Make sure your buyer has enough cash

With the banks still in cautious mode, home sellers should continue to insist on strict buyer pre-qualification by their agents, especially with regard to the funds required to pay a deposit, as well as the “hidden” costs of property purchase.

Besides transfer duty, these transaction costs include valuation fees, bond initiation and registration fees, legal fees, deeds office fees, a portion of local authority rates during the transfer period, connection fees and stamp duties.

Thus on an average home costing R850 000, for example, the cash required to cover a 10% deposit plus costs would be around R132 000.

And, notes Harcourts Africa CEO Richard Gray, long transfer delays and even cancellation of the sale will occur if the buyer does not already have this cash on hand at the time of purchase.

“The cagey approach of banks to new loans over the past two years, and their insistence in most cases on substantial deposits, has meant that even those buyers who were aware of these costs and who did try to budget for them often did not have enough cash in reserve at the time of purchase.

“Consequently, thorough pre-qualification has become increasingly important, and many savvy property sellers are now making it a condition of any mandate they award.”

Certainly, says Gray, they should add this service to the list of good reasons for working with an estate agent, “because the individual trying to sell his own property privately will seldom have the courage to ask a buyer about his financial status”.

Potential buyers, meanwhile, should not resist the process of pre-qualification, as it provides the opportunity to become fully informed about the total cost of purchase “and, if necessary, to reshape their aspirations without embarrassment”.

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