South Africa is a country where property ownership was denied to more than 50% of the population in earlier days, hence the onus on sales people in the industry to educate buyers and sellers as the population gets more active and entrenched in property transactions.
South Africa is a country where property ownership has been denied to more than 50% of the population in earlier days, hence the onus on sales people in the industry to educate buyers and sellers as the population gets more active and entrenched in property transactions.
The past two decades, with a new Constitution in place, allowed for a number of new consumers trying their hand at the game of property. Most of those clients entered the market with a clean slate; a statement which relates to a buyer with cash on hand or a loan from the bank.
The arena, however, has not been closed to the older hands in the game, which include those property owners who move from one location to another, be it for the reason of upgrading, going smaller or retiring.
Most of the population in this segment, as a general rule, shop around until they find a new home, then only take the bold step to sell their home and move on.
This brings us to the sale of contract, where the purchaser is buying a property, with a suspensive condition that he has to sell his existing home in order to pay for the new home.
In short, the funds received from the existing home, must pay for the new home. In other words, if the purchaser is unsuccessful in realising a successful sale on his existing house, he is undoubtedly not in a position to pay for the new home.
All of this seems quite easy, however, many buyers and sellers are caught up in situations where the agreement does not specify the exact events and it is often a matter of timing that must match the performance.
Linda Erasmus, CEO of Fine and Country SA, gives a few simple guidelines to assist the buying and selling public in this respect:
1. Keep in mind that the proceeds from an existing property will be used to make payment on the new property.
2. Guarantees (payment for the new property) must clearly be linked to the property which is in the process of being sold.
3. Unless the money is available from some other source, a contract without the link does not reflect the true position of the party that is buying.
4. Time frames play an important role with the suspense sale, and a qualified person should assist the parties with such clauses.
5. The clauses that need to be linked in sale contracts, are firstly the deliveries of guarantees by the buyer and secondly the registration of transfer of the buyer’s property.
The buyer is not in a position to deliver his guarantees, unless he received the proceeds on the sale of his property.
6. If the process is understood, this type of sale is actually very easy to do, however, caution must exist with linking the sale.
7. In order to protect the seller, should the buyer not sell his property in the specified time, a clause should be inserted to give the seller the option to accommodate other offers during the specified time.
8. Although the suspensive sale is simple when there is one buyer and one seller involved, it can become complicated if another buyer appears with an offer.
9. The most important criteria, to avoid conflict, is to have a proper addendum with the correct clauses to protect both buyer and seller at the time.
This is still one of the most popular ways to buy a new home as the average person does not own more than one home.
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