What, Where, How and When? It Depends.
Time is of the essence, when it comes to buying your dream home. In this article, we will offer you a process and timeline to anticipate what, where, how and when.
On average, to buy a house in South Africa, it takes around three months from the date of sale until the property is registered in the new owner’s name.
But, how long is a piece of string? Some house-hunters will find their home very quickly, others will need more time. Time buys you more choice with new listings, but you may need to make an offer quickly if you are competing with other interested buyers. Your agent will advise you when to act swiftly.
The following topics will be discussed here:
- Finding a House
- Financing
- Making an Offer
- Negotiating
- Legal Processes
- Transfer Processes
- Other Considerations
The Process of Buying a House
The process of buying a house requires a lot of time and effort. Here is a step by step guide to make the entire process manageable and help you make the best decision.
Finding a House
Where your Dreams Meet your Financial Reality
- Define what type of buyer you are.
- Make your very own personal wish-list. This list must include your “must-haves” and can include your “would love to haves”.
- Neighbourhood, proximity to schools and amenities.
- Number of bedrooms, bathrooms etc.
- Your price-range.
- Stairs or no stairs?
- Security features.
- Architectural style.
- Free-standing or sectional title?
- Complex, apartment or gated estate?
- And the list goes on and on…
- Get online and do your research to determine the asking prices of houses that match your wish-list or ask our area specialist Leadhome agent for this information.
Be aware that on average:
- It takes prospective buyers about two to three months to find a home that they are interested in buying.
- Prospective buyers view many homes before settling on one to buy.
To speed up the process of buying a home
- Calculate what you can afford and what your repayments will be by using our Affordability Calculator
- Apply for pre-approval of your loan so that you have an idea of how much money your bank will lend you. Most banks will give you pre-approval subject to the onsite valuation inspection, at a later stage, of your chosen property.
- Compile a list of your current expenses and any extra foreseen expenses the new home may require such as levies, security, after-school care etc. NB Don’t forget the transfer duty, moving costs and legal fees.
- Or you can ask your Leadhome agent for the amount you will need to pay.
This way you will not waste any time or effort looking at properties below or above your reach.
Here are some of the common pitfalls when finding a home:
- Not having a clear idea of what you are looking for.
- Not being sure of what you can afford.
- Not factoring the additional costs into the budget.
- Not shopping around for the best rate (your Leadhome agent can assist here).
- Neglecting to check out the neighbourhood in which you wish to buy.
- Allowing your emotions to influence your decision such as: falling in love with a home that is beyond your means and overextending yourself financially, buying a fixer-upper that takes up all your spare time and money.
- Not inspecting the home thoroughly before you buy.
Financing
In brief, this is the finance process:
- Ask your Leadhome agent to assist you:
- With your bond application and to guide you on your bond amount.
- In getting pre-qualified to determine the loan amount you qualify for.
- In being issued with a pre-qualification certificate, usually valid for 90 days.
- In applying on your behalf for a bond when you have found your perfect home.
- In negotiating on your behalf with the banks for a better interest rate.
- And giving you up-to-date information on the application process up until final approval.
Follow these links to our home loan guides for more information on this process:
https://www.leadhome.co.za/guides/home-buyers/finance/how-to-qualify-for-a-home-loan and https://www.leadhome.co.za/guides/home-buyers/finance/what-is-a-home-loan-and-how-does-it-work
Getting pre-qualified for a home loan usually takes a minimum of one week provided there are no unexpected delays such as application backlogs, missing paperwork etc. However, it is well worth the time and effort to get pre-approved if you want to speed up the offer process because then:
- You already know whether you can afford the home.
- You know that you are protected from putting in an offer on a property you can’t afford.
- Sellers will be more inclined to accept an offer from a buyer who has proof that they can afford to buy the home.
- Organising the loan will be much faster as your paperwork will already be on file
- You are in a better negotiating position not only with the seller but also with the bank when trying to get the best interest rate for your home loan.
Making an Offer
- The seller’s agent will prepare an Offer To Purchase for you to sign.
- It is an agreement between yourself and the seller and will stipulate the terms and conditions for the sale of the property.
- It is important to note that this agreement is a binding contract and that once you make an offer, you cannot change it easily. Follow this link to find out what you need to consider when making an offer (https://www.leadhome.co.za/guides/home-buyers/closing-the-deal/how-to-make-an-offer-on-a-house).
- Your offer will scope various time conditions including:
- A time range for your seller to accept or reject your offer, usually 24 hours to 1 week.
- A defined time to meet suspensive conditions which could include the sale of your current home.
- A deadline to get your bond approval and bank guarantees in place.
Negotiating
You have found the property you love but the asking price is too high or not quite within your budget. If you want to enter into a negotiation with the seller to lower the asking price, it is best to present him with facts and figures to support your request.
Ask your Leadhome agent to prepare a comparative market analysis (CMA) which compares the home with other similar homes that were sold recently in the area – on such details as size of property, square-meterage, layout, listing price versus actual selling price, condition and location of the house etc. This will only be useful if the statistics are in your favour.
The agent should then try to negotiate a lower offer with the seller based on these facts.
This may become a rather lengthy process and timelines will vary in each situation. Much will depend on the stamina of both seller and buyer to continue the negotiation process but the agent should be able to advise on whether it is best to proceed or move and find another home.
Legal Processes
Once the seller has signed an acceptance of your offer, you have a binding sales agreement with a few more hoops to jump through.
The next steps can take up to 3 – 4 months to complete.
- Secure your home loan.
- Make contact with your seller’s appointed conveyancing attorney.
- Provide them will all relevant documentation
- Copies of Identification Documents and Marriage Certificates and Antenuptial Contract, where applicable.
- Your bank’s conveyancers will draft bond documents for your signature.
- The bank’s conveyancer will thereafter provide the seller’s conveyancers with the bank guarantees.
- The conveyancer will draw up all required documentation and require signatures from both the purchaser and the seller before proceeding with the registration of the property into the new owner’s name.
- You will be required to pay the bond registration costs, the transfer duty (which cannot be unreasonably withheld), and the transfer registration costs.
- The seller will make payment for a municipal rates clearance to the conveyancer who will secure the clearance certificate before he/she can proceed to lodge the transfer in the Deeds Office.
- With the SARS Transfer Duty Receipt and the Municipal Rates Clearance Certificate, the new bond documents and cancellation of the seller’s existing bond all in-hand, the conveyancer will lodge in the Deeds Office.
- Registration is achieved within 7 to 10 working days in the ordinary course.
To ensure that this process is not delayed in any way, be sure to respond quickly to any requests for documentation or payments or appointments.
Transfer Processes
- Once the property has been transferred to your name, you are the lawfully registered owner, earning the right to enjoy all the benefits of ownership.
- You will only be able to move in before transfer has taken place, if you have negotiated occupational rent and dates with the seller, and once all the financial guarantees are in place.
- NB: Don’t start any renovations or structural changes until transfer is officially in your name.
Other Considerations
The time it takes to buy a house can be influenced by several factors such as buyers searching for a better interest rate on their bond should the Repo rate have recently changed, or the buyer having recently been promoted at work and thus being able to arrange a better home loan, or a global pandemic like Covid-19.
Getting the timing right is tricky especially when you are coinciding your new purchase with your own house sale and the availability of funding for upfront costs. These considerations together with your potential pressing relocation needs can most often be accommodated.
Summary
Your Leadhome Agent and Conveyancer will guide you from the day you decide to make an offer and will ensure you have provisions and conditions in your “Offer to Purchase” to accommodate your needs and meet your obligations.
