Beginners Guide To Buying

New year, new goals! If you’ve resolved to purchase your first property in 2018, then this 6-step guide is a must-read. It will help you navigate and simplify what is often seen as a confusing process of buying your first home – right from the house-hunt to the house-warming. Let’s do this!

But we also know that buying your first home is a big decision that may feel like it holds far more ‘new challenges’ than ‘new beginnings’. That’s why we’ve put together this six-step guide that will help first time buyers navigate through the entire process of acquiring their first property – right from the house-hunt to the house-warming!

Step 1. Find a good agent
For many, the house-hunting process generally starts with tons of questions, such as: “Where’s the best place to look for property?” “How do I know that the area I want to buy in is a good one?” “How do I know if the offer I want to make on my dream home will actually ensure I get it?” This is not even to mention the complication and uncertainties around getting a bond approved.

Fortunately, you don’t have to deal with these difficult questions or processes on your own – that is, if you have a reliable, experienced estate agent who can help you to find your dream home.

So, what does a good estate agent look like? Make sure you ask the following questions of your agent:

a) Is s/he qualified?
Agents working in real estate in South Africa are required to have a certain level of qualification to practice. This qualification is called a Fidelity Fund Certificate (FFC) that needs to be renewed every year. Ensuring that you ask a qualified agent to represent you is especially important as they would need to help you navigate and understand the, very often, complicated terms and conditions involved in buying your home.

b) Is s/he on your side?
It’s important to know your agent has your best interest at heart and that they will find exactly what you’re looking for and can afford. Personal recommendations are a great way of finding an agent you can trust – so, ask family, friends and neighbours. If they had good experiences, chances are you will too.

c) Does s/he know the area?

We get it: there are probably hundreds of neighbourhoods in your search area, so where do you even begin looking? Your agent should be able to provide you with those important pieces of information – such as schools in a 10km radius, who is in charge of the community watch, where’s the nearest shopping centre – that could just be the thing that will sell a neighbourhood to you.

Step 2: Find the right neighbourhood
Before you start dreaming about the kind of house you want, start thinking about the kind of neighbourhood you want to live in… Because, where you live does have a huge impact on your wellbeing. Here are a two things that will help you find the right neighbourhood:

a) Review your lifestyle
When buying your first home, it’s important to think a few years ahead… city-living might be your dream right now but, if you’re thinking about starting a family soon, the bustling nightlife around your apartment might not be well suited for a new born baby. If you’re a parent, you may want to ask yourself where you would like your kids to go to school? Or if you have dogs, you may want to consider neighbourhoods that have the best parks and outdoor areas? Other questions you need to look into include: How far are you willing to commute? Are you planning to drive, walk or take public transport? Do you want to be in a neighbourhood with charm and character, or do you prefer the newer, more modern areas?

b) Scout the area
Once you’ve narrowed down your list of preferred neighbourhoods, it’s time to explore it. Take particular note of your general impression of the area: What were some of the first things you noticed? Are the sidewalks and houses well maintained? Can you visualise yourself jogging or walking your dog in the area? Take a drive through the neighbourhood in the evening and see if it still has the same appeal. Talk to people in the area and find out what they think about it. This is often the quickest way to get an insider’s perspective on the area.

Step 3: Find a dream home that matches your dream neighbourhood

So, you’ve narrowed down your search to a select few neighbourhoods; now it’s time to find a property that you can afford in one of them. This step is where your estate agent comes in, as s/he will be able to provide you with a list of the available properties within your price bracket in your preferred area.

You may also want to browse online portals as many exciting, new properties are listed on various property websites. And while you’re there, make sure you subscribe to updates and set up alerts for listings in the area you’re interested in and soon you’ll be saying home-sweet-home in no time!

Step 4: Get Pre-Approved
There are few things as disappointing for first time buyers than finding their dream home, only to discover – once the offer has been accepted – that the bond hasn’t been approved! Fortunately, disappointment can be easily avoided, if you have a pre-qualification certificate.

What is this pre-qualified certificate, you ask? It’s a free, no-obligation document offered to buyers through mortgage originators. It will not only give you an indication of what kind of bond you will be able to afford (and qualify for), but it will also:

Enable you to search for a property within your budget, and thus save you valuable time and effort.

Empower you in negotiations, as you will know what you can afford and how far you will be able to stretch your offer or any counter offer.

Make you a favourable candidate when putting an offer on the table. Sellers prefer buyers who are pre-qualified, as they know that the offer a buyer makes is one that they really can afford.

Make the bond application much quicker and far simpler. All relevant paperwork is usually submitted in your pre-qualification certificate; so, it’ll only require a few amendments and you’ll be set to go!

You can obtain a Pre-qualification Certificate directly from Rawson Finance, the mortgage originator arm of the Rawson Property Group. Please note that you will be required to submit (amongst other documents) an expense sheet, bank statements and copies of your payslip.

Step 5: Make an attractive offer
Always put forward an offer that will make you the most favoured candidate to the seller. How? Consider offering full or close to full asking price; if the property is worth it (and you can afford it), consider offering a bit more – this is when your pre-qualification certificate is particularly useful, as you will know exactly what you can offer.

Another factor that will make you a favourable buyer is if you have a substantial cash deposit to put down. A decent deposit is not only a positive sign of commitment and goodwill, but also shows both the seller and the banks that you can afford the property. So, it might be good to ensure you’ve got enough saved up before you start the house hunt.

Step 6: Understand the cost involved in buying property
Many first time buyers are often unaware of all additional costs that are involved in buying and in transferring the property in to your name. These fees can become costly, especially if you’ve not planned for them.

Instead, familiarise yourself with the costs and make sure you can afford to pay them before the house is put into your name. These include:

a) Transfer Costs
This is the fee payable to transfer the property into your name. While the price varies from home to home, you can bargain for anywhere between 8% – 10% of the purchase price amount.

b) Bond Costs
There are also fees involved in registering a bond. The main areas where costs come in are: home loan initiation fee (the cost to process your home loan application), which can come in at around R1000 plus approximately 0.4% of the value of your loan; the conveyancer’s fees, which vary according to the capital of your home loan account but it’s important to note that the higher your bond amount, the higher the conveyance fee; and post and petties for the deeds office to register your bond.