Finances - how much does my agent need to know?

Financial matters and discussing money is often a very sensitive topic for many consumers. “Telling someone how much you earn, or for that matter, how much you owe to your creditors, is something that most would like to keep private and close to their chest,” says Adrian Goslett, CEO of RE/MAX of Southern Africa.

“Most find it uncomfortable to divulge financial information and would prefer to keep as much as possible a matter of privacy. However, when it comes to purchasing a property or requesting a home loan there is a certain amount of information that a potential buyer will need to discuss with their real estate agent and their lender.”

He notes that if potential buyers are at all concerned about providing details of their finances to their real estate agent or the bank, they can rest assured that their privacy is protected by their client and agent relationship.

According to Goslett, the real estate agent will not expect the buyer to fully disclose all their financial information in detail; however it is important for the agent to understand the buyer’s financial situation in order to provide guidance and advice with regard to affordability and what the bank will be willing to give them as a bond.  “Agents will want to discuss the buyer’s finances in general and details regarding getting pre-approval from their preferred lender. They will also need to have a discussion regarding what the buyer can realistically afford, bearing in mind that is not just the bond repayment amount that the buyer will need to budget for. It is important for buyers to remember that there may be a difference between what the pre-approval letter that states as a purchase price and what they may be able to pay comfortably on a monthly basis,” says Goslett.

He notes that real estate agents should give the buyer some guidance regarding transfer fees, attorney costs, deposit requirements and how the interest rate can affect their monthly bond repayments. “Knowing how much a buyer has to work with as far as a deposit or paying their own property transaction costs is important for an agent. Many first time buyers and even experienced buyers are unaware as to how much the transfer costs will be. Even financial institutions can, from time to time, fail to inform their clients as to the full amount of cash needed up front. If the costs are higher than expected, it can lead to a bad situation at the closing table. This situation can be avoided if the agent makes the buyer aware upfront as to how much will be needed and knows how much the buyer has available. It helps to ensure that there are no surprises at the end and makes for a happier buyer,” says Goslett.

A bank or bond origination company such as Betterbond will be able to calculate the buyer’s maximum purchasing power and their monthly payments based on their loan application, financial documentation and debt-to-income ratio. Buyers should be prepared to supply the lender with recent pay slips, bank statements and investment account statements.

According to Goslett, once the buyer and the agent have established a total monthly repayment that the buyer is fully comfortable with, they will be able to determine a purchase price that works for the buyer. This will assist the agent in narrowing down the property search and will save time as the agent will only show the buyer properties that they can realistically afford.

“Once the financial discussions have been covered, the agent can focus on finding a perfect home the buyer and will assist in keeping the transaction on track and assisting in navigating the real estate paperwork. An agent’s strength lies in their understanding of the market, home values and neighbourhood features,” Goslett concludes.

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 17 Nov 2017
      FWJK has announced the launch of its latest residential brand, the Lil’ Apple, which will be launched simultaneously in two developments in Cape Town and Umhlanga totaling 600 apartments. The Lil’ Apple is set to be a brand of FWJK’s New York style apartments which will be rolled out nationally.
    • 17 Nov 2017
      It’s been a tumultuous year on many fronts, with socio-political uncertainty setting the tone for much of South Africa’s economic activity yet despite this and seemingly counter-intuitively, the residential property market has held up well.
    • 17 Nov 2017
      The EAAB (the Estate Agency Affairs Board) recently claimed that around 50,000 illegal estate agents could currently be operating illegally.
    • 16 Nov 2017
      Penthouses are synonymous with New York – characterised by high-rise living that is decidedly luxurious and spacious. While exclusivity comes at a price, you can still create a “penthouse” look and feel in your existing apartment or even the upstairs bedroom of a double storey house with some clever design changes and styling touches.
    • 16 Nov 2017
      The area has long been popular with kite surfers and, with escalating property prices in Cape Town itself, is increasingly in demand with home owners who work in town, but are looking to invest in more affordable properties.
    • 16 Nov 2017
      Cape Town’s popularity as a world-class tourist destination has resulted in a spike in the number of homes available for holiday lets and fuelled investor demand for sectional title units with short term rental potential.
    • 15 Nov 2017
      Sappi, one of South Africa’s oldest global companies and a leading global supplier of sustainable woodfibre products, has moved its global and regional headquarters to a new site on the corner of Oxford and 14th Avenue in Rosebank.
    • 15 Nov 2017
      There’s an old saying in real estate that you should seek to make a profit when you buy, not only when you sell – and a large part of succeeding at that endeavour is buying a home in an area with desirable features that will enhance the resale value of your property.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us