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Frequently Asked Questions
What home loan insurance do I need?
There are two types of insurance relating to a home loan. Homeowner’s Cover is compulsory if the property is a house or cluster. It protects the owner and the bank against any unforeseen or accidental damage to the property.
Bond Protection Insurance includes life cover, disability and retrenchment so that in the event of an incident, the monthly home loan payments will continue.
What if the property inspection report reveals problems?
You have a few choices. If the inspection revealed major problems, you could speak to the seller – possibly via the estate agent – and include correction of that problem as a suspensive condition of the sale. Or, you might even negotiate the selling price if it’s costly to repair. If a satisfactory property inspection was a condition of the sale, you would have the right to cancel the sale.
How many banks can I apply to?
No restrictions on that at all. When you apply through We Apply, they apply to all major banks on your behalf, free of charge.
What is the next step?
Usually, there is a time period specified on the Offer to Purchase, for the buyer to fulfill any suspensive conditions – being granted a home loan is one of them.
How much does a property inspection cost?
The costs vary from company to company, but generally, a typical three bedroom two bathroom home will cost around R 4 000 for a comprehensive report.
When should you call a property inspector?
Once you’ve taken the decision to buy the property – and have signed the Offer to Purchase – consider employing the services of a property inspector to check out the property thoroughly for any faults you may have missed. They are very used to the signs of problems.
What is a property inspection?
There are property inspection companies that offer their services to conduct a thorough inspection of the property you intend to buy – they will discover faults you may not be able to see with the naked eye.
What if my offer is rejected?
The final accepted offer price is usually reached through a process of negotiation, so if your budget allows, you can submit an amended offer to the seller.
How does the buyer protect against the voetstoots clause?
As a buyer, it’s well worth having a professional property inspection company conduct a thorough investigation of the property. This is at you, the buyer’s expense, and it needs the seller’s permission.
Is the voetstoots clause still valid?
Yes, it is. The Consumer Protection Act has no effect on the voestoots clause.
What is the voetstoots clause?
It is a clause in the Offer to Purchase which states that the buyer is buying the property as it stands, in other words, with defects and all.
What is an Offer to Purchase (OTP)?
This is a detailed document that is exchanged between a buyer and seller, with all the property and purchase details and conditions printed on it.
What are patent and latent defects?
In the Offer to Purchase is a ‘voetstoots’ clause, which says that a buyer buys the property ‘as it stands’. It includes patent and latent defects. A patent defect is one that is easily visible when you have a look around the house; a latent defect is more difficult, sometimes impossible, to see, but one that sometimes the seller knows about (for example, a leaking swimming pool). He may not sell the property without revealing that fault, but if he does, the buyer has to prove that he knew about this defect.
What is a cooling-off period?
There are misunderstandings regarding the so-called cooling-off period – it is not a time to rethink your property purchase and change your mind. The Consumer Protection Act (CPA) does not protect you in this case – only if you’ve bought a property through direct marketing.
The cooling-off period refers to property transactions of R250 000 or less. In this case, the Alienation of Land Act provides a cooling-off period of five days from the date of signing the Offer to Purchase.
What are suspensive and resolutive conditions in the Offer to Purchase agreement?
The best example of a suspensive condition is your home loan. In the Offer to Purchase, it will be stated that you will buy the property as long as you are granted a home loan of X amount. Should you not be granted that the Offer to Purchase is not binding.
In the case of a resolutive condition, the Offer to Purchase contract is immediately binding after both seller and buyer have signed. It remains binding, subject to fulfillment of a future event stipulated in the conditions. For example, the contract will terminate if a cellphone tower is erected next to the property, within a certain period.
What makes a valid acceptance?
When the buyer and seller have both agreed on the terms of the Offer to Purchase, and both signed the document, this is a valid acceptance.
What makes a valid agreement?
The Offer to Purchase is first signed by yourself as the buyer, and then, once the estate agent has presented your Offer to Purchase to the seller, it will be signed by the seller too.
What makes a valid offer?
A valid offer is known as an Offer to Purchase. You are entitled as the buyer, to make an offer to buy the property, at less than the buyer’s asking price, or with certain conditions attached to it. This will be presented to the seller.
What is the difference between prequalifying and pre-approved?
These are two different concepts: prequalifying will give you an idea of what size loan you are likely to qualify for. Preapproval is a conditional commitment by the bank to grant you the mortgage.
Can I start the home loan application process before I find a property to buy?
You can’t apply for a home loan, but you can certainly make enquiries online as to your affordability – see the WeApply Affordability Calculator and what the bank is likely to loan you given your income, assets and expenditure. Once you have that information, you can also access the online calculators to indicate what the other so-called ‘hidden’ costs are likely to be.
Can I sell my current property through WeApply?
Not yet, but we’re working on it!
What should I know about the ‘voetstoots’ clause
The voetstoots clause in the Offer to Purchase states that you, the buyer, are buying the property ‘as it stands’, in other words, defects and all. But, take note – if you can prove that the seller was aware of the defects and failed to reveal them, you would have recourse through a court of law.
Which are the best property search engines?
The two largest online property search engines are Property24 and Private Property.
How should the estate agent behave?
The estate agent’s services are usually engaged by the seller, but that doesn’t mean that person won’t act on your behalf as well. It is definitely in the estate agent’s interest to ensure that both buyer and seller are satisfied with the negotiation and deal which is struck.
The seller pays the estate agent’s commission.
It’s wise to check that the estate agent holds a Fidelity Fund Certificate, essentially their license to practice as a sales consultant in this industry. That certificate is issued by the Estate Agency Affairs Board (EAAB), a body set up to manage and control the Estate Agent’s Fidelity Fund. This Fund is there to reimburse a member of the public who suffered a loss as a result of dealing with a registered estate agent.
Forming a trusting, amicable relationship with an estate agent is first prize. This is likely to be the biggest purchase you ever make, and particularly if you’re a first-time buyer, you will need guidance and advice. It’s very satisfying to walk this path with an estate agent with whom you have faith, and have enjoyed their company and support on the exciting journey to buying your own home.
The importance of property inspections
In many cases, this is a very worthwhile expenditure – a detailed property inspection by a professional can reassure you that there are no patent defects. This inspection will result in you, the buyer, obtaining a full report of the state of the property, with the focus on any areas of concern you may have picked up.
Prospective buyers need the permission of the seller to conduct this inspection, but few sellers would object. If they do, it would probably give you cause for concern – why would they not want an inspection, are they hiding something?
Consider this. Some sellers even employ the services of a professional property inspector so they can attend to any issues that are discovered. That way, they can present this ‘proof’ to the buyer that the property is in perfect condition. It’s a very good selling point, and it also eliminates to a large extent, any possible come-back from a buyer in the future.
Prices for the service vary, but depending on the size of the property and a few other variables, estimate between R2 000 and R6000. If you do intend to do this, it’s smart to call them in before you sign the Offer to Purchase. If you call them in afterward, put a subjective clause into the agreement – in other words, make your offer on the property subject to the property being in the condition that the seller claims it is (this clause is often best drawn up by an attorney – it can be tricky).
This inspection is a private investigation and does not affect anything to do with the municipality, home loan application or anything else.
Property is rarely perfect, so a few issues that are picked up are seldom great cause for concern, or likely to change your mind about buying the property. The inspection is to put your mind at rest and, on that rare occasion, pick up any major structural or other issues. If you’re a handyman, you may consider it worth submitting a lower offer because you’re prepared to deal with that leaky ceiling or similar…but think hard about it.
Patent and latent defects
The important thing as a buyer, is to investigate the property thoroughly and communicate your concerns about defects to the seller directly or through your estate agent. These would then be included in some format or another, in the Offer to Purchase.
If you don’t pick up issues before the property is registered in your name, although you do have some recourse, it’s not an easy process. It’s far better to deal with it before you get too far down the line towards the purchase.
There are two different kinds of defects – patent and latent.
What do the words patent and latent mean?
The word ‘patent’ means visible, and ‘latent’ means largely hidden from view. When these words are referred to in terms of a property sale, it would be a patent defect and a latent defect.
A patent defect will be something like a very clear crack in the wall, obvious when you, as a buyer, do a simple inspection of the property; a latent defect, however, is often not visible at all and would include items like a faulty geyser or even something the owner has concealed under a coat of paint.
One of the important clauses in an Offer to Purchase is the voetstoots clause, explained further in Voetstoots Clause. What this means is that you, as the buyer, have no claim against the seller for patent defects – in other words, you should have seen them when you inspected the house. But if there are latent defects which can be proven to have been concealed by the seller, as a buyer, you have a potential claim. Proving this, of course, can be exceedingly difficult. As a buyer, you would not be the first person to cancel the Offer to Purchase contract or, indeed, claim repayment of some of the purchase price from the seller, if patent defects are discovered which weren’t disclosed. But it’s really advisable to avoid a situation like that.
A few hints
Do make sure the property’s plans fully reflect any outbuildings, additions or alterations. Make sure they have been approved by the municipality. If they are discovered later to not have been improved, it could be viewed by the law as a defect.
But this isn’t the way you want to buy a property. It’s often unpleasant, and it’s up to you, the buyer, to prove your case. Never that easy to do, and it can be expensive engaging the services of a legal team.
Remember, too, any new defects discovered between the time you, the buyer signs the Offer to Purchase, and the property is transferred into your name, is the seller’s responsibility.
Do consider a professional property inspection.
Tips on house hunting
Make sure you have run an affordability check on line – it’s easy, and it means you don’t waste your time, that of sellers, and you aren’t disappointed when you find the perfect property…only to find out you don’t qualify for it.
House hunting today can happen in a few different ways. Most people do a great deal of homework online, and if you’ve put your specific property needs into a website like Property 24, you’ll be constantly updated with all new properties which come on the market.
Properties on line give you an excellent overview of the property. Then you need to fine-tune that list, and make an appointment to go and look at those you feel might fit the bill.
Show houses are a very easy, relaxed way to look at prospective properties, and you can see a whole host of them in one Sunday afternoon.
Take note. When you visit properties with an estate agent, if you’ve seen it before with another agent, disclose that information straight away. You’re not going to lose that property – leave the estate agents to resolve that between themselves, and with the seller.
You’ll have a list of questions; you’ll want to ask the seller either directly or via the estate agent. Don’t be shy. Ask them. And make sure you get all the information from the estate agent, such as the amount of the levy (if it’s sectional title) and what it covers, are pets allowed, is there visitor’s parking, and so on.
If you like the property but you notice a crack in the wall or damp on the ceiling, speak up. Today, repairs and restoration are expensive, and you need to factor those costs into the price you offer on the property.
Always remember, don’t feel pressurised into making a decision before you’re ready. Give yourself time to think through the property, the neighbourhood, your financial situation and so on.
The Consumer Protection Act (CPA)
This may not relate to the property you’re about to buy or situation you’re in, but it’s worth remembering – the Consumer Protection Act (CPA) is for the protection of consumers, and provides a ‘cooling-off’ period when the property is sold to you by methods such as direct marketing. It could be by somebody or an organisation which hasn’t been honest. This right is only applicable to the sale of properties with a purchase price of up to R250 000, whether or not the right is specified in the Offer to Purchase.
For fuller details about the CPA, look at Benefits of the Consumer Protection Act
Choosing your neighbourhood
You’ll have a number of criteria as to where you’d like to live. Probably the main five would be:
- Zoned for great children’s schools or at least, nearby good schools
- Proximity to place of work
- Accessibility to public transport
- Is it a good investment?
You may not be able to achieve all of those goals, but you’ll soon see – after affordability – what matters the most.
For affordability, you’ll have accessed the online tool which indicates what price range you’re going to be able to buy in – in other words, what size home loan you’re likely to be offered (together with your deposit, you’ll know what price range in which to look at property).
The right suburb for you
Clearly, different suburbs or areas within suburbs vary dramatically in property prices, so you’ll be able to narrow down the general area you’d like to be in. If, for example, you need a large property because you have three children, you may need to forgo your preferred suburb for one that offers you what you can afford. Often, compromises need to be made, but it’s worth it to own your own property.
Schooling a priority?
If you have school-going children, and have chosen the school you’d like them to attend, you’ll want to move into the catchment area. Do your homework and find out precisely where the boundaries of that area are – the school will be able to tell you. You may feel so strongly about this, that you’re prepared to buy the two-bedroomed property that you can afford, rather than the three bedroomed you’d like, because it allows you to live in the right catchment area for great schooling.
Proximity or at least easy access to work is usually a priority. Running a car – fuel and other costs – is expensive, and increasingly, so too public transport. Long distances cost more, and that adds up to unnecessary expenditure. It’s also increasingly not the lifestyle we want – hours spent in traffic rather than with family or enjoying hobbies.
There are other considerations when choosing a neighbourhood. If your affordability allows for an apartment, you’ll want easy access to outdoor facilities like a safe park and perhaps a public swimming pool for the children.
It’s a good idea to write down a list of priorities, and then match them with a suburb.
Your home – an investment?
You will want to make sure your property is a good investment, and although property is rarely considered a short-term investment, you want to buy in an area that is in demand, or is an up-and-coming area. How do you know if it’s up-and-coming – not always easy, but have a look online at related articles on the internet, talk to friends and family, and chat to an estate agent about who is buying in the area. Very often just by driving around the area, you can get a feel for it – are the verges neat and tidy, do people show pride in their neighbourhood, and, importantly, what are the crime statistics like? Safety and security is something everybody wants, so do as much homework as possible to ascertain whether the area you’re looking at has unusually high crime rates?
Do I have the option to have any inspections to the property?
This would be subject to agreement by the seller, and you would need to include that as a suspensive condition in your Offer to Purchase. In other words, you agree to purchase the property subject to an inspection of the pool/roof, wherever your concern may lie.
Will the estate agent act in my best interest?
The estate agent is usually appointed by the seller, but is very likely to represent both parties so they achieve a satisfactory outcome during the sale process.
Any hints and tips before I sign on the Offer to Purchase?
Check out the property thoroughly – don’t feel uncomfortable about running the taps, pointing out damp areas or cracks, and so on. Look at the approved house plans to make sure the property matches the plans. Discuss anything which concerns you before you sign the Offer to Purchase.
What should I know about the ‘voetstoets’ clause
The voetstoets clause in the agreement says that you, the buyer, are buying the property ‘as it stands’, in other words, defects and all. But, take note – if you can prove that the seller was aware of the defects and failed to reveal them, you would have recourse through a court of law.
What do I need to include in the Offer to Purchase agreement?
There are many standard inclusions which you must make sure are 100 percent accurate: names; property description matches the one in the title deeds; and price. You need to specify any movable items which would not necessarily be included in the sale, but you would like to be – pool equipment, satellite dish, and so on. Make sure of the correct occupation date – and occupational rental.
Which is the best property search engine?
The two largest online property search engines are Property24 and Private Property.