2009/03/06

A great deal of time and frustration could be avoided in the residential real estate marketing world, if buyers would only do the necessary homework before they start looking at homes to buy.

So says Mike Greeff, Chief Executive of Greeff Properties, who adds that "the first point to be clarified at the outset, is how much the banks will allow on a bond".

"It is surprising how ignorant on this matter people can still be despite the huge publicity given to the National Credit Act (NCA)."

"The applicant must know and be able to declare the combined income of himself and his spouse or partner and their expenses – very often we find that certain expenses have simply been overlooked in the review process. An experienced bond originator will then be able to calculate just how much is available for the house purchase and the type of bond that the applicant will qualify for."

This apparently simple pre-qualification process, said Greeff, has time and again not been carried out by those looking for homes.

Many buyers, added Greeff, under today's credit restrictions qualify for only a 70% or 80% bond. To some this has proved "a big shock" and has resulted either in their giving up the search for a house or having to settle for something less expensive, in a less fashionable area.

Another factor quite often causing sales to fall through, said Greeff, is the conditional clause in the buyer's offer stating that their current home has first to be sold at or above a stipulated price.

"Here the problem is that despite the ongoing discussions in the press on this matter, sellers still often have totally unrealistic ideas of what their homes are worth. A great deal of time and effort goes to waste when after three months they have still not found a buyer at what they regard as an acceptable price and therefore cannot honour their Offer to Purchase."

Buyers, said Greeff, must find out upfront from reputable valuers and/or agents what the current value of their home is.

"There are a great many who still have no idea of how much property prices have levelled off, or even declined, although, as I have said before, the Cape has proved far more stable than almost any other area in South Africa."

Buyers, said Greeff, must also accept that the 72-hour (or three day) clause allows the seller to try and find an equal or better offer within that period - and if this happens they will have to meet the offer or forgo the sale.

Conditions in the current market, said Greeff, are beginning to ease and banks are likely to be more generous in the sizes of loans they are offering but, he predicted, for the next six to nine months the type of essential preparation work that he outlined will remain absolutely necessary to achieve a quick sale.

Property24