As a first time homebuyer, it may be time to get started on what the process will look like when you buy your first home.  At Cornerstone Realty, Nicole and I work as a team under the name Cornerstone Realty and our business and our team is powered by eXp South Africa, one of the fastest real estate brands in SA and the globe. Take a deep breath because we make buying your first home easy and we have your back. As Randburg Property Practitioners, we bear the weight of this process for both you our buyer and our sellers.  We are the glue that holds the process together so feel free to ask questions.  It’s easier than you think to get started but it starts with have you been pre-qualified.  Here are a few steps that we will help you navigate. Don’t stress, we have got this and our role in the process is to be the glue that holds it all together.  Need help, call Sandy on 083 550 1220.

Your documentation as a first time buyer

All the following documents need to be collected and submitted with your Offer to Purchase (OTP) or Agreement of Sale. This is for the benefit of the process and is required by law to start a property transaction for transfer.

  • Your ID (both if relevant),
  • Your SARS Number (Both if relevant and numbers only will suffice),
  • A copy of your most recent COJ (if you have one), Your Marriage Certificate (if relevant),
  • The most recent copy of your Levy Statement (if relevant),
  • And your Bank Pre-Approval.  It is imperative that at this point you understand that there are bond costs and transfer costs.  We have provided a link to the attorneys we trust and always recommend as Louise Tonkin Incorporated.  Their website provides stunning and accurate numbers to consider in terms of these demand costs.  Here is the link https://www.ltinc.co.za/cost-calculator/

First time buyers; here is what you need to know about the OTP

As a first time buyer we will need to complete your Offer to Purchase or OTP which is a legal contract.  Firstly, as the buyer you put forward your best offer on the property you have fallen in love with.  You will need to sign and initial on each page and sign in full in 2 places.  The lovely people who are selling their home will sign after you and once they sign this OTP becomes legally binding so be sure that this is your dream home.  Key to this process is providing us with the direction we need to complete the offer correctly in terms of:

  • As a 1st time home buyer, what is the price you are offering for this property?  We suggest you put forward your very best offer.
  • Will there be a deposit and what is the amount of the deposit you plan to put down?  It is not imperative to put a deposit down, but if the funds are tied up, we need you to make every effort possible to ensure the funds are available as stated on the OTP.
  • What is the amount you plan to bond with your bank?  We sincerely hope that by this point you have made arrangements to secure a bond preapproval.
  • Also, there is a section called other contentions when you put in an OTP.  This usually includes anything that the Seller has confirmed that may or may not be part of the sale like a Generator, a Wendy house, etc.
  • I normally state in the OTP that the Seller Declaration Report is included as an attachment to verify the current condition of the property you plan to buy. 
  • Occupational Rent: Occupational rent is provided either before the property becomes your or after it becomes yours.  If you need to be in or be out this clause comes into play and confirms the money you will either receive or owe depending on the situation.  The attorneys will draw up what we call an Occupational Addendum for all parties to sign which is also binding.  Remember Occupational Rent is normally always paid to the attorneys and upfront on a pro-rata basis.
  • The Seller always appoints the attorneys to attend to the property registration.  I always suggest that our buyers request a pro-forma invoice from the attorneys to confirm all costs and fees that are payable on demand.  This gives us all comfort in what the amounts are that need to be paid when the fees are called for payment.

As a first time buyer, what is the Property Condition Report?

A further document which forms part of the OTP at the time of submission is called the Property Condition Report and this is also a legal requirement.  This document is important and here we highlight the importance and the process:

  • The Seller has declared the current state of the property you have plans on buying. 
  • The Seller declares with absolute transparency what the current condition of the property is at the time you buy the property.  This document is also signed by the buyers and the sellers and is binding when submitted with the OTP.
  • Be sure to ask questions if you have any but this process is straightforward.

What are Suspensive Conditions as a 1st time home buyer?

These are the hurdles or the conditions you are making when you undertake the purchase of this property and include the following considerations:

  • The sales price is acceptable to the lovely people who are selling their homes, so put in your very best offer.  Sellers have 3 choices, accept the offer, decline the offer or counteroffer (which means they will push you for a little more in terms of the sales price.
  • The deposit is payable on the dates we agree to on the OTP which is a legally binding contract.
  • The bond finance you are applying for is approved by the bank.  This is essentially the most important clause or condition in the offer.
  • If you are considering putting in an offer on condition of the sale of your property, this is not considered a strong offer in the current market because it can take 90+ days to sell a property in the current market.  But we will need to know at the very least that your property is on the market and we should be able to view it online via a property portal.  The OTP will include the address of the property and in this case our buyers would be given 60 days in which to market and conclude the sale.  If your property is not sold in this time, you are in breach of the contract.  But your Seller has the right to continue marketing the property during this time.  If during this time the Seller is presented with a better offer for more money or less suspension conditions ensuring a quicker sale, you will be notified.  You will have 48 hours to match or better your offer.  We would love to hold your hand and work with you at this time to ensure that the dream home you fall in love with and want to buy becomes your forever home.  We will work closely at this time to keep us on target and in line with the Sale Agreement or OTP.  

What are the steps to get your OTP underway?

  • We will ask you for all your documentation as above.
  • We will prepare your best offer on paper and we will take you through the OTP to ensure you understand all the clauses and requirements as outlined in the OTP or Sale Agreement.  As the buyer, you will sign your offer first, both parties that is.
  • We will present your final offer to our Seller and the seller always has 3 options, Accept the offer, Decline the offer or Counteroffer.
  • Once the seller signs the OTP the contract or the Sale Agreement becomes binding.
  • As property practitioners, we submit the OTP to the Seller’s appointed attorneys together with the Property Condition report and all the required documentation to support FICA and SARS requirements.

Useful links to help you with costs and fees as a first time buyer

What are the steps in the Property Transfer process?

  • STEP 1: • The Seller and Purchaser sign the offer to purchase which is then sent to the Seller’s transferring attorneys. The transferring attorney will request: FICA from the Seller and the Purchaser. Payment of the deposit and pro forma transfer costs from the Purchaser, Electrical, plumber, beetle, gas, borer, fencing compliance certificates from the Seller, where applicable, The title deed and bond cancellation figures from the current bondholder over the property.  This means that the bond cancellation figure is the amount which the existing bondholder requires to cancel the bond), Rates clearance figures from the City Council (which figures are calculated four months in advance and payable by the Seller),
  • STEP 2: The Purchaser makes payment of the deposit into the transferring attorney’s trust account to be held in safekeeping until registration, The Purchaser’s bond is approved and the Purchaser advises the transferring attorneys, The bank approving the Purchaser’s bond will appoint bond registration attorneys to attend to the registration of the bond, The transferring attorneys liaise with the bond registration attorneys who supply the transferring attorney with the amounts available for guarantees and request guarantee requirements to cancel the existing bond over the property.
  • STEP 3: The bond cancellation attorneys are appointed by the existing bondholder to cancel the bond, The bond cancellation attorneys send a copy of the title deed and bond cancellation figures to the transferring attorneys, The transferring attorneys use the bond cancellation figures to send a request to the bond registration attorneys to issue guarantees to cancel the existing bond over the property.
  • STEP 4: Transfer documents are drafted and the Seller and Purchaser are called to meet with the transferring attorneys to sign, The bond documents are drafted and the Purchaser is called to meet with the bond registration attorneys to sign and to pay their bond registration fees.
  • STEP 5: Once payment of the pro forma transfer costs is received from the Purchaser and all transfer documents are signed by the parties, the transferring attorneys make payment of the rates and levy clearance figures and the transfer duty (payable to the South African Revenue Services), The Seller must provide the transferring attorney with all compliance certificates, The Purchaser must make payment of the remaining balance of the purchase price, if not already covered by guarantees.
  • STEP 6: The transferring attorneys receive the original guarantees covering the purchase price from the bond registration attorneys, The transferring attorney sends the original guarantees to the bond cancellation attorneys and makes payment of the bond cancellation attorney’s costs on behalf of the Seller, The attorney receives the rates clearance certificate from the City Council, the levy clearance certificate from the homeowner’s association or managing agents and the transfer duty receipt from the South African Revenue Services, At this stage all suspensive conditions to the offer to purchase must have been met.
  • STEP 7: The transferring attorneys arrange with the bond cancellation and bond registration attorneys for simultaneous lodgement of their deeds in the Deeds Office, If all parties are ready to proceed, the deeds are lodged.
  • STEP 8: The transfer takes approximately 8 – 10 working days to register provided there are no unforeseen delays, The documents are examined in the Deeds Office after which the deeds will reach the final stage in the Deeds Office, namely Preparation, when all attorneys involved in the matter are called to sign off their documents for registration, At this stage all finances must be in order to ensure that the purchase price is covered in full.
  • STEP 9: On registration of the deeds in the Deeds Office, the Purchaser becomes the new owner of the property and the Seller’s bond is cancelled with the simultaneous registration of the Purchaser’s bond, The bank is presented with the guarantees for payment of the purchase price which may take 2-3 days to reflect depending on the efficiency of the bank transfers, All parties are advised of registration and the transferring attorney draws a final statement of account for both the Seller and Purchaser. Any credit balances and the purchase price are paid normally within 2-3 working days after registration.
  • STEP 10: The Deeds Office releases the title deed and mortgage bond after a period of approximately 3-6 months once the deeds have been data captured and microfilmed, The original deeds are sent to the transferring and bond registration attorneys for delivery to the current bondholder or owner. The average period from acceptance of the offer to purchase by the Seller to registration of the deeds in the Deeds Office takes approximately two to three months depending on the terms and conditions of the offer to purchase.

View our properties here…

To view the properties that Cornerstone Realty has access to we have listed on Property24.  Remember we have access to all the houses on the market within eXp South Africa so let us know if any of our properties catches your eye and let us help you get started with a viewing.  

Buying your 1st property is a big deal

As first-time buyer, we go slow and we walk the road with you.  We actually go at your speed and we have all been in the position of being faced with this process for the first time we have done loads of times before with 1st time home buyers that have ended extremely well.

Nicole and Sandy from Cornerstone Realty are seasoned property professionals who are capable and professional in delivering an experience that you will talk about for a long time after you have moved in.  No matter where you are in the buying process, we do take the time to go slow and to make sure you understand all the various steps in the process.  It starts with viewing the property.  It includes making sure you have the correct processes in place to support your start with a pre-qualification.  Remember we can assist you on this front and saving R500 per month over a 20-year loan term is significant and we would love to assist you.  Filling in the paperwork (OTP, Concluding the Property Condition Report and collecting all the FICA and SARS info) is essential to get you started on the right footing.

Cornerstone Realty is here to help you as a 1st time home buyer

Need help?  Just let us know.  Call Sandy on (083) 550 1220 or visit my website or drop me an email at sandy.graham@expsouthafrica.co.za.  Cornerstone Realty is here to help and we would be honoured to be the ones to help you secure your 1st dream home.

Randburg Estate Agent

Written by: Sandy Graham on 083 550 1220 from Cornerstone Realty, powered by eXp South Africa and operating in the Randburg property market as a full-status Randburg estate agent.

 

 

 

Get valuated for free