MAIN IMAGE: Grant Smee, Managing Director of Only Realty Group
Staff Writer
Whether you are a buyer or a seller, your goals are intrinsically linked: a buyer wants to secure their dream home or property investment, and a seller wants to secure a vetted buyer who can afford the purchase and will appreciate their home.
However, Grant Smee, Managing Director of Only Realty Group and Property Entrepreneur, says both parties should be aware of common ‘red flags’. A lot of time and money goes into the purchasing and selling of a home. It is a big investment decision and should not be taken lightly.
While the rental property market is on the up, homes for sale are still in excess supply – putting both buyers and sellers at greater risk of ignoring warning signs to close the deal quickly. “A quick succession of interest rate hikes, job volatility and an increased demand for flexible lifestyles by millennials have all contributed to reduced demand in property sales – particularly over the last few months.”
Conversely, Smee notes that homes in certain in-demand areas are moving quickly – which means that buyers must act fast. “Either way, making hasty decisions without doing your homework puts you at risk.”
Buyer red flags
“Buying a home is no small feat. It requires time and capital to make it happen. And, given the stakes involved, buyers may face pressure from estate agents and sellers to make a commitment. I would advise buyers to disregard external pressures and make sure they approach their dream home fully equipped with knowledge of the area, the property, and the home buying process,” says Smee.
Smee details the red flags that buyers should be aware of as follows:
- Check for defects: Prior to putting in an offer to purchase, ask to inspect the house one more time – at leisure. Minor issues such as broken door frames and cracked tiles should be listed as conditions in the offer to purchase. Meaning that the seller would need to fix these prior to transfer. In a case where the property is sold ‘voetstoots’ it is the seller’s responsibility to disclose any latent defects of which they are aware. Some sellers still hide behind this clause, so inspection is key.
- Privy to pressure: Both the seller and estate agent want to sell the property as quickly as possible, however, you do need time to go through the paperwork and to ensure that this investment is the right decision for you. Stipulate the time that you need – do not feel pressured to sign on the spot.
- Do your homework: If a home has been on the market for a long time, it is important that you investigate all the reasons for this. Take all the emotion out of the purchase by thinking logically and like an investor. Ask yourself if you will be able to resell this home when the time comes?
Seller red flags
“There are many homes on the market and buyers are spoilt for choice. So, when an offer comes through, a seller may be tempted to rush the deal to secure a buyer,” explains Smee.
He explains that the process of homeownership can take around three months – from signing an offer to purchase to handing over the keys – and lots can happen during this time. One often sees buyers who are not pre-approved and do not have the finances in place to afford a home. This creates a lot of stress and heartache for the seller.
Selling a home is also an emotional process. Sellers are fully invested in the process. There is a lot of money tied into a home and therefore it is important to think rationally and to work with a property professional who understands the process and can vet a buyer prior to putting forward an offer to purchase.
Watch out for these red flags:
- Not all property professionals are equal: Look for a credible and reputable property professional aligned with your goals. They should know what sort of buyer you are looking for, what offer you would be willing to accept and what it takes to ‘close the deal’.”
- Due diligence: The property professional would need to clearly establish whether the buyer has received a pre-approval from a bond originator. In a case where they have not attained pre-approval – they can still put down an offer, but it is advisable not to get your hopes up until they have approval from the bank.
- Flaky buyers: Some potential buyers will say what the property professional wants to hear. In cases where they are difficult to reach and non-committal, keep pushing the sale of your home to other potential buyers rather than putting all your eggs in one basket.
- Suspensive conditions: A suspensive condition is a condition that needs to be met before a contract can become legally binding. Check all the suspensive conditions in the offer to purchase carefully prior to signing. An example of a common suspensive condition is that of a ‘subject to’ clause which means that the buyer can only buy your home if they sell theirs. A timeframe is normally included in the contract for this and if you sign it, then you can only accept another offer once the time lapses.
