Buying your first property can be a daunting process, especially when interest rates are high and there is uncertainty around whether yet another hike is in the pipeline. Doing your research and relying on the advice of a real estate agent could save first-time buyers from making expensive mistakes on their first property purchase.
READ: Home buying: Steering clear of common mistakes
"Starting off on the right foot in the home-buying journey is crucial to avoid disappointment down the line," explains Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa. “Many first-time buyers dive straight into house hunting without knowing their financial boundaries. Instead of rushing into property searches, it's essential to first understand what you qualify for," he advises.
To avoid being caught off guard if there is an interest rate hike at some stage early into your first home purchase, Goslett says that the very first step in the house-hunting journey should begin with playing around on a bond calculator to see what the home loan instalment would amount to at various interest rates.
Apart from discovering what your monthly repayments might be, Goslett advises that it is also important to see what the total bond fees and transfer costs will amount to, as these amounts will be payable upfront as soon as your offer is accepted. This information is usually displayed at the bottom of a property listing across most property portals and websites.
“After doing your initial research, I would always recommend working through a bond originator, as they will be able to guide you and will also help you get the best deal on your home loan by applying to all the major banks on your behalf – and at no cost to you. They will also help you get pre-approved so that you know exactly how much you could qualify for on a home loan.”
READ: Tips for first-time homebuying success
With a pre-approval certificate in hand, the next step in the process is to reach out to a local RE/MAX agent. “While solo searches are an option, partnering with a real estate agent can streamline the process. Agents possess market insights and often have access to listings before they appear online. By communicating your preferences and dislikes, agents can efficiently narrow down options, saving valuable time,” says Goslett.
Next, it’s time to start viewing homes in person. Clearly define your wants versus your needs and keep this in mind when walking through a property. “Apart from the liveability of the home, my advice to first time-buyers is to consider the investment value of the home. In all likelihood, your first home won’t be your forever home, so you’ll want to find a property that has the best potential of appreciating in value over time so that you can use the capital appreciation to help you climb the property ladder,” he recommends.
Once you find your perfect home, it’s time to submit an offer to purchase (OTP). Goslett warns that this is a legally binding document, so it is imperative to read through every single clause carefully. “If you are unsure of any of the clauses in the OTP, ask your agent for clarity. Never feel afraid to ask – the agent is there to help you understand,” he notes.
One of the last steps in the buying process is the anxious wait to hear back from the seller. There is usually a timeframe stipulated in your OTP regarding how long your offer is valid. The seller has until that date to get back to you, at which point they might counter your initial offer, reject your offer, or accept it. They might also ask for an extension on the deadline and it is up to you whether you are willing to accept the extended timeframe or rather to let the offer lapse and no longer be valid.
READ: First-time buyer? Here are 10 hidden costs of buying a house
The final piece of the puzzle is when the offer is accepted and the OTP is signed by both the seller and the buyer. This will then kick off the transfer process (which is a whole separate endeavour) and the transferring attorney (selected by the seller) will be in touch to guide you through the lengthy administrative process of transferring the home into the new buyer’s name.
“Buying your first home can be daunting, but it need not be. With the advice of a reputable agent on hand, purchasing your first home can be a stress-free journey from start to finish,” says Goslett.
READ: First-time homebuyers: Here is what to expect after signing the offer to purchase
Additional tips:
In an article published October 2023, Samuel Seeff, chairman of the Seeff Property Group, said it is vital to realise that an offer to purchase a property is a legally binding contract and that you cannot get out of it without incurring onerous financial penalties. You should therefore be ready to purchase the property before you put in your offer.
A property is a long-term purchase, and you need to ensure you make the right decision before putting in the offer. You cannot put more than one offer in at a time and once that offer is in, it is binding unless it lapses due to your inability to fulfil any potential suspensive conditions.
Seeff says these are some of the things that you need to consider before doing so:
That you are able to pay the purchase price. If you need a home loan to help you buy the property, you should do a formal prequalification so that you know how much you can buy for and that you will be able to secure a home loan.
That you have cash available to put down as a deposit. Generally, only in the case of qualifying first-time buyers will the banks grant a home loan to cover the full purchase price. In all other instances, the buyer will need to put down a deposit. Currently the average deposit requirement is around 10%.
That you have cash available for the transaction costs. This can be considerable and include transfer duty, attorneys’ fees, bond registration costs and other incidentals. The money must be available upfront and usually become payable once the Conveyancing Attorneys start with the transfer process.
That you have all the necessary documents. You will need certified copies of your personal documents (ID, proof of address, marriage certificate etc.) and documents required for a home loan application such as proof of employment and income and three months recent bank statements.
That property will meet your future needs. For example, if you want to make alterations or build on and the property is part of a community scheme what the restrictions or regulations are, or things like visitors parking or what you can put in your yard or on your balcony.
That you have done a proper walk through and inspection. You should be quite sure that you want to buy the property because an offer to purchase is a binding legal contract. You should also familiarise yourself with the neighbourhood, amenities, schools and the daily traffic commute.
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