If your New Year’s resolution is to finally become a homeowner in 2024, then know this: buying a property, even if it is not your first, is an intimidating experience – and one that has the potential to be the best investment or the worst mistake of your life.
It is, therefore, perfectly normal for those navigating the ins and outs of property for the first time to feel mildly panicky, especially after submitting an offer.
“There’s no doubt that buying a property in South Africa can be a daunting experience for most people, especially when considering the amount of money involved,” says Carlo Mariani, founder of The Property Coach.
To avoid expensive mistakes and tap into the endless power of property ownership without the risks, he and David Jacobs, Gauteng regional sales manager for the Rawson Property Group, offer some practical tips:
1. Know what you can afford
Before you start looking seriously for your property, Mariani says it is critical that you establish what you can afford by approaching a money-raising expert and finding out your creditworthiness.
“Take this action three months in advance to avoid nasty surprises. This will allow you to approach sellers and agents with the confidence of knowing what you can afford.”
2. Choose the right neighbourhood
The area you live in plays a huge role in your ability to enjoy your home, says Jacobs. It can also directly affect the value and growth potential of your investment.
“Since you can’t just pick up and move your property if you don’t like where it’s located, finding a neighbourhood that meets your needs should be the first step of any house hunt.”
If a neighbourhood is priced right and safe, it’s time to consider its amenities. Does it provide access to the essentials you need for everyday life?
“Make a list of your must-haves, from public transport to good school zones. Remember, a property is a long-term investment, so don’t just think of your needs now. Imagine what you’ll want in five or ten years’ time as well.”
In addition, he says, you must feel like you connect with the community on an emotional and social level. That means finding somewhere close to important friends and family, with an atmosphere you enjoy (busy and bustling or quiet and peaceful) and neighbours you can see yourself befriending.
3. Finding the right home
Once you’ve settled on your ideal neighbourhood, Jacobs states that it is then time to dive into the real house-hunting. He suggests starting your search on the major online property portals, but also approaching a local real estate expert with your property wish list.
“Most properties are listed online, but there are still gems that sell before they’re ever made public. If you want to be in on that action, you need a real estate agent keeping an active eye out for properties that meet your needs.”
When considering which home to buy, he adds that it is relatively easy to knock down a wall here and there to improve a property’s flow, but it’s a whole other ballgame to move a kitchen or a bedroom to a different part of a house.
“Make sure the basic layout of the property supports your lifestyle. So, if you’re an entertainer, look for a good flow between kitchen, dining room and outside areas. If you have kids, make sure there is enough room indoors and outdoors for them to play and do their homework.”
4. Get a professional inspection
Once you’ve found the property, Mariani says you should have it inspected by a professional. After all, you don’t want to discover unexpected problems, latent defects, structural issues, shoddy electrical installations, and leaking plumbing after you’ve signed your offer to purchase.
Importantly, do not rely on agents’ and sellers’ promises or even written declarations.
“This is not the time and place for DIY. Engage the services of a professional property inspector. This is guaranteed to be your best investment in avoiding expensive surprises.”
Echoing this, Jacobs says that, unless you’re specifically looking for a fixer-upper, you’re going to want to find a property in good condition.
“Sellers are required to provide a list of any defects, but these aren’t guaranteed to cover absolutely everything. It is still essential that buyers do their own investigation and book a professional home inspection before they buy.”
5. The important and not important factors
As for defining your needs, Jacobs says you should start with the essentials. These include the right property size, the right number of bedrooms and bathrooms, and any other must-haves.
“Try not to be put off by surface aesthetics like paint colours. Good basics in good condition are much more important than a seller with the same taste in décor as you.”
You should also ensure your must-haves cover your future needs.
“You may only need two bedrooms for now, but you’ll wish you had more when that work-from-home opportunity or second child comes along.”
No property is perfect, and most buyers will need to make minor compromises. However, Jacobs recommends avoiding properties with major features you absolutely dislike.
Also, do not compromise on the big things.
“If you're not that into Victorian houses or can’t handle face brick, it’s not worth trying to convince yourself to live with these feelings. You need to be proud and happy and comfortable in your home. If there’s anything that materially and irreversibly detracts from that, it’s not the property for you.”
6. Do your own fact-finding
“Any claims by seller or agents that are not in writing are just that – claims,” Mariani says. So, ensure that you have a good idea of the actual market value of the property, and that the property has been built in accordance with approved building plans. “I am a big fan of using tools like Lightstone Property...”
If you are purchasing in a sectional title unit, you should also ask for the body corporate’s financial books.
“Check they are in good shape by obtaining a copy of the latest audited accounts and by having a telephonic interview with the chair of the body corporate.”
7. The 3-visit rule
Mariani recommends that you visit the property – or at least the complex or area – on three different days and at different times.
“Make sure you visit at weekends, after sunset and at rush hour. This is a powerful way to ensure that there are no safety and crime issues as well as unforeseen problems.”
8. Don’t make your first offer too high or too low
The asking price of a home is a “marketing trick”, and so you have to be careful of using it as a yardstick for negotiation, Mariani says. Importantly, you should establish a “walk-away” price before even starting the negotiations.
“I also suggest you give yourself some time between one round of negotiations and the next to reflect on whether you really want the property. It can also create a bit of FOMO (fear of missing out) on the parts of the seller and agent and make them more negotiable. Do not negotiate in a rush.”
Jacobs says the easiest way to narrow your neighbourhood choices is to exclude those that fall outside your affordability.
“Remember, it’s a better investment to buy a bottom-of-the-range home in a good neighbourhood than a top-of-the-range home in a worse area. The best buys are in neighbourhoods with property prices at your affordability level and higher.”
While it’s always nice to put your own stamp on a new home, he advises that if upgrades are part of your plan, it is a good idea to make sure your property has room for improvement.
“If you’re buying at the upper limit of a neighbourhood’s price range, there’s a risk that any improvements you do won’t add materially to your property’s value. Rather buy a little lower if possible so your efforts will pay off in the long run.”
9. Negotiate in writing
“The best – and only – way to negotiate in a professional manner is to submit a written offer to purchase.”
It will also give you the chance to engage in serious discussions with the seller and/or the agent.
“Once you have done so, expect reciprocity and do not engage in counter-offers unless they are also in writing.”
Specify in your offer that it is valid for 24 hours only, no matter what you are told, Mariani says.
“The reality is that agents and sellers are always in close contact and you want to establish urgency with both of them, rather than allowing them to use your offer to seek competing offers from other prospective buyers.”
10. A standard purchase agreement doesn’t exist
He says you should beware of any claims by sellers and agents that you should sign the offer without any worries because it is a “standard agreement”.
“I often come across a number of really nasty clauses in agreements that are designed to reduce your rights and boost those of sellers and agents. Ask for a copy of the agreement, take it home, read it with care and ask for advice if you do not understand something.”
Mariani adds that an offer to purchase is a legally binding agreement that can cause problems, such as having to pay agent’s commission even if you never take transfer of the property.
11. Don’t wait for a ‘better’ time
Mariani says property ownership remains the most proven and resilient way to build wealth and cash flow for generations to come, and while you should exercise caution and build your specific knowledge, you should not let fear stop you forever.