Often a first-time buyer or a property investor overlooks the “small stuff” and this can end up costing the property buyer thousands of Rands in the long run.
Here are our best tips to save a homebuyer and owner thousands of Rands. “You do not make money when you sell, you make your money when you buy, “says Meyer de Waal, director of MDW INC Attorneys, Attorney Realtor HUB and Rent2buy, an exhibitor at the Property Buyer Show hosted at the Cape Town CITCC from 6 – 7 April.
1. BE[COME] AN EXPERT - DO NOT PAY MORE THAN THE REAL MARKET VALUE.
Make sure that you understand the market and do your research first. Many properties are listed too high and sellers may accept a lower price.
Avoid “buyers rush” - do not sign on the dotted line for the first property that you see and do not get pressurised by an estate agent to buy.
Do your market research - check out the many websites that can assist with a comparative market analysis, e.g. Lightstone or PropStats. Compare the recent property sales statistics on Private Property.
Compare current listings - Research all the current listings in your area of interest through online websites such as Private Property. Get a good idea of what you will get for the money that you will pay.
The condition of the property - Few home buyers are experts when it comes to the condition of the property you want to buy – read more later how a property inspection report can save you thousands of Rands.
2. GET FREE MONEY FROM THE GOVERNMENT
Free money is available for first time home buyers from the Government.
This unique opportunity is in the form of a once-off FLISP subsidy.
The Flisp subsidies range from R121 600 to R 26 960 and available for first time property owners, with a dependent, whose home loan is approved.
Read more: What is a FLISP subsidy?
3. CHECK YOUR CREDIT SCORE – BEFORE YOU START
Many minor factors can reduce your credit score.
If your credit score is below good or excellent, a financial institution can add a percentage of two to your home loan rate, or demand a larger deposit to cover their risk.
Calculations show that every 2% in extra interest can cost a homeowner up to 32% more in home loan repayments over 20 years.
4. HAVE YOUR “FINANCIAL DUCKS IN A ROW”
Negotiate the lowest purchase price you can.
Cash is king. If you submit a cash offer, consider offering a lower offer than the asking price.
If you are not a cash buyer – put your best “foot” forward. Get pre-qualified for a home loan and know your buying power.
A leading mortgage origination company promotes the concept that almost 90% of buyers who receive a pre-qualification for a home loan receives a final home loan approval. Do your own online home loan pre-qualification with through a similar online process – click here to calculate your own affordability & credit score.
Have your Flisp prequalification ready – If you are a first-time buyer.
5. DEPOSIT
A deposit will give you two advantages: - the ability to negotiate a lower interest rate for your home loan with a financial institution. Remember, the lower your interest rate, the more you save on your home loan repayments in total. - be able to show the seller that you are serious about buying a property and “outbid” other buyers.
6. FREEZE THE PRICE – SIGN NOW AND PAY ONLY TWO YEARS LATER
Get your foot on the property ladder as soon as possible.
Freeze out property escalation – Property prices continue to escalate. Often property experts advise home buyers to save up for a few years and then go out and buy a property. The problem that often arises is that the property prices escalate so much every year that your savings does not allow you to keep up with price escalation.
With the Rent2buy Finance concept, an aspiring home buyer can secure the price in 2019 and only pay in 2021, with a small extra amount added to the purchase price.
For more information on the Rent2buy Finance concept – click here.
7. THE HIDDEN COSTS – WHO TO PAY AND WHAT EXTRAS ARE ADDED?
Estate Agents The lower commission you negotiate, the more you save. The commission of an estate agent can range between a fixed fee (sometimes between R25 000 – R39 999) or a percentage of the purchase price, which can range from a high of 7%, to a low of 2,5%.
The commission is added on top of the net purchase price.
If a homebuyer can negotiate a lower commission rate with the estate agent, thousands of Rands can be saved on the purchase price.
Attorney fees All costs included - If you do not have the extra money to pay transfer duties, transfer and bond fees, look for a property price that includes all costs and fees. To calculate the fees and expenses – click here
Time your move - make the right move at the right time. Moving companies are like UBER taxis – they spike their rates in peak times. Time the relocation to your new home to avoid “peak time” relocation fees.
8. AVOID PAYING DOUBLE
Moving into a new property may mean you have to move out of an existing property. Make sure your date of occupation in your sale agreement ties in with the date you have to move out your existing rental property to avoid paying double rent or a home loan instalment.
9. BE A SAVVY HOME OWNER
Investor buyer?
Save up to 10% on your rental income per year – collect your own rental income, for example, R7 200 savings on a bond of R1 million if you collect your own rent from a tenant. A rental guarantee can cover late or bad payments and cover legal costs.
Pay your bond off faster.
A few hundred Rands paid in your bond every month can save you thousands of Rands in the long run. The quicker you pay off your home loan, the shorter repayment period you have and save thousands of Rands. For a handy calculator click here.
10. BEWARE OF THE “BLACK HOLE” SYNDROME
Once you own a property, there can be many unexpected expenses.
Future maintenance expenses can burn a hole in your pocket.
Get a Property Inspection report before you buy. It will give you a good idea of the repairs and maintenance that you may need to carry out in the near future.
Check the financial affairs of a body corporate when buying in a sectional title scheme. The Sectional Title Management Act Body Corporates compels a body corporate to save money for future expenses and this may increase monthly levies, but this will also indicate whether the scheme is in a healthy financial position and managed well.
