Sunday, August 19

The A-Z of house buying

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Successful property transactions require experts from beginning to end, and all at costs to both buyer and seller.

House hunting may seem like a simple process, but Gerhard van der Linde, managing director of Seeff Pretoria East, says there is more to a property transaction than you may think.

Aside from listing and marketing, a mutually acceptable deal needs to be negotiated (or brokered). Then a chain of events follow and these involve many role players before ownership of the property is finally transferred. Role players in a property transaction include:


● Seller 

This is the property owner. Steve van Wyk, managing director of Seeff Centurion, says the seller usually appoints a seller’s agent (estate agent) to market and sell the property on their behalf. 
The seller is responsible for payment of the commission on the sale, usually a percentage of the selling price. The seller is also responsible for payment of clearance certificates required by law and bond cancellation fees (bond attorney costs) if applicable.


● Buyer 

Van Wyk says the buyer will put in an offer to purchase and hopefully secure acceptance from the seller. The buyer does not pay any commission or costs of clearance certificates. 
The buyer is, however, responsible for the costs of registration of the transfer (transfer attorney costs), property tax (paid to government) and, if there is a bond, the bond registration costs (bond attorney costs).

● Willing buyer, willing seller principle 
Van Der Linde says an important aspect of selling and buying property is the “willing buyer, willing seller principle”, which is a defining characteristic of a free market economy. 
It enables a seller to sell their property at fair market value on the open market based on the price a willing (unpressured) buyer will offer and that a willing (unpressured) seller will accept. This principle is enshrined in Section 26 of the Constitution.

● Seller’s agent 
The seller usually appoints an estate agent (seller’s agent) to market and sell the property on their behalf at an agreed fee (sales commission), generally calculated as a percentage of the sales price. 
Van Wyk says it is usually an area expert with a track record of successful sales and network of potential buyers. The agent will list the property on property portals and perform marketing activities to attract the right buyer interest. 
The agent will also facilitate and negotiate a deal that will meet with the approval of both parties and result in a successful sale. Thereafter, the seller’s agent will manage and monitor the transfer process, from bond application through to final transfer.

● Buyer’s agent 
Although uncommon, some buyers, especially if they do not live in the area, may appoint a buyer’s agent (also an estate agent) to look for property on their behalf. Van Der Linde says the buyer’s agent would act on behalf of the prospective buyer or investor to liaise with other agents in the area, view properties and liaise with the buyer. The agent would generally charge a fee to the client and may also share the commission with the seller’s agent.

● Bond originator 
Liaising with banks to secure finance can be cumbersome so the role of a bond originator has become vital, says Lynne de Vos, licensee for Seeff Jakaranda. 
The bond originator acts as an intermediary or mortgage broker, sourcing a housing bond on behalf of the buyer, liaising with banks and financial institutions and negotiating the most favourable loan and interest rate.

Picture: Supplied


● Conveyancer/transfer attorney/s 

The transfer of ownership of property is undertaken by a conveyancer, appointed by the seller. The process involves a number of steps including obtaining the original title deed/s, clearances such as municipal (rates and taxes) and tax clearances and electricity, plumbing and other compliance certificates. The average transaction takes about three months to complete, but varies according to the area and time of year.

● Bond attorney/s 
The bank or financial institution that grants a housing bond will also appoint an attorney (bond attorney) responsible for registering a bond over the property in the name of the lending institution. 
At the same time, says De Vos, there might be an existing bond on the property and a second bond attorney will thus be appointed by that particular financial institution to effect the cancellation of the bond upon full settlement.

● Clearances and inspectors 
Van Wyk points out specialist role players are also called on to undertake inspections and issue compliance certificates. 
These include certificates of compliance for all electrical aspects of the property, the electric fence (which requires a separate certificate), plumbing and gas (if applicable). 
In the Western Cape, there is also a Water Installation Compliance and a Beetle Certificate. The buyer may also want to get structural aspects of the property inspected, especially if it is an old building or home, and this will be for the buyer’s account.

● Valuators 
The bank or bond company will send a valuator to evaluate the property against its asking price as part of the bond application. Van Der Linde says the bank will generally grant a loan as a percentage of the assessed value (generally a lower value than the asking price) and the difference (generally anything between 10%-25%) will have to be paid in cash by the buyer, either from savings or further finance.

● Deeds Office 
Each demarcated property in South Africa carries a title deed that is de facto proof of the extent of the property and its ownership. South Africa has one of the most advanced deeds registration systems in the world, regulated by the Deeds Registries Act 47 of 1937. 

The written records of property transactions date to around 1686, with subsequent legislative improvements in 1828 and the first Deeds Registry Act 19 of 1891. As territory expanded, more legislation followed, including the Consolidated Deeds Registry Act of 1918 which was subsequently replaced by the current 1937 Act.

There are 10 deeds offices in South Africa, covering various regions and a main head office in Pretoria. With a few exceptions, every piece of land in South Africa has been measured, surveyed and plotted on a diagram and plan, held in the office of the Surveyor General for the province in which it is located. As developments are established or property sub-divided, new title deeds are established.

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