Things Home Buyers should consider

It is expected that the property market will be more vibrant this year than it was in 2012 as a result of the more stable, and low interest rate. It however still presents some challenges to buyers.

Among the toughest of these is obtaining bond finance. According to statistics, one out of two bond applications are being turned down by the banks. Banks have also tightened up their lending criteria again so finance is likely to remain a major issue going forward. To get around this, buyers should make sure they have a deposit of at least 10 percent of the purchase price, and that their credit record is clean. A tad of advice is, buyers can consider using a mortgage originator. Bond originators provide you with options and expertise. You’ll have a more reasonable chance of securing finance, and getting a good rate.

Another challenge for buyers this year, is that there will likely be a shortage of “stock” in some areas, particularly in the lower to middle price range (between R550 000 and R800 000.) This is the sector of the market most favoured by first-time buyers, and will continue to drive demand this year.

Third on the list is “unqualified house hunting. A lot of prospective buyers were bitterly disappointed last year, having failed to get themselves pre-qualified by their bank or mortgage originator before starting their search for a home. They ended up choosing a property that ultimately proved to be out of their price bracket. To avoid this, house hunters should get themselves pre-qualified for a bond so that they know exactly what they can afford upfront. This is a free service offered by all the lenders that will not only establish the size of the bond you qualify for but also the costs involved in the transaction. Being pre-qualified also identifies you as a serious and able buyer, which will also stand you in good stead during negotiations.

Then something buyers should be cautious about is slow decision making. Although you should be making decisions very carefully when it comes to buying or investing in property, and there are definitely very important things you have to consider, you should also not wait too long. Don’t delay in your decision making if you’ve found the right place, because another buyer will likely come along and sweep it out from under you. Correctly priced properties sold well last year and everything points toward this trend gaining momentum, and competition is growing among buyers.

Lastly, something else for buyers to consider this year is the danger of making “low” offers. These are offers that are significantly lower than the market value of the property. A “low” offer in most sellers’ minds translates to the buyer trying to in a sense steal their property from them. It’s no secret that buyers want a bargain but an unreasonable offer, which is anything less than 80 percent of the market value of the property (as opposed to the asking price) will upset the seller, who will invariably then put the brakes on any further negotiations with that particular buyer.

Article: Dillon Gray - www.tivvit.com

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