A guide for first-time home buyers | Fin24
 
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A guide for first-time home buyers

Apr 26 2018 07:09
Lameez Omarjee

Cape Town – Buying property involves two elements, your emotions and your finances. A buyer needs to strike a balance between these two competing forces, according to an expert.

Speaking at the Property Buyer Show held in Cape Town recently, marketing manager of Private Property Greg Crowder shared a few guidelines for first-time home buyers.

He explained that buying property is an emotional journey. The property you buy will be your home, and people have an emotional connection to where home is.

However, because buying property is an emotional decision, people could make “fundamental and silly mistakes”, Crowder warned.

Buyers need to consider the practicalities of their pockets. “We each want to make a property decision to financially benefit you, maybe not immediately but down the line,” he said.

“The heart element comes into it too often. These elements are fighting all the time and we must learn to harness and control them,” he said.

Crowder explained how first-time buyers can find the right home, while balancing these two elements.

Use technology wisely

The search for property has evolved over the years. Buyers don’t have to limit themselves to the choices made available by a real estate agent or newspaper.

They can now use online portals where they can filter their searches to find the home they want, he explained.

But technology can also be misleading, said Crowder. If not used correctly, a buyer could think they have seen everything they need to. “Use technology to make sure you have seen everything you want to see, and not miss anything out.”

Be wise when applying filters, as this could cut out options that you might like. “Start with a broad spectrum and then slowly trim down,” he advised.

Save properties on a wish list

When using technology, make sure you save properties you might like to a wish list – a feature available on websites - or bookmark the properties you like to return to them at a later stage.

The next thing to do is to set alerts for new listings. When a new listing comes up, you don’t want to miss out, said Crowder.

“It’s important to get it right at the beginning,” he said. It also helps if you show the real estate agent you have an interest in the property by being one of the first to contact them about it.

Get the right financial advice

Once you think you found the house you might like, consult with a professional about financing the property. “Speak to property finance people,” Crowder stressed. “It is important to get the right advice by speaking to the right people.”

Buyers can also make use of online features like bond calculators, which can give them an idea of what they can afford. Getting prequalified for a bond also helps.

Crowder said buying property is not like buying a cup of coffee. Before purchasing a property, you need to make sure you have the means to do so.

“Go to a mortgage originator or the bank and speak to them about your options in the market and what you can afford.”

Getting prequalified for a bond saves work and time for when you actually have to apply for a bond, he explained. The prequalification also gives you a 90% chance of getting the bond you applied for, he said.

Most people go to banks to get finance from the home loan division. Crowder encouraged buyers to shop around for a mortgage from different banks as they have “different appetites” for home loans at a particular point in time. Some banks may have too many home loans and would not want to take on more, he explained.

Bond originators are a great resource

If you are not clued up on the bank space, then reach out to a mortgage originator, he advised.

“If you want to get a great return and get the absolute best rate, go speak to a mortgage originator. These are companies built just to shop around banks and across financial channels for home loans.”

Crowder explained that you need to get the right advice when financing property, because you don't want to run into trouble when investing.

The finance is not just for the bond, you need to consider the other costs associated with buying a property such as admin fees and taxes.

“The wallet decision should outweigh the heart one when talking to the financial channel.”

Take a notebook on property viewings

Before you start negotiating an agreement for a home, you have to visit properties. Crowder advised buyers to take a notebook and pen and log everything about their visit in the notebook.

This will also ensure that you do not confuse the details of different properties. A notebook allows you to keep a record of concerns and features of the properties you see.

When it comes to what to consider when visiting a home, be mindful of where the property is.

Check out all the angles

For example consider what the traffic is like getting to and from work, see if there is a transport network you could possibly use, consider if the area is safe and if there are dodgy parts that could be an issue later.

Also consider if there is development in the area which means there will be investment - a factor which could raise the future value of your home.

When you are at the property, inspect it for cracks, damp, holes and other damage. A real estate agent is compelled to reveal known defects.

However, a private seller is not legally complied to reveal everything, Crowder said. “The agent must protect the buyer and the seller.”

He added that you should have an emotional connection with the property. If not, it’s the wrong property, no matter how good a deal it may be.

Legalities are important

Don't get caught out by doing things yourself, Crowder warned. Conveyancers are equipped to ensure you are protected in a property transfer. “They are desperate to make sure your transfers happen and to look after you,” said Crowder.

Having a conveyancer is necessary to make sure you have the right contract with conditions in place to protect you.

In conclusion, Crowder reminded buyers to be clear about what they need and want, and joked that following the guide is “what an absolute ninja warrior would do.”

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home ownership  |  property  |  personal finance
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