When buying property, buyers have a few important questions they need to answer before getting on the property ladder and before they sign on the dotted line - we take a look at some of these questions and their answers.
Before getting on the property ladder
- What is the market like?
Knowing what the market is like will help you understand how long it could take to find a property, if you will be able to negotiate on the asking price and what kind of bond you will be able to get, for example. If you enlist the help of a trusted real estate agent they will able to help guide you through these questions.
- What are the growth prospects of the area I am interested in?
Whether you are a seasoned property investor or just starting out, being able to spot an up-and-coming neighbourhood is a sure way to maximise your return on investment. As they say - location, location, location.
Here is how to spot an up-and-coming neighbourhood
- How much is an estate agent's commission and should I opt for an open or sole mandate?
The commission charged by estate agents varies and is usually based on a percentage of the sale price. However, the national average can range from 5 to 7.5 percent plus Value Added Tax (VAT). The commission can be negotiated, but it is also important to remember that agents put a lot of time and money into listing and marketing the property to ensure a sale that will ultimately see them receive their commission.
Some agents have a fixed fee payment structure where the commission is fixed at a certain price or a certain percentage irrespective of the sale price.
Calculate estate agent's commission here
When you get ready to sell your home for the first time, you might be faced with whether you want to sell your home with a sole or open mandate
So what is the difference?
A sole mandate is a written agreement giving one agency exclusive rights to market and sell your property. The agreement should include the length of time that the mandate is granted, the selling price, the commission rate, and any other terms and conditions.
An open mandate allows a home to be marketed by more than one agency or estate agent at a time. When you opt for an open mandate the estate agent that closes the deal is the agent that receives the commission. While you do not need to have an open mandate in writing, it is still recommended so that everyone involved is in agreement.
What to keep in mind when choosing a mandate
While many buyers believe that having multiple agents, will ensure a faster sale this is not always the case. With increased agents, comes increased viewers and increased hassle. With a sole mandate, you only deal with one agent and the potential buyers they show the property to.
When agents compete against one another to close a sale, you might find yourself under pressure to accept a lower offer or lose the sale. Because all offers are directed through a single agent under a sole mandate, your agent will be able to negotiate the best possible offer for your property.
An open mandate also opens the seller up to potentially paying double the commission because multiple agents can claim that they were the ”effective cause” of the sale.
How to choose the right agency for your sole mandate
• Choose an agency with a good track record in your neighbourhood;
• Check that your agent and agency have valid Fidelity Fund Certificates;
• Request a property valuation, and make sure it has supporting research;
• Ask about the agency’s marketing approach
Should I be pre-qualified before I start looking?
A pre-qualification is a basic review of your finances to determine if you would qualify for a mortgage. In general, a pre-qualification is based on unverified information you provide and a credit check.
A pre-qualification can show sellers that you're serious about buying a home and that you're likely to be able to follow through on a bid, and close on their property.
Get pre-qualified here
These questions are a great start, but won’t necessarily make your decision final. Depending on your objectives and personal circumstances, you should also consider the following:
• Do you work from home, or what would travel time be for you living in your desired area?
• If you have children, are you planning on sending them to the neighbouring schools?
• Do you want to be based closer to work or closer to where you want to spend your leisure time?
• Do you want to live in a gated community, a complex, or a freestanding house?
• Are you looking for a fixer-upper or a house that is ready to move in?
• What are your parking and storage requirements?
• What amenities are important to have close by?
Answers to these questions will narrow down your search.
Once you find the home you want to buy
- Do you have the required finances available?
Costs for the purchaser include transfer duty, conveyancing fees, and registering a bond if applicable – as well as a bank admin and initiation fee if you get a bond
- Are you aware of all the hidden costs involved once you move into the property?
From hiring a moving company to getting your electricity connected - there are a myriad of costs involved and before you buy a home you need to ensure that you have the cash available for these costs and other unforeseen expenses.
- Has the seller signed a disclosure document stating any defects that the property may have?
Purchasing a property is a major investment that should be considered carefully. On the surface, a home could be stunning, but there might be underlying issues that, if overlooked, could cost you a lot to repair.
Here are 5 defects that you need to be aware of before buying a property
There are also some other less common considerations that may be worth thinking about before you make the move;
• How do I know if this is actually a good deal?
• How many homes should I look at before I decide which one to buy?
• Can I move in early? (If the property is unoccupied, could I move in for free?)
• Are there renovation or improvement costs to consider down the line?