5 THINGS TO CONSIDER WHEN BUYING A PROPERTY
The decision to buy a property is one of the most significant, and exciting, financial decisions you will make in your life. For potential home owners, especially first-time buyers, the process involves navigating various aspects unique to South Africa's real estate market. Key factors to be considered include choosing the right location, understanding the legal intricacies (i.e. conveyancing fees), and whether to buy a full- or sectional-title property.
Let’s dive in!
1. Location
A good starting point is to decide where you want to live. A number of locations (i.e. towns, suburbs, regions) can be put forward as options to begin with. When considering a location you would want to consider aspects such as safety and security, weather, distance to shops or work, and possibly even schools and key amenities which interest you. For instance, how safe is the area you’re aiming to live in? Is there a good neighbourhood watch monitoring the area? How close are you to work, if you work from an office? Do you have children, and if so how close are their schools from your potential new home? These are just a few key questions to ask yourself during the process of whittling down your options to areas which will interest you.
2. Real Estate Agents
Most home owners selling their homes, and developers selling new properties, will make use of real estate agents. When looking at properties on-sale, chat to estate agents. Don’t be shy to ask questions about the properties, as well as the processes and commissions included when buying a property through their agency. Real estate agents are there to help you. They want to give you the best service possible throughout the purchase process. A good tip is to speak to friends and family who have bought properties in the past, finding out about their experiences during the process, and more specifically how their experiences with the various real estate agents have been. If someone highly recommends a real estate agent they previously used, find out if you can talk to that real estate agent regarding assisting you with your process. Real estate agents are usually linked to a specific area or suburb, meaning that if they are not working in the suburb which you are looking to potentially buy, they could potentially recommend a colleague, or another real estate agent whom they might work with in the market, to find you the best property to suite your needs.
3. Budget
You’ll obviously need to be able to afford your new home. We would suggestion speaking to your bank, and a few other financial institutions who offer property financing through bonds (assuming you’ll need to finance the purchase). This will give you an indication of your eligibility for homes within the your chosen price bracket, as well as understand what interest repayment rate you will fall into as a new home owner. An important point to note here is where the economy is based at the time of purchase, in terms of lending rates at that specific point in time. If national lending rates are low this is great in the short-term as you're sure to receive a low interest repayment rate on your home loan. The risk in this scenario is that if the lending rates increase due to negative national (or international) economic conditions your home loan interest rate is likely to rise, meaning that your monthly bond repayment values will rise too, if you have chosen a variable interest repayment rate. Will you be able to afford this?
Another consideration will be the legal fees involved when buying a new home? Our Property Transfer Calculator is here to assist you in forecasting these costs and their potential value as part of your budget.
4. Sectional-Title vs Full-Title Property
Which will you choose? There are pros and cons to deciding on either of these two property types. In summary; sectional title properties offer a fantastic platform for first-time homeowners, as this form of ownership includes maintenance of external buildings and gardens (common ground) which are maintained by the sectional title scheme via the body corporate. Sectional title properties are also generally found within housing complexes, where safety and security are of a high priority. Yes, sectional title properties do come at a cost, called a monthly ‘Levy’, which is billed to each property owner. This levy value is dependant on multiple factors within the specific housing complex (i.e. security services employed, complex maintenance costs, the floor size of your specific property, etc.), but it is a small price to pay for a safe, secure and well maintained living environment.
Full title properties, on the other hand, require all costs of ownership and maintenance to be covered by the homeowner, and do not include ownership levies. For example, most free standing homes in a suburb are full-title properties.
TIP: If you are aiming to purchase a home within a housing complex, ask the estate agent to request the housing complex’s financial details. A well-managed housing complex will have good financial statements, and most importantly have their financial status in a positive position.
5. Conveyancing Process & Fees
Conveyancing is the legal process of transferring property ownership from the seller to the buyer. It involves several administrative and legal tasks, and professional conveyancers, such as E. W. Serfontein & Associates Inc. facilitate the entire process for you. As a property buyer in South Africa it is essential to understand the conveyancing fees and their importance. Fees associated with the conveyancing process cover the services and expertise of qualified conveyancers and attorneys who manage the legal aspects of the property transfer process.
Conveyancing fees include:
a. Transfer Costs - These fees are paid to the conveyancer for transferring the property's title deed from the seller's name to the buyer's name. Transfer costs are calculated based on the purchase price of the property by the buyer and vary depending on the property value. Transfer costs are the responsibility of the buyer to pay, and the conveyancing attorney is selected by the seller of the property.
b. Bond Costs - If you are financing the purchase through a home loan, bond costs will apply. These fees cover the registration of the mortgage bond and are also based on a percentage of the bond value.
Conveyancing fees are essential for ensuring that the property transfer process complies with South Africa's laws and regulations. By engaging a qualified conveyancer such as E. W. Serfontein & Associates Inc, buyers are ensured that all legal requirements will be met, giving you peace of mind when moving into your new home.
Buying a property is a big, exciting, and sometimes daunting decision. Selecting a qualified conveyancing partner will add great value to the entire process, providing peace of mind that all of your legal-bases are covered and that once ownership is received, all your paperwork is in order.
Are you buying a property? Get in touch with us, we'd love to assist you.