Many of the estate agents in South Africa have little or no formal training and act on behalf of the seller! It is their mandate to achieve the best possible selling price for the seller on the most attractive terms. Therefore having a team of professionally and well-trained consultants acting solely on your behalf, with your best interests as their main priority, is advisable.
Unlike in most other countries, when you find a suitable property you make an offer to purchase in writing. Once this offer to purchase is signed by both the seller and the purchaser this ‘offer to purchase’ becomes a legally binding document and should be treated with the importance that any legally binding document tying you to a major purchase deserves. It is imperative that the ‘offer to purchase’ is checked by appropriate legal experts prior to submission to the estate agent.
A common clause within the offer to purchase is one relating to any bond (mortgage) application. It may state that you instruct the agent to be your sole bond originator (i.e. to get the bond for you). In many cases the estate agents have no formal training in giving financial advice or simply hand you over to a bond originator who pays them an introductory commission. Not only can this compromise your ability to get a bond but may mean that you get tied into a poor interest rate. You are perfectly entitled to cross this clause out, the seller will understand!
Most purchasers pay a deposit of 10% of the purchase price once they have submitted the offer to purchase and it has been accepted by the seller. However some agents will try and get you to pay a larger deposit and this is not necessary. Check on the offer to purchase where this deposit will be held, as some agents will try and hold the deposit in their own trust account instead of a credible solicitors trust account. Our advice is to only agree for the deposit to be held by a credible solicitor in their trust account. The interest gained on the deposit should always be for the benefit of the purchaser.
The seller nominates a solicitor to transact the legalities of the house purchase. As the purchaser you are obliged to use this solicitor, in most other countries this practice would be viewed as a conflict of interest.
When purchasing a property in South Africa it is advisable to ensure you have an agent looking after your best interests, who will provide you with sound advice and information to make the right decision on the right property, with the best terms and conditions.
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