Once you have found your perfect home and the right financial package to go with it, you start on the rather complicated and annoyingly long process of making an offer and waiting for transfer to take place.
The first step is to sign an offer to purchase, which the seller can accept or reject within a period you specify. This is a very important docu-ment and it is a good idea to read through it thoroughly.
According to Ben Stander, product manager at Old Mutual Bank, once the offer to purchase is accepted it becomes a legally binding contract. So, before you commit, you must check that the property is properly described as per the title deed.
Next, make sure that the purchase price, deposit and details about how these will be paid are correct. Check the occupation date, whether occupational rent will need to be paid and, if so, how much. Ensure that all moveable items, fixtures and fittings are specified to avoid any future difficulties. Finally, make sure that you are satisfied with any conditions, such as the granting of a home loan.
Also, remember that the contract is not set in stone — you can make changes to ensure you are protected.
Attorney Aaron Stanger says all sale agreements are open for negotiation. ‘People think that because it is printed on a piece of paper it is not negotiable. The seller and buyer are always at liberty to amend the contract. It is important to remember that there are three parties involved [including the agent] in a sale and all three have a right to set their terms.”
The agent may request that you put down a deposit to secure the purchase. You do not necessarily have to do this, although it may make your offer more attractive to the seller. Keep in mind that you will lose your full deposit if you pull out of the deal.
If you do pay a deposit, Stander says it is generally paid to the estate agent or the attorney handling the property transfer. Both will have trust accounts to keep your money safe until the transaction is concluded, but ensure you get the correct receipts and confirmation that the deposit has been paid into a trust account. Specify that any interest accrues to you.
Stanger points out that, although it is standard practice for the seller to name the conveyancer (transferring lawyer), you have the right to request your own conveyancer. This will help you to control the legal process. It is also advisable to request that the seller allows a thorough home inspection by a qualified inspector of your choice to ensure there are no structural damages to the property and gives you an independent report on the state of the electrics, one of the major areas of concern when buying a home.
‘The offer to purchase may include some important details such as a voetstoots clause, which means you buy the property as it is, with all existing defects. Remember, it’s not the bank’s responsibility to point out any problems with the house,” says Stander, who adds that if the property price is less than R250 000, you have five working days to reconsider your purchase. This is called a cooling-off clause. If you do change your mind, you have to give written notice.
Once the offer is accepted, the legal work and approval for the home loan begins. Stander says the bank appoints a registering attorney to prepare the bond contract and have it registered in the deeds office. A conveyancer takes care of the transfer of the property into your name.
The attorneys will contact you in a few weeks to sign the documentation required to register the bond and property transfer. A transfer from start to finish takes between two and three months.
Besides the deposit, you will need to pay:
- an initiation fee to the bank for processing the home loan;
- an assessment fee for the bank’s assessment of the property; and
- bond registration costs payable to the conveyancer for registering the mortgage.
If the house costs less than R500 000, you will no longer need to pay any transfer duty. If the property is valued at between R500 000 and R1-million, the transfer duty is 5%, and for properties valued at R1-million and above, it is R50 000 plus 8% of the value above R1-million.
Once the attorneys have cancelled any existing bonds over the property, registered the new bond and transferred the property into your name, the documentation is lodged with the deeds office. The attorney then advises the bank, which pays for the property.
Stander says that on registration, the attorney should contact you to confirm that everything has been done successfully and provide a final statement of account. The bank will send you a letter confirming your bond registration and the date of your first repayment.
You are now the proud owner of a new home.