Look before you leap
Understand your cost
When buying a home, you need to have a 10% deposit, and funds to cover transfer fees and bond registration.
ooba (www.ooba.co.za) has a great online tool that shows you the transaction costs you would incur.
For example, their transfer and bond costs calculator shows that for a R1 million property, one would incur R45 000 in fees in addition to the R100 000 (10%) deposit.
You will need to have R145 000 in cash to buy the property.
Buying on auction
If you buy a property on auction, you would need to have a premortgage approval for the amount you want to spend.
In the case of a repossessed property, only buy the property if the owners have moved out.
There are horror stories of owners who refuse to move out or they strip the property bare.
The FNB Quick Sale website – www.quicksale.co.za – has distressed properties (not repossessed) for sale where you may pick up a bargain and the bank waives certain fees.
Buying a rental property
If you are buying a property that has an existing tenant, check the lease as a tenant lease supersedes that of property ownership.
So if there is a lease in place, they do not have to move out, even if the owner sells.
Check the valuation
Your bank would first do an evaluation of the property before granting the mortgage.
So it is worth finding out from your bank what you could expect to spend on a property in the area so that you do not end up making an offer and the bank rejects it on valuation.
Inspect the property
Definitely consider a home inspection before you buy.
Home inspections are common overseas, but have only recently become popular in South Africa.
A home inspection company will check for serious structural problems, such as the roof and foundations.
The body corporate
If you buy a flat or townhouse with sectional title, make sure you do your homework on the body corporate first.
Ask to see their financials to make sure they are solvent.
There are many sectional title developments that have gone bankrupt.
Ideally, you should join the body corporate so that you know what is happening with your levies.