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Using an estate agent
An Estate Agent is legally responsible for representing the buyer's interest in a real estate transaction. Generally, the seller compensates the Estate Agent at the time you purchase a new home. There are some limitations in use of an Estate Agent, however. Before you decide, have your Estate Agent explain the advantages and disadvantages of using the services of professional agent.
10 Most Common Mistakes Buyers Make
1. They don't choose or select an Agent before rushing out and looking at open houses.
2. They don't make use of services Financial Institutions make available to them especially by obtaining a formal prequalifying certificate.
3. They are not aware of the additional costs to register a bond or the property in their name.
4. If the agent represents the Seller, the Buyer fails to question the Agent on who represents them, and what choices they have regarding representation. After all would you feel comfortable dealing with an Attorney who was representing the other party?
5. They fail to view a property because of the kerb appeal or outside appearance.
6. They fail to start negotiations in writing when they find the right home. Many buyers have been totally distressed because they lost the home they really wanted. It's also strange how you tend to want it more when you know you cannot have it.
7. They neglect to check out competing homes. Buyers must buy and learn by comparison.
8. They sign an offer to purchase without checking it out or being aware of the commitment involved. Many purchases fail to understand legal implications of the offer and that it becomes a contract which is binding the moment the Seller accepts it without alterations.
9. They fail to establish a checklist and work through it to check the home is sound and in order. Eg.: taps loose, damp, electrics, pool etc...
10. They are not aware of the concept of occupational interest, Mora Clauses and "out" clauses in purchasing subject to the sale of a property.
Questions Buyers Ask an Agent When Considering a Purchase
1. How much deposit is required?
The payment of a deposit upon signature of the agreement usually is an indication of the purchaser's serious intent. No amount or percentage is specified, but if bonding is required, the financial institution may require a minimum deposit of 10 or 20%.
2. What happens to the deposit?
The deposit is paid into the trust account of the agent or the attorney. The purchaser should stipulate that the interest that accrues thereon must be for his account.
3. How is the balance of purchase price paid?
The balance is usually paid in cash on registration of transfer and will be secured by delivery of acceptable guarantees within a specified time period. The guarantee is an undertaking by a recognised financial institution to pay a specified sum of money on the transfer of the property in the purchaser's name. The guarantee system ensures that both parties are protected. It is desirable that the date on which a purchaser is obliged to furnish guarantees precedes the date of occupation.
4. Is it possible to inflate the purchase price to secure a higher bond?
This practice is regarded as fraudulent and carries the risk of prosecution.
5. When is transfer duty payable?
This sum is payable to the Receiver of Revenue, but is usually collected by the conveyancer. Transfer duty is actually only required to be paid within a period of six months from the date of the transaction.
6. On what date should occupation be given and what is Occupational Rental?
Occupation should be agreed on a date mutually suited to both parties. It will often occur, however, that one of the parties is in occupation of the property whilst it is registered in the other's name, thus requiring the occupier (who may be either the buyer or seller) to pay a rental to the owner. Entitlement to such rent is not automatic and should be specified in the agreement of the sale. The amount of the rental is usually agreed at a level commensurate with rentals available in the market.
7. What if a tenant has a lease that overlaps the transfer date?
Once a tenant has taken occupation of the property he acquires a real right thereto for the duration of the lease and will be protected by the "huur gaat voor koop" principle. The new landlord steps into the shoes of his predecessor who in turn is relieved of his obligations towards the tenant.
8. Is the buyer ever liable for commission?
Strictly speaking, commission is payable by the party who conferred upon the estate agent the mandate to act on his behalf. In reality, however, it seldom happens that South African buyers pay commission.