Don't sign before you sell

Even though the economy is improving, the latest statistics show that around one-fifth of all home sellers are still looking to downscale to smaller homes that are less costly to run and maintain.

And many developers are playing right into their hands now – offering really competitive deals on newly-built units in estates and complexes that also address the rising concerns of many about their security and personal safety.

However, says Berry Everitt, MD of the Chas Everitt International property group, in most cases it is not a good idea to commit to the purchase of a new home before you have sold your existing property.

“Most developers will only accept offers that are not ‘subject to’ the sale of your old home, so if you make an offer and this sale takes longer than you anticipate - which is quite likely in the current market – you could be putting yourself in a really tight spot financially.

“At the very least you will need cash to cover the deposit on your new home, transfer and legal costs, and at worst you could also find yourself responsible for two home loan instalments and two sets of running costs each month until you achieve a sale.”

Writing in the Property Signposts newsletter, he says it would be far better to plan ahead and work with an experienced and motivated estate agent to sell your existing home so that you have the proceeds in hand before you make any offer to purchase a new one.

“Meanwhile, if you have already started looking at new homes, you should resist any effort by the agent who is selling the units in the new development you like to obtain the mandate to sell your own property, as there is an obvious conflict of interest.”

In addition, says Everitt, you should know that you do not have to deal only with the bank or financial institution associated with the developer when it comes to applying for a home loan. “Even if just for your own peace of mind, you should consult a mortgage originator to see if you can possibly negotiate a better package or interest rate elsewhere.”

Article from: www.chaseveritt.co.za