Buying a house can be an extremely fulfilling experience, but it can also be very overwhelming for first time buyers. Knowing how to recognise the right house when you find it and make an appropriate offer is often tricky without having any previous experience in the market. Navigating the seemingly complex process of getting bond approval and transferring ownership can be stressful for the uninitiated as well, but as with most things, a little preparation can go a very long way.
“One of the most important things a first time buyer can do is familiarise themselves with the market and the process of property sales before jumping into anything,” says Bill Rawson, Chairman of the Rawson Property Group. “Buying a house isn’t complicated, but there are a lot of elements that need to be considered for the most successful outcome.”
The first element to consider should always be affordability – not only what kind of financing you qualify for, but also how much you can spare from your monthly budget for all those additional expenses like rates, insurance, repairs and maintenance. “It’s always wise to be conservative with the size of your bond,” says Rawson, “especially as a first-time buyer with interest rates on the rise. You’ll need to make sure you have enough money left over after your bond repayments to cover any unexpected expenses, and that you’ll be able to handle an increase in your repayments if the lending rates continue to climb. Don’t forget that you’ll probably also need cash for a deposit, as well as legal fees, bond fees and transfer costs too.”
To get a good idea of how bond repayments relate to the value of a property, loan term and interest rates, and how much the associated costs might be, try using the Rawson Property Group’s online Bond Repayment Calculator. You can also apply for bond pre-approval through Rawson Finance, the Rawson Property Group’s in house bond originator.
Once you know how much you can afford, it’s time to start familiarising yourself with the market to get an idea of the type of property you can expect within your budget. It’s a good idea to put together a check list of “must-have”, “nice-to-have” and “don’t-want” features so that you can compare properties on the market to properties you would be interested in purchasing once you’ve had time to get to know the lay of the land.
“If it’s possible, take your time to look around at various properties in your price range before you consider making any offers,” Rawson advises. “It’s very helpful to have that context when you do decide to make a purchase, because you’ll have a better idea of the going rate for properties with similar features.”
Rawson strongly advises approaching an estate agent in your area of interest at this stage to assist you in narrowing down your search to houses that best suit your requirements. “Property listings very seldom have all the details you need,” he explains, “and you may visit ten different two bedroomed houses where only one of them has all the items on your “must-have” list. A good estate agent will be able to do that legwork for you, and save you a huge amount of time by only taking you to houses that meet your needs.”
Once you’ve found a home that fits the bill in a neighbourhood that you’re happy with, it’s time to make an official offer. To do this, you’ll sit down with the seller’s estate agent and fill out an offer to purchase agreement. Feel free to ask as many questions as you need to feel comfortable with the paperwork.
“An offer to purchase is a binding agreement,” warns Rawson, “so make absolutely sure you understand the terms and that you want the house before you sign anything. You may need to add some suspensive conditions, like making the purchase subject to bond approval, or subject to a successful home inspection if one has not already been performed. The seller’s estate agent will be able to help you add these conditions, but if you’re unsure of anything, have your lawyer look over the documents.”
Don’t be too surprised if the first or second offer you make on a home is unsuccessful. It’s very common and, although disappointing, can help you adjust your expectations to make a more appropriate offer next time.
If your offer to purchase is accepted, you’ll need to start the ball rolling on the finance side of things, and using a bond originator like Rawson Finance can make this process a lot less time-consuming. “A bond originator will approach all the financial institutions for you and present the best options to you to get your financing approved as quickly as possible,” says Rawson. “It’s free service, and there really isn’t a downside to taking advantage of it, but you can always approach the banks yourself if you prefer.”
Once your bond is approved and registered and any other suspensive conditions have been met, the seller’s attorneys will handle the rest of the transfer process. You’ll be asked to sign a few documents, but other than that, there is very little that you need to do.
“The transfer process can take up to three months,” says Rawson, “but the official date of transfer is usually specified in the Offer to Purchase and Deed of Sale agreements.” On this date, your bank will pay the balance of the purchase price (after the deposit) to the seller (or the seller’s bank if there is an outstanding loan), and the house will officially be transferred into your name.
With that, congratulations are in order as you’ll finally be a home-owner! Pop the bubbly and enjoy a glass before you start planning your big move.
For further information visit: www.rawson.co.za
