BUYERS GUIDE

  • The Role of and Benefits of using an Estate Agent

Most estate agents specialise in the selling or letting of residential property. There are however also estate agents who specialise in the selling or letting of commercial, industrial or agricultural properties. We will only be discussing those estate agents that specialise in residential property.
What Role Does the Estate Agent Play?
The estate agent is the link between a seller and buyer, who will negotiate an agreement of sale acceptable to both parties. An Offer to Purchase is drafted by the estate agent, which must be signed by the buyer, seller and estate agent.

For his service, the estate agent charges a fee or commission, which is paid by the seller. The commission payable is negotiable and must be discussed with the estate agent at the commencement of the transaction. The commission is usually calculated as a percentage of the selling price.
What are the Benefits of Using an Estate Agent?


An estate agent will know how to deal with the legal, financial and marketing issues in the appropriate manner.

He will also have knowledge of different sales techniques, financing alternatives, valuation methods, construction practices and relevant property laws and regulations.

He will be familiar with the local property market, understand consumer behaviour and be able to communicate with people at different levels.

The estate agent will protect the interest of his client to the best of his ability with due regard to the interest of all other parties concerned.

Buying property is probably the biggest investment you will ever make. The estate agent plays a vital role in ensuring the security of your big investment.

Estate agents registered with the Estate Agency Affairs Board are governed by a code of conduct, Common Law, as well as certain provisions of the Estate Agency Affairs Act, which are enforceable by means of disciplinary action by the Estate Agency Affairs Board.

  • House Hunting Checklist

Obtain as much information as possible about each property, make notes on each one you like and compare them at the end of the day.

See house hunting checklist for your convenience.

  • Starting Point Tips for New Home Buyers

Step 1:

Start saving for a deposit and registration & transfer costs. The banks have all changed their home loan lending policies. No longer can you obtain a bond for 108% of the property value. In fact, in certain instances, you may only qualify for 60% of the purchase price and the rest (including the bond costs) will have to be paid out of your pocket.

Step 2:

If you need to sell your current property, in order to buy another, it may be a good idea to put your property on the market first. Speak to estate agents operating in your area to advise you on a selling price, and also do your own homework as to what similar properties are selling for in your area.

Step 3:

Do a comprehensive budgeting exercise to see how much you can afford for monthly home loan repayments.  Take into consideration that the interest rates may change.

Step 4:

Obtain a copy of your credit report from the major credit bureaus and review the information. If there are errors or matters that need to be addressed, it is advisable to sort it out before you apply for a home loan. If you know that there are a few blemishes on your credit record, and you have been making an effort to clean them, let your bank know what they are, why they are there, and what you are doing to sort them out. Lenders will look at your credit and financial situation to determine how likely you will be paying back the home loan. If you suffered unexpected circumstances that were out of the ordinary, like a loss of a job or extensive medical bills, let them know so that they understand that it is not likely to happen again in the future.

Step 5:

Make sure all your tax-affairs are in order. It won’t hurt to just make a phone call to SARS, to check whether all your tax-affairs are up to date. Your new property will not register in your name if you have any outstanding SARS matters.

Step 6:

Pay a visit to your bank , and ask a home loan consultant to assist you in finding out what amount you may qualify for, in terms of a home loan.

Step 7:

Do your homework before you house-hunt:

  • Decide what kind of home will suit your needs. Think about security, the size of your family (or of your future family size), the suitability for your pets, and so on.
  • You should also consider the location in terms of traveling distance to work, schools, and so on.
  • Enquire about affordability of the schools, rates & taxes, levies and other expenses/facilities in the area.

Step 8:

While house-hunting ask the estate agent and owner as many questions as possible about the property.

Step 9:

When the time comes to sign an offer to purchase, make sure you understand everything written in the contract. Do not sign a contract if you are unclear about anything. Rather ask advice from someone you trust.

Step 10:

You will need to apply for a home loan. Once you have completed the home loan application forms, your bank will process the application and do the necessary credit checks and assessments. If everything is approved, you will receive a letter of approval giving the conditions and benefits of the agreement.

Step 11:

Conveyancing attorneys will now register your home loan and transfer the property into your name. The previous owner of the property will be paid and you will become a home owner.

  • FICA Requirements & other documentation

You will need the following documentation for your bank loan as well as for the Estate Agent and/or Conveyancing Attorneys: 

  • Copies of your Identity Document
  • Marriage Certificate
  • Proof of Residence
  • 3 Months Bank Statements
  • 3 Months Payslips (Individual)
  • Financial Statements (Company / CC)

It would be wise and save a considerable amount of time and frustration if you have three sets made, have them certified and have them in readiness when visiting any of the above. 

5.             The Registration & Transfer Process
               


There will be instances where some steps outlined below will happen simultaneously, or in a slightly different order, but this gives you a good idea of what is involved and why this process is such a lengthy one.

Where the buyer or the seller needs to take any action, it is coloured accordingly.

Step 1

The buyer makes an offer on the home he wants, by signing a legal agreement called the Offer to Purchase.

Step 2

If accepted, the agreement is also signed by the seller. The buyer, as well as the seller, must keep a copy of the Offer to Purchase.

Step 3

The buyer pays his deposit to either the Estate Agent or the Transferring Attorneys, who must hold it in an interest bearing trust account until the property is registered in the buyer's name. The buyer must make sure that he receives a receipt.

Remember that the buyer is entitled to the interest earned on the deposit being held in trust.

Step 4

The buyer applies for a mortgage loan (bond/home loan) with his bank.

Step 5

The buyer's bond application goes through a process of approval by the Bank's Credit Division.

Step 6

The buyer's Bank sends out a valuator to assess the value of the property the buyer intends to mortgage. The Bank may also require that the property be inspected for beetle infestation (coastal properties).

Step 7

The seller must obtain an Electrical Certificate of Compliance, and give it to the Transferring Attorneys.

Step 8

The buyer's home loan is granted, subject to the valuation and credit approval mentioned above, and the Bank advises the Registering Attorneys to register a Bond.

Step 9

The Transferring Attorneys get a copy of the agreement and request the Title Deed and Cancellation Figures from the Seller's Bank (which currently has a bond over the property).

Step 10

The Transferring Attorneys also request a Clearance Certificate for the Rates and Taxes from the Local Municipality.

Step 11

The Transfer documents are then drawn up by the Transferring Attorneys once all the information in the above steps is obtained. The Transfer Documents include:

  • The Transfer Duty or VAT Receipt (from the Receiver of Revenue).
  • The Rates & Taxes Clearance Certificate (from the Local Municipality) or the Levy.
  • Clearance Certificate (from the Body Corporate).
  • The Consent of the Bondholder (Bank which holds the current bond) to cancel the current bond.
  • Consents required in terms of conditions in the Title Deed (i.e. a right of first refusal waived by the interested party).

Step 12

The Registering (Bond) Attorneys advise the Transferring Attorneys of the amount available for guarantees (the amount of your new bond over the property).

Step 13

The Transferring Attorneys then advise the Cancellation Attorneys to cancel the seller's bond, which is done upon receipt of the guarantees.

Step 14

Once the Transferring Attorneys receive the Title Deed and Cancellation Figures from the seller's bank, they send a copy of the Deed of Transfer and guarantee requirements to the Registering (Bond) Attorneys.

Step 15

The Transfer Documents are signed by the buyer and the seller, with the Transferring Attorneys.

Step 16

The buyer pays the Transfer Costs, with which the Transferring Attorneys pay the Rates and Taxes and Transfer Duty to the Receiver of Revenue and a Transfer Duty Receipt is issued.

Step 17

The buyer's Bond Account and Supporting Documentation are prepared by the Registering (Bond) Attorneys.

Step 18

The Buyer signs the Supporting Documentation and pays the Bond Registration Costs to the Registering (Bond) Attorneys.

Step 19

The necessary guarantees are prepared by the Registering (Bond) Attorneys and forwarded to the Transferring Attorneys, who prepare the bond documents for lodgement with the Deeds Office.

Step 20

The Transferring Attorneys then forward the guarantees to the Cancellation Attorneys, who get consent from the Bank (which currently has a bond over the property), to cancel the Seller's Bond.

Step 21

Once all the documentation is signed and all the costs are paid, the buyer's new bond documents, the transfer of the property (into the buyer's name) documents and the cancellation of the seller's bond documents are prepared by the respective attorneys and lodged in the Deeds Office - simultaneously.

Step 22

The Deeds Office takes approximately 2 weeks to check all the documentation before they are ready for registration by all the attorneys on the same day.

Step 23

On Registration, the Bank pays out the loan in accordance with the guarantees issued and the estate agent is paid the commission.

The whole process can take anything from 6-8 weeks, if there are no complications.

What Could Delay the Process?

  • The seller could be in arrears on the instalments of the existing bond, and could have difficulty in coming up with the money.
  • Either/both the buyer and seller could disclose insufficient or incorrect essential information.
  • Any of the parties involved could delay the provision of documentation, guarantees, certificates, employee subsidy documents and so on, on time.
  • A delay in signatures and/or payments of conveyancing documents/costs.
  • Delay by the buyer in obtaining government capital subsidy approval/employee subsidy documents for new bondholders and failure to comply with other requirements of the bank.
  • Special consents in terms of the title deed may need to be obtained.
  • Final Word

Buying your own home doesn’t have to be painful; it can be a joy and a pleasure.  Let us help you realise your dream! 

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