What happens between the purchase and transfer of your new home?
Category General News
Your offer has been accepted - so what happens next? These are the important steps to note before you take occupation of your new home.
Prospective home buyers get a lot of advice about how to choose the right home and the right home loan, and how to make a successful offer to purchase, but not enough about what happens next.
"Even when your offer has been accepted and the bank has approved your loan, there are still several other important stages of the transaction to get through before you can settle into your dream home and invite your friends around for a tour," says Gerhard Kotzé, MD of the RealNet estate agency group.
A professional Estate Agent should be able to guide you through these important stages, which include:
Note the difference between occupation and taking ownership
Once the sales agreement has been signed it still takes a number of weeks, generally around 12, for a property to be transferred from the seller to the buyer. Depending on how quickly a buyer's property sells, or on when their current lease agreement expires, they might decide to take early occupation of their new home.
"Depending on the buyer's situation, it may be necessary to take occupation as opposed to having to rent accommodation elsewhere and in effect moving twice, for example. Buyers need to note that there is a difference between taking ownership and occupation," says Bruce Swain, CEO of Leapfrog Property Group.
"Once a buyer has taken ownership of a property it legally belongs to them to do with as they see fit - living in it, renting it out, selling it, etc. Taking occupation merely means that the buyer is allowed to live in the home while the sales transaction is concluded."
READ| Home buyer's quick guide to occupational rent
Get your finances in order
Your bond may cover the whole purchase price of the property but you are also going to need cash to pay the bond registration fee, legal fees, transfer fees and any transfer duty that may be due. You will also have to pay half of the expected municipal rates and taxes for the transfer period, which is usually about three months, although you may get some or all of this amount back when the property is transferred. After that, you will need to pay for the municipal services such as water and electricity to be connected in your name.
"So you may need to transfer funds from a savings account or liquidate another investment or wait for an inheritance to be paid out before you can proceed, and a reputable estate agent will ensure that your sale agreement gives you a reasonable amount of time to do this, without infringing on the rights of the home seller," he says.
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Obtain additional insurance
"Your lender will certainly insist that you obtain homeowners' insurance (known as HOC) to cover the repair or replacement of the property in the event that it is damaged or destroyed by fire, wind, flood or other natural disasters," says Kotzé.
"While insurance is a necessity for homeowners, it does not have to be a financially draining burden. Shop around and see what options are available from the various insurance providers," says Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett.
"Many banks will also insist that you take out credit life insurance (bond cover) to the value of the outstanding home-loan balance. This is a good idea anyway because it means that your family will be able to pay off the bond and continue to live in the home even if something happens and you pass away. Some of these policies also cover several months of bond repayments should you be retrenched from your job," adds Kotze.
READ: Under offer | The 72-hour clause explained
Coping with any other contingencies
The whole transaction can be put "on hold" while you organise a report from a home inspector, or wait for an electrical compliance certificate, or for your existing home to be sold and the proceeds to become available. But while a good agent will ensure that such contingencies are also written into your sale agreement, he says, there will be a deadline for them to be fulfilled, so you should be ready deal with them as soon as possible.
"If you need to sell an existing property, for example, you should ensure that it is listed immediately and be prepared to accommodate viewings by prospective buyers."
Responding to requests
You need to respond promptly to requests from your bank's attorneys or the attorneys attending to the property transfer to sign all the documents that are required to register a new bond and get the property registered in your name.
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"In fact, the involvement of a reputable, knowledgeable estate agent benefits the home buyer as much as the home seller - and is an increasingly important factor in purchase decisions, especially among first-time buyers."
Author: Property24