Real Estate Investor Magazine South Africa Real Estate Investor Magazine - June 2017 | Page 25

Step 5: Acquiring Your First Property
Y
ou’ve spent some time looking for the best
property investment deals on the market,
found the right property and are ready to
put in an Offer to Purchase (OTP) ‒ how exciting!
Your next step will be to sit down with the real
estate agent, or an attorney, to d raw up the OTP
together. Involving an attorney in the process is
advisable as they will be able to explain each section
to you and make sure you haven’t left anything out.
What’s the big deal about an OTP?
An OTP specifies the conditions of sale of the
property, the agreed date by which the property
will be vacated and occupied, any occupational rent
to be paid and the fixtures and fittings that will be
removed or left behind once the seller moves out.
As the buyer, you can specify certain
contingencies in the OTP that need to be met
before you are lawfully obliged to go through with
your offer. It makes no sense to buy the property
if your home loan isn’t approved by the bank, for
example. Many buyers will add a clause to their
OTP that allows them to withdraw their offer
should they not be able to secure a bond.
As the prospective buyer, another prerequisite
you could include is a brief time frame, before
signing the deed of sale, in which you can inspect
the property for any latent damage, termites or
borer beetles, safety concerns and the like. This can
be done through a professional home inspection,
which will put your mind at ease about any hidden
electrical or plumbing faults, structural damage, or
areas of concern related to the overall condition of
the property. The home inspector can also help you
with an estimate for repair and maintenance costs
for any defects found.
If you plan to move into the property before
the transfer goes through, the OTP can specify
the agreed upon occupation date as well as any
occupational rent that is to be paid over this period.
It needs to be specified who will be responsible
for rates and utility bills over this time, as well
as house insurance coverage, should anything
unforeseen happen.
Other points for consideration
Don’t forget to ask for all compliance and clearing
certificates, including the necessary electrical or
gas compliance certificates, as well as clearance
certificates for electricity, water, rates and taxes.
www.reimag.co.za
Meyer de Wall, from MBF, also recommends
that if you are looking to invest in a sectional
title scheme, be sure to obtain information about
the financials of the body corporate (i.e. special
levies and its financial health etc.) before you sign
a sale agreement, to avoid being landed with any
unexpected costs.
What’s next?
A signed OTP will be the catalyst for your bank
(or bond originator) to get the ball rolling to do
a credit check and a valuation of the property. If
you have already done a credit check and been
prequalified for a bond through My Bond Fitness
(MBF), then this process will be much quicker.
My Bond Fitness (MBF) is South Africa’s first online platform
for a free affordability and credit checks. Visit www.reim.
mybondfitness.co.za to register an account and find out your
credit score, affordability and get prequalified for a home loan.
After the Deed of Sale is signed by both you and
the seller, and you have paid across an agreed-upon
deposit amount (to be held until the transfer goes
through), the relevant attorneys are approached
for help with the transfer and registration process.
Ask your attorney about the costs implications for
you during this process (i.e. transfer duty, bond
and registration fees) so that you have the finances
available when needed. Some banks or bond
originators will also require that you take out life
insurance to cover your loan in the event of your
death, so do bear this in mind.
Other points for consideration
Things that may delay transfer include lost title
deeds, rates and taxes not being paid on time by
the seller (all unpaid rates and taxes are regarded
as debt to the property and not the owner, so you’ll
be liable for these once you take ownership), or
you, the buyer, failing to pay the agreed deposit or
the transfer fees on time.
RESOURCES
Ooba, MDW Inc, Law Society of South Africa, Pam
Golding Properties
JUNE 2017 SA Real Estate Investor
23