5 Popular property questions - and smart answers
Category Advice
It's always good to ask questions - and to remember that there is no such thing as a silly one - and even more so when it comes to property, whether it's got to do with buying, selling or renting.
"Property is a significant undertaking, irrespective of whether you're the buyer, seller or renter, and knowledge is power so one should always ask as many questions as you want or need to ensure you're equipped with the right information in clear and transparent way," says Silvana Dos Reis Marques, Principal at Leapfrog Pretoria East.
Her years of experience as a property professional has seen her answer many, many property questions but she notes the five below as the most pertinent.
1. How do I decide which is the best area in which to buy an investment property?
While location is always an important consideration when it comes to property purchase, it is also not inaccurate to say that property in most parts of South Africa is a good investment but depends rather more on what the investor is looking to get out of the investment.
As such the decision rests on considerations such as the type of property, the desired return on investment, surrounding amenities, safety and security, and individual preference.
2. What is the value of my property?
Let's start by clearly defining value versus price. We can take a leaf from Warren Buffet's book who said "price is what you pay, value is what you get". A property advisor will give you a market-related estimate for your property, this would be a price. This price is typically based on things like demand in the area, industry trends, location, as well as the condition and features of the property.
Value, meanwhile, is determined by what a potential buyer is willing to pay for the property and thus subjective. Seen differently, price is determined by various guidelines, which includes the property advisor's professional insight and expertise.
Remember too that buyers today are very savvy, thanks to information about properties being easily accessible online. "Buyers today know the value of a potential investment because there are so many free tools that allow for comparative research. Oftentimes this means sellers need to be very realistic, and even flexible, about their price," Dos Reis Marques explains.
3. What's the deal with the Offer to Purchase (OTP) - is it binding?
Yes, it is legally binding once signed by the seller. The OTP outlines the purchase agreement, including terms and conditions.
When the buyer signs the OTP, they agree to the terms as well as commit to paying a set price for the property. Pay particular attention to the purchase price, the conditions of sale, stipulations around fixtures and fittings, as well as date of occupation and occupational rent.
4. My bond was approved - yay - but what happens now?
A bond attorney is instructed by the bank to register the bond at the deeds office, while the seller advises the transferring attorney to transfer the property. The bond attorney then notifies the transferring attorney of the draft deed of transfer and guarantee requirements. Then the cancellation attorney cancels the seller's bond and the transferring attorney receives the title deeds and cancellation figures, and sends a copy to the bond attorney.
After this both the buyer and the seller sign the transfer documents. The buyer is then responsible for the transfer costs and the transferring attorney pays for the rates and taxes and the transfer duty. After all the documents are signed and costs paid, the transfer, new bond and cancellation bond documents are prepared for lodging at the Deeds Office.
On the day of registration the bank pays the loan as per the guarantees issued.
5. For whose account is occupational rent?
Occupational rent is the financial compensation for occupying a property that you do not own - either because, as the buyer, you've moved in before the transfer and registration has been finalised or because, as the seller, you continue to occupy the property after the sales transaction is completed.
It is designed to protect both the buyer and the seller, and the rule of thumb is that the rental amount should be in line with what the property would go for on the open market.
While these are the most "popular" questions Dos Reis Marques says all questions are always welcome. "As property experts, our role is to support and guide our clients on every step of their property journey and we welcome any questions that make the experience easier or more pleasant for clients. So don't worry about a silly question - there aren't any!"
Author: Leapfrog Property Group
