Buying house – a pain in the behind

Buying house – a pain in the behind

Posted on October 15th, 2009 Huis-Huis No comments

Buying doen't have to hurt... much

Buying a home is the biggest financial transaction many people ever get involved in. Buying house can be a down right scary business, even if nothing goes wrong. People’s hopes and dreams are often tied up in that home purchase, and it can be hard to keep emotions at bay. So, naturally, everyone would prefer it if their house purchase goes as smoothly as possible and is over in a jiffy.

Someone once confided to me that his experience of buying property was a lot like his experience of rectal exams: He knew it was important and had to be done, but he just wanted it over and done with!

Luckily, if you’re not scared to ask for help, buying a home does not have to be as bad as a rectal exam. If someone holds your hand, the scary stuff doesn’t seem so scary anymore. And once you know what is hiding around the corner, your heart can stop racing and your hair can relax again. But who do you get to champion your cause and look around the corners for you?

Don’t worry. I’ll tell you.

Wolves along the way

There will be no flashing warning signs. And the characters you meet on the road to home ownership won’t be wearing tags that say “don’t trust me”. Everyone will look nice, be friendly and say “don’t worry”. Be worried.

Who can you trust with the biggest financial decisions of your life? Well, NOT the same people that the seller is trusting, would be a good start.

The seller got into this property sale thing a while before you did, usually. And he/she already has a real estate team on their side. The seller has been told what is going to happen every step of the way, if the people they appointed are any good. The seller already has good information and people with experience. So, do the same.

Get informed. Read. Ask. Learn as much as you can. Knowing what comes next in the buying process will calm your nerves.

Get good people. And get your people in place before you go look at houses.

Being prepared, boy scouts believe, is a good idea. So, get prepared.

Buying informationKoop inligting

Information is your friend. Or, should I say, GOOD information is your friend.

Independent information is good information. Information tainted with spin from the seller and the seller’s real estate people is a bad foundation for important decisions. Look, the seller and his/her people may be straight shooting, honest folks. But how would you know?

The parties in a property sale don’t have to lie to each other. In fact, they shouldn’t. But they could, if they really want to. So, you end up wondering to yourself: Did they? Didn’t they? But the question you should be asking yourself is, “Do I feel lucky?”

Well, do you feel lucky, punk?

Where information is concerned, always consider the source. Someone with nothing to gain by lying probably won’t. And someone that do have something to gain by lying, might or might not. So, who are you going to believe? The guy at arm’s length, or the guy with his own dog in the race?

I’d trust independent info over biased drivel every time.

Buyer representationKoper verteenwoordiging

You have every right to appoint a buyer’s agent, no matter what the seller’s agent says.

The seller’s agent might look like an angel, have a great reputation, and seem like your best friend. But there’s just one problem. The seller appointed that real estate agent. He/she is the seller’s agent – with a mandate from the seller. The seller’s agent is bound by law to represent the best interest of the seller. The seller’s agent is on the seller’s side. Get the picture?

If you had to go to court, would you be content to have the complainant’s representative handle your defense? A daft idea, right? So why trust the seller’s representative with your interests when you buy house? Don’t do it.

At least arm yourself with enough information to represent your own best interests, if you’re not going to get a hired gun. But ideally, get a good buyer’s real estate agent to do the heavy lifting.

Legal help

Believe it or not, buying house involves some legal issues. And someone who knows their way around the law will mop the floor with someone who doesn’t, any day of the week.

Do you have enough knowledge of the law to stand up to the seller’s property lawyer? No? Then get your own attorney.

Getting your own agent is a good start, but real estate agents usually aren’t lawyers, even if they have more experience in real estate law than you. So, don’t expect a real estate agent to handle your legal issues.

You have as much right as the seller to appoint a transferring attorney to effect the transfer of ownership, no matter what convention says. You’ll be paying the transferring attorney’s fee anyway. So, why not appoint your own?

Insisting on appointing the conveyancer can strengthen your position considerably. If the seller agrees and does not appoint legal representation of his/her own, then you’d be in the pound seats, legally speaking. You would have eliminated one of the seller’s real estate gang without firing a shot. Sound good?

A real estate attorney can structure a contract of sale that affords you all the legal protection you need. And he/she will be able to spot pitfalls in the terms and conditions the seller’s real estate people want to include in the contract.

Without someone with knowledge of real estate contracts, someone who knows what that legal gobblety-gook means, you’re bound to end up with a contract that favours the seller’s interests over yours. And that’s not good.

Get the right person for the job. Get a legal eagle for the legal stuff.

Finance friendsGeld gabbas

If you identify yourself as a buyer, which you probably do if you’re reading this, then you most likely already have an idea of what you’d like to buy. But do you know if you can afford it yet?

Knowing your limitations before you start looking for houses to buy is important. It will save you lots of time traipsing through properties that you just can’t afford. And knowing what you have to work with allows you to plan your negotiation strategy.

You could approach your bank of choice for home loan pre-approval directly. Or you could contact a mortgage originator to find out what a realistic budget would be, based on your financial information. Or your good old buyer’s agent can do the calculations for you and explain the reasons for the limits, or contact a mortgage bond originator on your behalf.

But giving all your financial information to the seller’s agent is like showing your cards in a poker game, in my opinion. Probably not the best idea, if you know what I mean?

Market informationMark inligting

The real estate market dictates what you can buy with your budget. But every area has it’s own market. Reading the Sunday newspaper’s report on the real estate market in South Africa is not good enough information to make decisions about buying a specific property in a specific street of a specific suburb in a specific town. You need specific info.

You’re going to need information on the real estate market for the specific area you are looking to buy. Not knowing and generalisations will lead to mistakes. And you need to get independent information. A selling agent’s spin on the market reality is not good enough.

In South Africa, the deeds office records every sale of property. The deeds office is the place to find out what properties are selling for. And the good news is that anyone can access that information, at a fee, of course.

And then, all that needs to be done is to go and visit each of those properties to see what they offered their buyers. You need to compare apples with apples, after all. And houses are usually not quite similar.

It’s a big job, but someone has to do it.

The good news is that someone else may very well have done the work already, and that you could get it for free, or at a small fee.

If you have your own real estate agent – a good one, of course – who works in the area regularly, then he/or she should have that information already, or be able to get it for you. See, I told you: Your own real estate agent can be quite handy.Alternatively, you could get the information from a property valuer who regularly works in the area – without breaking the bank.

However you get it, be sure to get the information you need to make an informed decision about your offer price.

Property information

Before you sign the papers, it would be wise to know exactly what you’re buying. You need to find out what the property is and what you can do with the property. All properties are not equal.The first step would be to go and see the property for yourself. And I’m sure you were planning on doing that anyway, because you already know not to put too much trust in what the seller and the seller’s people tell you. But is seeing the property enough? You might think it is, but no, it’s not.

There are facts regarding the property that you cannot know unless someone tells you, or you go and dig a little in the right places.

The title deed for the property might include limitations that would prevent you from using the property the way you wanted to, or prevent you improving it in the way you had envisaged. There might be servitudes cutting through the property that are not currently in use, which you’d never find by just looking at the property. You need to inspect the title. Your attorney can help you with that. And luckily you have one by now, don’t you?

There may be limitations imposed by the municipality on the use of the property. The zoning of the property can be inspected at the municipal offices. And yes, your attorney or agent can help you.

The improvements to the property might not have been approved by the minicipality. This might become a problem for you once the municipality serves you with a notice to demolish part of the new house you just bought. You need to inspect the building plans on file at the municipality. Need help with that?

Inspector Homes

Now, how clued up are you about building regulations, building defects, plumbing, electrical wiring and that kind of thing? Would you be able to spot a problem under that fresh coat of paint the sellers applied before going to market?

If you have your doubts, get an expert opinion – especially if you’ll be buying the property “voetstoots” or “as is”, according to the contract of sale.

The seller’s verbal assurances don’t hold water. An expert house inspector will let you know of problems before you buy. And your attorney can modify the contract to include a suspensive condition that will allow you to safely cancel the sale if any problems pop up.

If you don’t know, find out, before it is too late.

Buying house without the pain

Buying house does not have to be a painful experience. You’re not alone. Or you don’t have to be, at least.

Armed with the right knowledge and backed up by the right people, your property purchase should go off without a hitch.

So, relax. This wil be over before you know it… SNAP!