Real Estate Investor Magazine South Africa October 2014

ACQUIRING BY MEYER DE WAAL Buying a Property? Beware the pitfalls... W hen Angile [real name withheld] recently bought her first property, she encountered a number of pitfalls that very few property buyers are prepared for. The estate agent put her under significant pressure to submit an offer, saying there were many other potential buyers waiting to submit offers on the property. Angile liked the particular area, so even though she had visited the property only once, and had only verbal information provided by the estate agent and a onepage flyer with a picture and a few sketchy details about the property, Angile signed up for the biggest debt she had ever incurred in her life – a debt that will most likely take her 20 years to repay. But this was just the beginning... Although Angile was able to put down a reasonable deposit, she still struggled to raise a home loan. So, when the bank finally approved her home loan, she gladly accepted the home loan offer with an interest rate 2% higher than the prime lending rate. Little did Angile know that this extra 2% on her interest rate means that she would pay almost 32% more for the property she had just bought. Would Angile accepted a home loan that resulted in her overpaying 32% for a property if she had access to a comparative market analysis (CMA) and time to do proper research? Even a novice would not have done so, but Angile was so battered and worn down by the purchase process and home loan application, that she put in an offer and accepted the home loan offered by the bank, without understanding the real consequences. But Angile’s struggle was not yet over... As most buyers do, Angile assumed that the registration of the property on her name would be a straight-forward process. In reality, she could not comprehend why she had to visit two sets of attorneys to sign documents she did not understand and, to her great dismay, had to pay each attorney a hefty sum of money before they would register the property and the bond. As the date of transfer drew near, Angile sold some furniture, packed up the rest and made arrangements 26 October 2014 SA Real Estate Investor to move it. After numerous phone calls the week before the removal truck was due to arrive, she learnt that the transfer would most likely be delayed, as the municipality was behind with the issuing of rates clearance certificates. Now homeless, with all her belongings packed away in boxes, Angile had no way of knowing when she would be able to move into her new home. Interestingly, Angile is a financial consultant with two degrees behind her name. One would have thought she would understand the process of buying a property, applying for a home loan and registering ownership better than most. Unfortunately, the reality is that most property buyers do not understand the process, because they do more research when buying a mobile phone or a car than when buying a property, which will most likely be their biggest investment and the biggest debt they will incur in their lifetime. www.reimag.co.za

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