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So you’ve found the home you want – what now?
Finding a dream home takes time. Being prepared means you can act quickly.
When you walk into that house you’ve been searching for, all other thoughts and rational decision-making fly out the window. And why not? You’ve quite literally found your dream home, and you want it. You want it now.
While your excitement is understandable, you need to be aware of what lies ahead on your journey to move into the home of your dreams. Here are 5 crucial steps in the process, with some tips to help you understand what to expect.
1. Making an offer to purchase
In case you didn’t think that buying a house was serious business, wait until you start signing sets upon sets of documents. This is an unavoidable part of the process, but one that becomes all the more enjoyable as each signed page brings you one step closer to owning your home.
The very first step you take, after your pulse has settled and you’re sure this is the property you want, is to make your offer to purchase. You’re signalling to the seller that you’re interested in buying the property and what price you’re willing to pay. Depending on market conditions – like when sellers are struggling to find buyers – you can quite easily offer 10% or more below the advertised price.
Speak to the agent to get an idea of how fixed the seller is on the price, and do some research on the prices paid for other houses in the area.
When you’ve decided on a price you’re happy to pay, get in touch with the selling agent so that you can make a formal offer to purchase. This is an official, legal document that indicates your interest in buying a house and it is binding if accepted.
2. Offer accepted
Once you put pen to paper on the offer to purchase, you’re showing that you’re serious about wanting to buy the house. You can make sure the seller is equally serious by including an ‘offer expiry date’ so that the seller can’t put off making a decision in the hope of getting a better deal.
If the seller accepts and signs your offer, this document is now considered a legally binding sale agreement. It contains a number of terms that you must be sure you understand.
An important term is the so-called 72-hour (3-day) clause. This applies only if your offer depends on getting the right loan, or selling your current house so you can afford the one you’ve just bid on.
This clause means that even if the seller has signed your offer, the one that is conditional on loan approval or the sale of your house, they can continue to look for buyers until you’ve got the bond or sold your home. If another buyer steps up, you then have 72 hours to come up with the money to secure the sale.
A way to overcome this uncertainty is to get a pre-approved home loan. The application process is exactly the same as when applying after having made an offer, except that you know for sure what your highest offer can be.
3. Understanding the terms of the deal
It’s crucial that you fully understand what is said in this sale agreement. If you’re unsure of anything, don’t be shy to ask the lawyers or real estate agents involved. They’re the experts, and it’s their duty to make sure you understand everything you’re signing.
An important condition to understand fully is ‘occupation date’ and its relevance. You and the seller can agree that you move in only when the property is in your name. This is usually around 3 months from when you’ve signed the offer to purchase.
If you need to move in before the transfer is completed – which may take longer than the expected 12 weeks, or shorter – then you’re expected to pay rent to the seller for occupying the property. If the shoe is on the other foot, with the seller still in the house after transfer is completed, then you can claim occupational rent. This rate is stipulated in the sale agreement and is based on accepted rental rates.
Other important details to include in the sale terms are whether you’re paying a deposit, which is seen as a further sign of your commitment. If so, stipulate the amount and that this should be held in an attorney’s trust account and that you earn the interest on this money until the transfer is complete.
4. Home loan and credit approval
There are 2 ways to go about getting a home loan approved: either before or after you’ve signed an offer to purchase.
The first way is known as pre-approval, and involves doing the credit and affordability checks in advance before you actually find a home you want to buy. You won’t receive any money yet, it is more like an estimate that the bank is willing to give you a loan up to a certain value (subject to you applying for a home loan and submitting all your supporting documents).
This helps to you search for a home within your affordability range. The pre-approval is not the home loan itself, but once you’ve put in your offer, you can then apply for the home loan.
Despite the buyer paying for conveyance costs, the seller has the right to choose the transferring attorney and the bank appoints the bond attorney
The process, and the documents you need to submit with your loan, are explained in detail in this blog.
The home loan application process could take anything from a few hours to a couple of days. You can expect longer times if you need to submit additional information, should the need arise. The bank may send a valuer to determine whether the property has sufficient value as security for the home loan. After that, you’ll receive a loan quotation with important information (like the approved loan amount, interest rate and term), which you need to accept. Once you accept the loan offer, the bank will appoint the bond attorney and you will then pay the bond and transfer costs, sign your loan documents. Both the bond and the registration attorney will complete the conveyancing process, and your bond will be registered.
5. Bond registration and property transfer
The bond registration is the contract between yourself and the bank and outlines the loan and repayment terms. The property transfer lodged with the deeds office is essentially a register of who owns which piece of registered land. Both these processes are part of the conveyancing process, and can cost you a considerable sum depending on the size of the loan. Read all about these extra costs in this blog.
Despite the buyer paying for these costs, the seller (or the bank, if their property is still being financed), has the right to choose the attorney that will handle the transferring conveyancing process. But you can negotiate to use a lawyer of your choosing, if the seller agrees. That won’t have any influence on the cost, though, because the fees are all prescribed amounts set by the Law Society of SA as a percentage of the sale and bond amount.
This administrative process can take up to 3 months. But once done, hurray! You’re now the owner of a piece of property that will hopefully mean many happy years and memories for you and your family.
Did you know that on average, Nedbank pays out around R1.8 million a month in cash back on home loans? In 2023, we paid out more than R20 million in cash back on home loans. For an affordable home loan tailored to your circumstances and value-added extras like up to R20,000 cash back and a 50% discount on your attorney bond registration fees, choose the bank that’s best for your money.
