pool equipment etc?
• The sale price
• The amount of your deposit
• The amount of the home loan you intend to obtain
• The date of occupation. Be sure you and your seller have a clear agreement about the date of occupancy
• Any contingencies (agreed upon by you and the seller) which must be met before registration can take place, such as: home improvements (painting, roofing, etc), review of the contract by either or both buyer and seller’s attorney(s) and your ability to obtain a specified home loan within a stipulated time period
• Your signature, and that of the seller

Focus on First Time Buyers

HOW MUCH SHOULD I OFFER?
You have found a home you like, in a neighbourhood you feel comfortable in. You know the sale price is open to negotiation. How much should we offer?
First ask yourself how much this home is worth to you. The same house may be much more valuable to one person or family than to another.
For example, a big garden might be worth a great idea to someone who enjoys growing things, but might actually reduce the value for someone with little
interest or time for ‘gardening”.

Next consider these questions.

• What is the asking price?
• How long has it been for sale?
• Has the price already been reduced?
• What are the owner’s reasons for selling?
• Is the owner in a hurry to move?
• What were the sale prices of other neighbourhood home, and how did they compare in size and condition? Several Financial Institutions have special packages for First Time Home Buyers and it is wise to speak to your Estate Agent about this prior to viewing any properties. You may be pleasantly surprised at what is available to you. Remember only YOU can decide the price you’re willing to pay for a home.

PURCH ASE R’S PERSONAL DETAILS

Required By The Bank

Nationl Credit Act Check List for home loan applications. Income and Expenditure Statement

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