When a person decides it’s time to purchase a home for himself, it is often an emotional decision, one that starts with a “feel” of wanting to own something for himself. When he looks for a property, it will be the one that he feels most at home in that he will put in an offer on, sometimes forgetting to do a fair bit of practical legwork beforehand regarding property ownership.
“When putting in an offer to purchase a property, the first thing to consider is whether you’re putting in the best possible offer you can,” says Rene Barry, partner at Henkes Nolte-Joubert Attorneys.
Putting in the best possible offer means: the market related value of the home has been matched, the buyer is offering the full amount that he can afford, and he has his finances in order and strengthened his position by obtaining pre-approval from his bank before he has started looking for a property.
When assessing one’s financial situation on the full amount that one can afford, all the expenses pertaining to buying that property have to be taken into account. Apart from the monthly bond repayments, there are other expenses that will affect the buyer a great deal, such as insurance, rates, water and electricity, levies if living in a sectional title or Home Owners’ Association run scheme, maintenance on the property and possible increases in interest rates or increases for services.
“In other words, when establishing affordability, it’s not just the bond repayment, it’s whether you have enough leeway and extra money each month to cover any unforeseen expenses as well as the full upkeep and running of your home,” says Barry.
Once the buyer has established that he can wholly afford the property he is putting in an offer on, he should then ensure he has cash put aside for the transfer fees, transfer duty, bond registration fees, and a sizeable deposit on the property (if he intends on putting down a deposit).
Putting a deposit down conveys a message of seriousness about buying, and strengthens the chances of the seller accepting the deal. When a deposit is offered, however, it must be cash available immediately, not money that will take days or weeks to be available, such as funds that are in fixed accounts or overseas funds, as this can cause delays which could sway the seller into rejecting or waiting for a better offer, she advises.
“If all this is established beforehand, the buyer’s offer will stand a high chance of being accepted, as the seller’s needs will have been met without a lot of negotiation or complications. Most property sellers would like their home to sell in a short time with minimum fuss and will welcome a buyer who has everything in order before submitting an offer,” says Barry.