Our latest blog explains what should, both the buyer and seller take into account before buying or selling a property. Our blog explains various terms in a contract of sale and who is responsible for the various costs involved, these include agents commission and legal fees.
WHAT REQUIREMENTS SHOULD A PURCHASER TAKE INTO CONSIDERATION BEFORE BUYING A PROPERTY?
- The buyer must contact their bank to find out whether or not they qualify for a home loan and if so, what amount they quality for.
- The buyer should make sure that they can afford the monthly loan repayments and other costs like, rates and taxes, water and electricity, insurance premiums etc. The buyer should also ensure that if the interest rate is increased they are able to afford those increases.
- The buyer must find out about any once off costs, for example, legal costs, transfer duty or value added tax, loan administration, initiation and registration fees. Please click here to see the current tariff fees- https://www.schwenninc.co.za
- The buyer should also consider their future needs, for example, whether the property that they intend to buy is close to their work or to shopping centers, schools and hospitals as this could determine the future selling price or value of one of their biggest asset purchases.
- The buyer should examine the property they intend to buy thoroughly for any defects or potential defects, for example, cracks in the walls, damage to the roof, faulty plumbing and so on. The defects may be taken into consideration when negotiating the purchase price of the property. Our advice would be to consider the use of company that would be able to assess the property and advise of any potential defects.
- The buyer should request from the person selling the property (seller) to provide them with the following documents: copies of the title deed and diagram; any existing lease agreements; approved building plans; any other relevant information (such as zoning, town planning or municipal requirements).These documents can be used or taken into consideration when negotiating the purchase price of the property.
- After examining the property and perusing the documentation, the buyer should decide whether or not they are interested in buying the property. If the buyer is interested in buying the sellers property, they will need to make an offer to the seller or through the appointed estate agent.
- When the terms and conditions of an offer to purchase are being negotiated, the buyer will be asked for the date that they intend to move into the property. If no date is set, the seller has the right to remain in the property until the property has been registered into the buyers name and the seller has received the agreed purchase price.
- After the buyer and seller have reached an agreement on the terms and conditions of the sale, the offer to purchase must be reduced to writing in terms of the Alienation of Land Act and signed by both the buyer and seller.
- Any change to the sale agreement must be done in writing and signed by both the buyer and the seller. This is by way of an addendum.
WHAT REQUIREMENTS SHOULD A SELLER TAKE INTO ACCOUNT BEFORE LISTING OR SELLING THEIR PROPERTY?
- A seller can sell their property privately or through a registered estate agent.
- The seller may appoint one or more registered estate agents to list their property. The estate agent must be registered by the Estate Agency Affairs Board and hold a fidelity fund certificate.
- The estate agent and the seller will enter into a agreement which is called a mandate, in terms of which the estate agent will be entitled to receive a commission for selling the sellers property. The estate agent must explain the terms and conditions of the mandate to the seller.
- When the sellers property is on show, the property should be kept neat and clean so that it is attractive to potential buyers on the day of the showing.
- Estate agencies have their own standard sale agreements that can be used for the purpose of buying or selling of a property.
- If the seller decides to sell their private property, they should rather approach an attorney or US to draw up a sale agreement.
- The seller is obligated to inform the buyer of all defects or potential defects relating to the property, even if they are selling the property voetstoots.
- Upon receipt of the buyers written offer to purchase the property, the seller must read through the offer carefully, cross-out anything that they don’t agree with, cross-out any open spaces on the offer where they have crossed-out or added something and return the offer back to the buyer for their consideration.
- If there was nothing to be crossed-out or added, the seller may accept or reject the buyers offer.
WHAT TERMS AND CONDITIONS MUST APPEAR IN A SALE AGREEMENT?
- The terms and conditions that the seller and the buyer MUST agree on are: a) Identity of the seller and the buyer: by including their full names, identity numbers, addresses and marital statuses. b)description of the property being sold by the seller: by including the deeds offices description, size, and/or street address of the property being sold. c)Purchase price of the property payable by the buyer: by including how the property is going to be paid by the buyer, for example, in obtaining a loan, and whether or not a deposit is payable. If a deposit is payable, the must be held in an interest bearing trust account by the conveyancers purchase price is R250 000.00 or less a cooling off period of five working days will apply.
- The term that the seller and the buyer MAY also agree on are for example: a) The details of the conveyance, usually the seller has the right to choose, b) Who will be responsible for which costs relating to eg cancellation costs, c) the date of the buyer will take, d) voetstoots meaning it is sold “as is”, Which estate agents will be involved in sale and who pays the commission, f)the seller must provide the buyer with electrical compliance certificates and gas certificates, g) are any suspensive conditions buyer will have to get a loan in a certain period of time, h)what remedies there are if one party was to conditions.
For any information regarding the buying or selling of a property kindly contact us on 031 003 0630 or email Charmaine@schwenninc.co.za.
WRITTEN BY : BARRY TODD