Important Things To Know Before Buying Or Selling Property
The ease of instant gratification in the digital age we currently find ourselves in, is not only reserved for that spontaneous purchase on your favourite shopping site, but also applies to the financial sector.
You can now easily determine the resale value of your car, apply for a short-term cash injection, be alerted when items go on sale, when new properties go on the market or get a valuation on your existing property – all online. Some people even purchase property online – without a physical walk-through! The beauty of online video has made that possible too.
Although finding, as well as selling property has become a lot easier these days, there are still a few foundational things you need to know, or prepare, before deciding to take the plunge of either buying, or selling your property.
If you are married, the way in which you are married impacts property ownership. Being married either in- or out of community of property will impact how you can buy, or sell property.
Out of community of property you don’t need consent from your spouse to buy or sell property.
However, if you’re married in community of property, you need both parties’ consent for any property transaction. Although the offer to purchase may only reflect the signature of the registered owner, the consent must be given by the spouse after the signature of the agreement. For in community of property both parties’ consent will be needed to sell it.
On the death of a spouse, if you are married in community of property you will need the consent of the executor to transact, and if you are married out of accrual, you would need the executor’s permission if the property was bequeathed to you but not transferred into your name.
Your credit score is determined by how well you manage your debt, how many accounts you have and how long you’ve had them for, among others.
Your credit score indicates to your bank whether your past debt repayment behaviour will make you a good risk or not for a (another) loan.
Having a low score impacts any future lending, and as a property is possibly the largest loan you will request, a low (or negative) score might put you at risk of not being granted a bond at all.
Credit bureaus won’t only be looking at your repayment history. They’ll be able to access your employment history and income as well and calculate your credit score according to a complex formula. In addition, your bank, or home loan provider uses both the credit bureau score and their own internal risk assessment criteria which looks at a number of factors specific to a particular home loan application, such as the loan size compared to the property value (and how much deposit you’re able to afford).
Unfortunately, there are also a few additional criteria involved around employment – those who are self-employed need to build up a history of min two years of financial statements before South African financial institutions are allowed to lend you money for a bond. This varies from institution to institution, but speak to your home loan provider about this in advance.
Determine Why You Are Selling
This is very subjective and can include a number of criteria from emigration, change of employment location, divorce, starting a family and needing more space, (or to be closer to a school catchment area), scaling down etc etc. Each one of these reasons may in turn impact a number of things associated with the sale, including: how much you need to sell for (ie how much money you need to get out of your investment), how fast you need to move, or whether you’re able to take your time with the sale and can wait for the right offer.
Knowing these criteria will greatly assist your estate agent in helping you determine your final sales price and a realistic sales date estimation.
How Much You Can Afford
Your credit score will have the highest impact on affordability, but you also need to understand your long-term plans. Most home loans span a 20 – 30 year period. Can you make that kind of commitment?
Consider things like job security – are you employed in a stable company? Will you work there for a number of years? Do you have prospects to grow in your career/salary? If you decide to change jobs, how stable is your career and salary bracket? Will you be able to afford to pay this loan in the long-run?
If you have any doubts, perhaps consider that it might not be the right time to buy just yet.
Knowing how much you can afford to buy for will also save you quite a bit of time and heartache. If you get prequalified with a bank indicator of what you can afford, you can make decisions a lot faster. In addition, if you find your dream home and apply to buy it, your application will be considered a lot more seriously than those that are not prequalified. The downside to not being prequalified is that you might lose that dream home of yours to another buyer that did get prequalified.
Sell/Buy Through Agent, or Privately?
Websites like Property24 and Private Property have made it very easy to list (or select) your home privately. They also make it a lot easier to see and compare all properties in your location and price bracket – from all agents as well as private listings. This gives you more choice on what is available in the market than working solely with one agent – if you’re a buyer.
If you choose to go outside the estate agent and buy/sell privately, directly with the owner/buyer, or where homes are listed for sale by owner – it could pose a potential risk on both sides.
Estate agents are the objective link between role players. Estate agents primary concern is to secure the sale and ensure that it doesn’t fall through for both the owner, and the buyer. They also ensure that legally, both parties keep their promises – whether this is for deposit payment, contract signing, property transfer with deeds office, or exit dates. There are many other benefits to both parties, including (but not limited to) qualifying buyers, negotiating the transaction and witnessing the final acceptance of sale on behalf of both parties. The latter is important so that there are legal repercussions for either party should they decide to renege.
Should you choose to buy/sell direct – ensure that you have a good attorney/conveyancing attorney on stand-by to assist you through the legalities of the transaction.