An excellent credit score is one of the most priceless assets a potential home buyer can have. This tool has the power to secure favorable mortgage and refinancing rate, influencing everything from the size of the loan repayment to the interest rate on the home loan.
“It is advisable that potential home buyers check their credit score before even starting to look for homes or applying for a home loan, as the banks will look into your financial history and the application will be declined if you have a low credit score. The important thing is that your accounts are up to date and that you have the ability to afford the bond” advises Craig Hutchison, CEO Engel & Völkers Southern Africa.
South Africans are entitled to a free copy of their credit record every year. “Many South Africans are surprisingly unaware of the importance of a good credit profile, many do not know what a credit profile even is, and even if they do, they seldom check their own personal credit profile. Today many potential employers look at credit profile reports as a way to judge a person’s character and level of responsibility” says Mellony Ramalho, Group Executive African Bank.
Your credit score is typically a number from 0 to 999 and is calculated by using all the details on your credit profile. “It reflects a ‘score’ summary of all your financial decisions, it is often used by lenders, such as home loan and personal loan companies, to make accurate decisions on whether they should lend to you or not” says Michael Bowren, CEO and founder Fincheck. Overall, a credit score measures the amount of potential risk the consumer is to the creditor.
We take a look at what the experts have to say about credit scores and what should and shouldn’t be done.
How does a credit score work?
The higher your score the better your credit health will be, which will be an advantage when applying for a home loan, making it easier for you to borrow money at lower interest rates. “The lower the score, the higher the risk which then influences the outcome of the credit application” advises Andile Fulane, CEO, Seed of Prosperity.
By managing your credit profile effectively, you can ensure your image and profile is viewed favorably by lenders or other organizations. A bad credit score would mean the exact opposite of this and result in almost no financial institution willing to offer you a home loan.
Credit score guideline:
|Credit Score Range
|767 – 999 (Excellent)
||Consumer has an high probability of collection
|681 – 766 (Good)
||Consumer has an average probability of collection
|614 – 680 (Favorable)
||Consumer has an low probability of collection
|583 – 613 (Average)
||Consumer has an low probability of collection
|527 – 582 (Below Average)
||Consumer has an low probability of collection
|487 – 526 (Unfavorable)
||Consumer has an low probability of collection
|0 – 486 (Poor)
||Consumer has an low probability of collection
How do they calculate your credit score?
Your credit score is calculated by a credit bureau based on your credit report. They consider how you pay your bills, how much debt you have and more importantly, how all of that compares to other credit active consumers. Each bureau has a different way of calculating your score and take into account different forms of information, including information their organization already holds on you, or your employment circumstances.
Your credit score is only one part of your credit report although it is almost the single most important item on your credit report; the full report gives you some handy information. Your credit report is a combined summary of your financial background with an overview of your credit score, financial accounts, profile, and rating.
What influences your credit score?
As you start transacting with various banks, retailers and other financial institutions like lenders, you start building a financial history. Your credit history will be determined by the amount of money you have borrowed in your life and how much of it you have diligently paid back on time.
Credit score is affected by the following:
- Missing payments or not paying on time, even if you make double payment the following month the score will affect your credit history. “While adverse legal information is cleared as soon as the account is settled, the negative repayment history however remains for a couple years,” explains Ramalho.
- Too much debt – how much you owe and how much of your available credit you’re using – it is advisable to try to keep the use of your current credit facilities to less than 35% of your limit.
- Negative information like a court judgment taken against a consumer’s name (commonly known as blacklisting).
- Length of credit history.
- Account application and enquiry activity – within a short period of time, how many account applications the consumer submitted and how many new accounts you opened.
My credit score is lower than I expected. Why is this?
Fincheck provide us with some reasons:
- A credit history of fewer than 6 years, which is the time frame used to calculate your total credit score.
- Missed or late payments over the last 6 years.
- Holding very few credit accounts means there will be less credit history available on your profile.
- Court judgments or record of insolvency.
- Having a lot of unused credit available could lead to a large balance of debt if you decided to use it all at once.
- Balances on your accounts that are very close to the credit limit indicate that you rely on credit to get through each month.
Why improve your credit score?
Credit providers measure their risk in taking you on as a client before they approve or decline your application for credit, so improving your credit score increases the chances of being granted credit on favorable terms.
How to improve your credit score
- Regularly checking your credit report to confirm all the details are correct.
- Making sure you make payments on any outstanding credit accounts on the due date. (Should you have difficulty in making your payments, you should contact your credit provider to agree on a payment plan, or to reduce your regular payments to an amount that you can afford to pay).
- Consider setting up regular automated payments rather than doing manual payments.
- If you have too many old, unused credit accounts, consider closing them.
- If you are almost reaching your credit limit on one or more accounts, try and reduce your balance. Outstanding balances mean you have a lot of outstanding debt in your name.
How long does it take to improve your credit score?
It depends on how long it will take to improve areas that need attention and maintain them, real improvement will start showing after three months of consistency, as you show progress your credit score will automatically get updated.
If you have had a couple bad experiences with your credit health, it is helpful to know that, credit inquiries stay on your credit report for up to two years, whereas more serious activities that incur namely late payments, lawsuits, bankruptcy and tax liens will stay on your credit record for up to ten years.
How to build up a credit score if you don’t have debt
Unfortunately you won’t have a credit score if you don’t have any debt because your credit score is calculated and based on your credit habits. This doesn’t mean your financial health is bad, there’s just simply not enough data to give you a credit score. This can be bad news if you’re looking for a home loan though, so your first steps will be to apply for financial products where you can start building a credit record.
These can include:
- Credit card
- Vehicle finance
- Phone contract
- Clothing accounts
Consequences of a bad credit score
- Not paying your account on time or at all which can result in you not getting further or desired credit when needed.
- Lenders will see you as a high risk meaning that should they decide to take on that risk, they will charge high interest rates compared to someone with a good credit score.
- Depending on what industry you are in – some industries such as banking – check a potential employee’s credit report and score. They consider a bad credit score as someone who is not trustworthy to work in a banking environment.
Consequences of not checking one’s credit score
It is advisable for a consumer to check their credit report every 3 to 6 months. Statistics show that only 3% of the 24 million credit active South Africans have seen and understood their credit report. This comes as a threat of potential identity theft where someone can use a consumer’s ID to clone their profile and open lines of credit. A credit report contains so much personal information including addresses, phone numbers and employment that the leak of such information poses a big risk of fraud to the individual.
How a credit score affects you when applying for a home loan
When it comes to taking out forms of credit like a home loan, your credit score plays a vital role in your eligibility for a home loan, however it’s not the only factor to affect your application, your debt-to-income ratio will also play a big role.
What score do you need to qualify for a home loan?
There’s no specific score which will qualify you, if you follow the step to build a healthy credit score and maintain a healthy debt-to-income ratio, lenders will see you as eligible for things like home loans. Most lenders prefer to lend to an individual whose debt is less than 36% of their gross income. This, along with healthy credit habits that keep your score in the ranges above 650 will put you in a good position to secure a home loan.
If you are declined for a home loan, what should you do and when do you apply again?
It’s important to know that if you apply for any hard forms of credit like a personal loan, credit card or home loan, you will get a hard inquiry against your credit report, too many of these are a red flag to lenders.
If you have had an unsuccessful home loan application, take a step back and start improving your credit health. There’s no fixed time frame for this, it will take as long as you take to form healthier credit habits, pay back debt and wait for that very happy green indicator on your credit report.
How can you get your credit score?
- Fincheck aims to help people make better financial decisions. They have spent a lot of time and effort in building a tool to help you do all of the above. You can sign up for the MyFincheck Credit Score Tool and get your FREE score directly.
- For more information about your credit score and assistance in improving it, you can download the Moneyac app available on the Google Play Store alternatively go to the website www.moneyac.club where you can access your credit report and experts that can help with anything related to financial health.
- TransUnion – 086 148 2482
- Experian – 086 110 5665
- Xpert Decision Systems (XDS) – 086 112 7334
- Compuscan – 086 151 4131
“It is never too late to begin working towards an improved credit profile. After all, it could be the difference between you being able to purchase your dream house, finance a vehicle, pay emergency medical expenses or further your studies one day” Craig concludes.
If you are thinking of selling your home, then one of your biggest concerns will undoubtedly be to find out how much your property is worth. It is very important that sellers set the correct asking price when placing their home on the market as buyers, who are looking at properties to purchase are educated and know what they can buy within their price range.
“The price of your home will get influenced by what is happening on the political and economic stage of the country, the area as well as the surrounding suburbs. The condition and upkeep of your property, is one of the biggest factors which result in home owners losing money, when the opportunity for sale presents itself” informed Craig Hutchison, CEO of Engel & Völkers Southern Africa. Many sellers have inflated beliefs that their house is worth more than what they paid for the property, especially if they have had additional cost on improvements. It is essential that sellers view their home as objectively as possible.
It’s always best to consult a professional estate agent, who will be able to provide sellers with an estimated market value of their home by conducting a Comparative Market Analysis (CMA). They will base their evaluation on statistics and facts and remain objective. This analysis will incorporate the strength of the local market, demand and supply forces, and the sale of other similar properties in the local area. Agents have access to advanced industry developed tools to assist them with this process. The CMA will help to determine how much people are willing to pay for a particular type of property, and this will assist the seller in making an educated decision when it comes to their asking price.
Determining your property sales price in 4 simple steps
Step 1: Get informed
Understand what determines the market value of a home
Your property value will be determined on several different factors. While location is undoubtedly the most important, house prices will also depend on layout, condition, size, future developments, and desirable features. Details like a newly renovated kitchen or manicured lawn will add to your property’s value. Yet house prices are constantly shifting, which means that the property could be valued at a very different price today than what you originally paid for it, or even what it was worth one month ago. It’s essential to understand your property’s current market value in order to present buyers with a focused marketing strategy; otherwise you may run the risk of selling below value.
Step 2: Asks the experts
Obtain an expert valuation
While you can glean data from comparable recent property sales in your area, it’s highly recommended to obtain a professional valuation. The housing market changes daily, so it’s advisable to gain access to the latest sales trends in order to achieve a desirable house price. “At Engel & Völkers, our expert real estate agents have the most current, targeted sales data in each location at their fingertips. Our comprehensive, widespread sales network is able to provide local knowledge, ensuring that you’ll receive a realistic, accurate property value to work with” noted Craig.
Step 3: Do the math & plan
Use your valuation to set a realistic sales price
Your property value report is more than just a number. You can use this figure as a starting point for potential remodelling before putting the house on the market. There are a number of ways to boost your home’s market value, chief among them being a loft conversion which can add an average 12.5% to your selling price. In many cases, simple home repairs and a fresh, neutral slick of paint will create a small increase in value. Your agent can best advise you regarding how to proceed. Refer to the ROI on renovations guide for more in-depth information on which renovations are best to consider.
Step 4: Go to Market
Market your property with value in mind
Qualified real estate agents can optimise the marketing and sales process by using market value as a guide. When consulting our agents, you can choose from a classic sale with public marketing efforts used to secure maximum coverage, or a discrete sale where we market directly to prestige buyers. In either case, we use the market value of a home to craft premium printed materials as well as online advertisements, and reach out to the target buyer demographic at the ideal price point.
Are you ready to sell your property? Get in touch with a team of real estate experts and obtain a professional valuation for your home.
It is that time of year again where all income from property investments must be declared to SARS and is subject to income tax, this includes all rental income. In preparation for tax season, taxpayers can start gathering all the supporting documents that are needed to submit their tax returns. The first important point to note when reviewing the income tax implications of residential properties is the difference between; the income tax of primary residences and buy to let residential properties:
Primary residences are occupied by the owner of the property and there is therefore no taxable income that is generated from the ownership of the property. All the costs that are incurred in relation to the property are therefore of a personal nature and cannot be deducted for income tax purposes.
Rental properties are leased by a tenant and the owner of the property (the lessor) receives a monthly rental income in return for leasing the property. The rent income must be included in the taxable income of the property owner regardless of whether the property owner is an individual, corporate entity or a trust. All the costs that are incurred in order to generate a monthly rental income can be deducted from the income that the property owner receives when calculating the owner’s taxable income for tax assessment purposes. Rental of residential accommodation includes:
- holiday homes
- bed-and-breakfast establishments
- sub-renting part of your house e.g. a room or a garden flat
- dwelling houses and
- other similar residential dwellings
“The important factor with owning an investment property is that all expenses are deductible from the rental income, before tax is calculated. These Costs typically include property management fees, municipal rates, levies charged by body corporates, repairs and maintenance, insurance premiums and municipal service costs that are paid by the property owner. Proper accounting records therefore need to be kept in order to provide SARS with supporting documents for the deductions that are claimed for income tax purposes if required to do so”, says Craig Hutchison, CEO Engel & Völkers Southern Africa.
How is tax calculated on rental income?
The rental income you get should be added to any other taxable income you may have. Any amount paid to you in addition to the monthly rental is also subject to income tax. These additional amounts or lease premiums are usually paid in the form of lump sums at the start of the lease and the full amount is subject to tax in the year that it accrues or is received. A refundable deposit paid by a tenant is not taxable provided it is kept separately in a trust account and is not used by you but if it is forfeited by the tenant then it’s taxable.
Can the taxable amount be reduced?
Yes, the taxable amount (rental income) may be reduced as you may incur expenses during the period that the property was let. Only expenses incurred in the production of that rental income can be claimed. Any capital and/or private expenses won’t be allowed as a deduction.
Which expenses are allowed?
Expenses that may be deducted from taxable income include:
- rates and taxes
- bond interest
- agency fees of estate agents
- insurance (only homeowners not household contents)
- garden services
- repairs in respect of the area let and
- security and property levies
Which expenses are not allowed?
According to Alvin van Staden, Director/CA(SA) at The Consulting Services Hub (TCSH), maintenance and repairs should be noted as specific costs and should not be confused with improvement costs. The latter is a capital expense that would be included in the base cost of the property, to effectively reduce the capital gain (or loss) on the disposal of the property, for capital gains tax purposes.
When it comes to VAT expense claims, the supply of residential accommodation by means of a “dwelling” is an exempt supply for VAT purposes, and you can’t deduct VAT incurred on its expenses. However, if the “dwelling” is used to earn rental income through the supply of “commercial accommodation” (such as hotels, B&B’s and lodges), the owner will be entitled to a VAT expense claim in terms of specific rules as stipulated within the Act, if they are a registered Vat vendor
What if the expenses exceed the rental income?
Should the expenses exceed the rental income, the loss should be available to be off-set against other income earned by the homeowner, provided that losses are not “ring-fenced” in terms of prevailing anti-avoidance provisions. For more information, see our Guide on ring-fencing of assessed losses arising from trade conducted by individuals. The homeowner must effectively be able to satisfy SARS that he is carrying on a bona fide trade through the rental of his property.
In certain circumstances can a lessor qualify for specific allowances?
Yes. Tertius Troost, Tax consultant at Mazars South Africa explains that in certain circumstances a lessor could qualify for specific allowances when letting out a property, which the lessor may deduct from the rental income they earn from the property.
Urban Development Zone (UDZ) allowance
If the property is located in an UDZ, the lessor will be able to claim a certain allowances. These allowances are dependent on the nature of the building. Of critical importance is that the lessor will need to obtain a certificate from the developer or municipality stating that the property is in an UDZ.
Here is a checklist of documents to be kept on file for tax season (for an entire year or part off where applicable)
- Monthly Rates & Taxes statements
- Monthly Bank Statement of home loan
- Levy’s or HOA statements
- Homeowners insurance
- Any utility bills included in the rental income
- Advertising invoices or agency fees statements
- Slips and invoices for any repairs done (example geyser bursting)
- Garden services or any other services necessary to make the home rentable
There is no doubt that house renovations are getting increasingly popular these days and homes are getting upgraded for various reasons. Some are integrating smart home applications and devices, others are doing a complete remodel and there are those who simply want to raise the value of their home for selling. For whichever reason, renovations done have to be sensible and wise, ensuring that the homeowner regains a beneficial return on investment when the time comes to sell.
“As much as we’d like to think that the money we pour into renovations will come back at us in full when we sell our home, that’s rarely the case. However certain renovations add value immediately, some small and exterior-focused improvements offer better value than larger challenging renovations” states Craig Hutchison, CEO Engel & Völkers Southern Africa. If you are considering making some home improvements, you will want to understand a concept called ROI. ROI stands for return on investment, which means how much money you stand to get back on any particular renovation whenever you decide to sell your home.
Craig continues by warning that many clients choose to add lavish features, thinking that it would make their property stand out. Sometimes standing out might actually be the wrong thing to do, especially if it changes the price tag. One should always remember that what you like, might not be what the next owner would want in a home, and that would mean that they might not be willing to pay for your customisations. If you custom your home too much, you are narrowing your potential buyers down to a very niche few, and this could result in your home remaining on the market for years.
A good place to start is to check the value of the homes in the area to give you a good feel of your home’s value and how much you should spend on the renovations. The last thing you want to do is over capitalise. If you are hoping to make a significant return when selling your home, make sure that the exterior is on par with the rest of the neighbourhood by making minor improvements to create maximum appeal. It is always a good idea to speak to an estate agent in your area to get a sense of the value that doing such improvements could add, and how best to get your renovation to deliver a significant return in future.
Choose smaller renovations instead of major remodeling projects to see the greatest potential return on investment. “Renovations to kitchen and bathrooms can generate a return on investment of between 60-80%. You don’t necessarily need to spend a fortune on renovations. Replacing countertops and flooring with inexpensive tiles, re-enameling baths and basins and re-grouting existing tiles in a bathroom can all have a major impact on the aesthetics and thus the inherent value of the property. Replacing old taps, light fittings and towel rails and installing mirrors or even re-painting can make the room appear more spacious and clean” advises Ooba. Another area that can add significant value is the garden and the entrance to the house. Neat beds full of healthy plants, manicured lawns and well maintained boundary walls or fences all create a good impression of your home, and can be quite easily achieved.
Renovating? What is the best ROI?
Loft conversion +192%
It’s often the easiest cheaper and less disruptive way to create an extra space in your house. The loft could be used for an extra bedroom, workroom, TV-room, playroom, study, games room, extra storage or a private home office which will immediately add value.
Going green +65%
Going green can seem totally overwhelming but it may be good to revise your home’s energy consumption. Many buyers look at the amount of energy a home saves because of the increase in electricity costs. Install solar heating panels, switch all or a few of your light bulbs to LED/CFLs, fix leaky taps, install water saving shower heads and have a timer installed on your geysers
Braai room +80%
There are two types of people those with braai rooms and those still wanting one. A braai room means being able to entertain, irrespective of the elements outside. A small unusable area can easily be altered into a practical braai area. Folding/sliding doors are also an option, enabling a person to have an area completely open when needed, yet closed when the need arises.
Decking / patio +133%
A deck/patio will provide you with more than a place to entertain outside and soak up the sun. Buyers see a deck as offering a seamless transition from inside to outside. It increases a home’s usable space – but costs only about half of what it would to build a new room. A well-made deck is something that can add real wow-factor as well as functionality.
A low maintenance garden could attract a buyer and can be just as appealing as a high maintenance garden. Making use of plants and shrubs that are indigenous to the area will alleviate unnecessary watering and maintenance. An automatic watering system and a water feature will add value to the garden. Ensure that the existing plants and trees in your garden are pruned regularly.
If you live in a higher-end neighborhood and most of your neighbors have pools then not having a pool might make your home harder to sell. A pool can add value to your quality of life and enhance the enjoyment of your home; you can’t put a price tag on that. If it’s an upmarket area however, having a pool may be an expectation. Only the homeowner can determine the true return on this investment.
New bathroom +75%
Simple bathroom fixes are a great way to redecorate your home and add value, without having to invest a lot of money in renovations. Refresh the paintwork, deep clean, replace the taps, replace that shower curtain with a glass screen, and invest in a heated towel rail rather than a hook on the back of the door. Let plenty of light in – fit more or bigger windows if possible, think about installing skylights.
Redecorating can make a property look brand-new. Add a splash of paint, your paintwork sends a strong message to buyers. Change the light switches, the standard white light switches tend to look yellow over time. Rethink window treatments, is the glass sparkling, check that the latches are working correctly. Revive the flooring, replace old rugs and ensure all of your flooring is clean and well kept.
New kitchen +80%
Redecorating your kitchen is one of the best ways to add value to your home. It’s essential to have it looking up-to-date, clean and functional. Replace kitchen cabinet doors/handles and drawer fronts, replace kitchen countertops. Add the wow factor with soft closings and some nifty storage solutions. Create as much space as possible. Use down-lights underneath the cupboards or in bulkheads to light splash-backs and countertops for a warm and welcoming atmosphere.
Fit the garage with shelves and cupboard space and replace the garage door. Most homes have double garages – you could build a flat let above the garage. Talk to estate agents to find out what buyers in your area want most – living space, another bedroom, an office. Potential buyers could view this as a way of generating additional income as it could be rented out or even used as office space.
This is possibly one of the most important features for re-sale value. Upgrading your home security will not only be lucrative for you when you decide to sell your property, but will also benefit you currently. Adding features like electric fencing, beams, and perhaps security cameras or merely upgrading your fencing will create a safer environment for you and for the potential buyer.
Property still remains your best investment, and the benefits of owning a home are well worth the effort. Although this might seem like a lengthy and complicated process, your real estate agent is there to assist you with each step. Find an experienced agent who can help guide you through the process.
First – one should know what you want. “Do your homework first” said Craig Hutchison, CEO of Engel & Völkers Southern Africa. Numerous estate agencies have open houses in various areas every weekend, and some even during the week. This will help you to judge the size that suits your needs and will help give good insight into your choice of area. Think about accessibility to work, public transport, schooling and other amenities. “Remember location is of great importance, especially to secure your investment for the future, and in fact will also have an effect on your loan approval” Craig continued.
Another big must is to sit down, and draw up a list of what is most important to you in a property. It’s OK to be picky, but don’t be unrealistic with your expectations. Small renovations can usually address any concerns that you may have with a property. Use your list of priorities as a guide to evaluate each property. Think long term. Are you looking for a starter house with plans to move up in a few years, or do you hope to stay in this home for a longer period? This decision may dictate what type of home you’ll buy as well as the type of mortgage terms that will best suit you. Accept that no house is ever perfect. If it’s in the right location, the yard may be a bit smaller than you had hoped. The kitchen may be perfect, but the roof needs repairing. Make a list of your top priorities and focus in on things that are most important to you. Let the minor ones go. Remember your home doesn’t exist in a vacuum. Don’t get so caught up in the physical aspects of the house itself — room size, kitchen, etc. — that you forget about important issues as noise level, location to amenities, and other aspects that also have a big impact on your quality of life.
Once you have done your homework and decided on what you want, there are some questions you need to ask your agent that may help give some good insight into your various choices available. “When working with a reputable real estate agency, your agent will be trained and qualified to provide you with all the information and answers you need beforehand, to be able to make that very important decision- to buy or not to buy”. Agents are legally bound to tell the truth, so it pays to ask a handful of questions to find out what the real situation is, which will make you feel more confident that you’re making the right choice on the right house.
- Who are you dealing with?
Find a real estate agent who you connect with. Home buying is not only a big financial commitment, but also an emotional one. It’s critical that the agent you chose is both highly skilled and a good fit with your personality. Enquire about their qualifications – designations such as a valid fidelity fund certificate with the EAAB. Qualified agents have gone through numerous years of training and are in a better position to advise you on all aspects of the sale, as well as to ensure you have the best possible negotiator and expertise in your corner.
- What financial obligation am I looking at?
Review your credit report and be sure you have enough money to cover your down payment and closing costs. Then, talk to a lender or mortgage originator and get prequalified for a mortgage. This will save you the heartache later of falling in love with a house you can’t afford; it will also be an indication to the seller that you are a serious buyer. Generally, you can afford a home equal in value to between two and three times your gross income. Ask your agent to help you with bond calculations and the monthly instalments as well as advise you on the deposit you will need. Ideally, you should have 20% of the purchase price saved as a down payment. Also, don’t forget to factor in closing costs, ask the agent for the closing costs including taxes, attorney’s fee, and transfer fees. Lastly remember to ask what the average monthly utility bills are. Inquire about electricity, water, waste removal, levies and any other utility costs that are applicable.
- Why is the owner selling & how long has the property been on the market?
Although the agent is not obliged to answer this question in detail, you will be given a hint to the circumstances of the owners. Perhaps the owner is selling due to personal circumstances, or it could be that there is something wrong with the property itself. If someone has passed away in the property, an agent is legally bound to disclose these types of reasons. By asking how long the house has been on the market you will also be able to gain some insight into whether there are any big problems that other people have realised that you haven’t or whether it is overpriced.
- How did the agent decide on an asking price? / How much is the home worth?
A professional agent will provide you with their justifications for the asking price. They should arm you with plenty of comparable stats and facts — prices of similar nearby homes that have been sold recently, how long homes are staying on the market as well as the current market situation. You should have a good idea what properties in the area sell for. Your agent will assist you with this information and advise you correctly to ensure you make the right choice.
- What offers have they had so far?
The agent will tell you if there have been other offers, but not the amounts of the offers. The agent is obligated and incentivised to get the best possible price for the seller.
- Exactly what is included in the sale?
Make sure you know exactly what fixtures and fittings are included in the sale of the home. There might be some items which really grabbed your attention, such as a home theatre setup, but only once you move in do you notice that the actual equipment have been removed, which could make you regret your purchase as it the chances are that it was one of the big emotional connections you had with the property. On the other hand, it could also help you to make your decision. If you were weighing up two properties, however the one includes all the custom blinds and curtains, it could possibly make it a bit more appealing than the other which is a blank canvass.
- What can they tell you about the local neighbourhood?
Ask about the location of the home. Homes in desirable areas are worth more than homes in locations not so desirable. What’s the school district like? – This is especially important if you have children, but it also can affect resale value. Where are the nearest shops? Are there nuisance factors? Traffic from nearby roads or stores may be an irritant. Think about accessibility to work and is it economically stable? – Check with your local property sales advisor to see if household income and property values in the neighbourhood are stable or rising. Is it a good investment? – Ask a local sales advisor about price appreciation in the neighbourhood. While it is a good idea to see what the agent has to say, make sure you do some independent research as well. Remember location is of great importance, especially to secure your investment for the future.
- Is there a problem with this house or the house condition you should know about?
The big fear if you are buying is that you are missing out some big negative factor that others know about. A nearby sewerage plant opening up, a new highway being planned on your boundary fence or previous water damage that could cause foundation problems. Ask if there are any drainage issues on the property that could later cause damp issues as well as problems with sink holes. If you have any doubts about a house, ask surrounding neighbours what they think. If you know in advance that the home has structural issues or deferred maintenance, you might want to take those problems into consideration before deciding on the offer price. Some agents recommend a home inspection before putting the home on the market, if one has been done, ask to see it. The general condition of the house is also an important pricing factor. Information concerning things that need to be done in or around the home must be taken into consideration when making an offer.
- Have any major works been conducted / has the sellers made any major renovations or additions?
If so, are you able to have a look at the relevant plans of these renovations or additions? It would be awful if you bought your dream home only to find out you would have to knock half of it down. In general, this will give you a ballpark notion of how much money they’ve invested into the home and what they hope to get out.
- Influencing factors
You have the right to ask the agent about the crime in the area, what type of incidents have taken place and whether there are security providers in the area, and if the property is in a boomed off area ask whether there are any monthly contributions that need to be made for the security.
Find out whether there are any problems with the neighbours – inquire about issues such as past /on-going disputes and the neighbourhood. If you are really unsure, ask if you could meet the neighbours, this will give you an indication if you will be compatible and they might disclose other facts of the neighbourhood that you would like to know. Ask them how long have they lived in the neighbourhood and what do they like best and least about living there? Do all the neighbours get along with each other? Have they ever noticed anything odd about their house or yours? How quiet is the neighbourhood?
One often forgotten, however critically important item is pets. If you are moving into an estate or a complex remember to ask the agent for the rules regarding pets. What types of pets and how many are allowed? Do they need to be chipped and do you need to verify them with the body corporate? You can also speak casually to potential neighbours to see if they are pet-friendly.
Accept that a little buyer’s remorse is inevitable and will probably pass. Buying a home, especially for the first time, is a big financial commitment. But it also yields big benefits. Don’t lose sight of why you wanted to buy a home and what made you fall in love with the property you purchased. Choose a home first because you love it; then think about appreciation. After all, a home’s most important role is to serve as a comfortable, safe place to live.