Buy or sell a house? watch out for those red flags
Whether you’re a buyer or a seller, your goals are intrinsically linked: a buyer wants to secure their dream home or real estate investment, and a seller wants to secure an approved buyer who can afford the purchase and will appreciate their home.
However, Grant Smee, managing director of Only Realty Group and Property Entrepreneur, urges both parties to be on the lookout for common ‘red flags’. “A lot of time and money is invested in buying and selling a home. It is an important investment decision and should not be taken lightly.
While the rental real estate market is on the rise, the supply of homes for sale is still oversupplied, putting buyers and sellers at greater risk of ignoring the warning signs to close the transaction quickly. . “A rapid succession of interest rate hikes, job volatility and increased demand for flexible lifestyles by millennials have all contributed to reduced demand for property sales, particularly in recent months. “
Conversely, Smee notes that homes in some in-demand areas are moving quickly, which means buyers need to act quickly. “Anyway, making hasty decisions without doing your homework puts you at risk.”
Buyer’s Red Flags and How to Avoid Them
“Buying a house is not an easy task. It takes time and a lot of capital to get there. And given the stakes, buyers may come under pressure from real estate agents and sellers to commit. I would advise buyers to ignore outside pressures and make sure they approach their dream home with full knowledge of the area, the property and the home buying process,” says Smee.
Smee details the red flags buyers should be aware of as follows:
Check for defects“Before making an offer to purchase, ask to inspect the house one more time – at your leisure. Minor issues such as broken door frames, cracked tiles, etc. must be listed as conditions in the offer to purchase. This means that the seller will have to repair them before the transfer. In the event that the property is sold ‘voetstoots’, it is the seller’s responsibility to disclose any hidden defects of which he is aware. Some sellers still hide behind this clause, so inspection is essential.
Subjected to pressure: “Fact: Both the seller and the real estate agent want to sell the property as soon as possible, but you need time to review the paperwork and make sure this investment is the right decision for you. Specify how long you need – don’t feel you have to sign on the spot.
· Do your homework“If a house has been on the market for a long time, it is important that you examine all the reasons why. You would need to take all the emotion out of buying by thinking logically and like an investor. Ask yourself: will I be able to sell this house when the time comes?
Seller Red Flags and How to Avoid Them
“There are lots of homes on the market and buyers are spoiled for choice. So when an offer comes in, a seller may be tempted to rush the deal to find a buyer,” says Smee.
He explains that the home ownership process can take around three months – from signing an offer to purchase to handing over the keys – and a lot can happen during that time. “Very often we see buyers who are not pre-approved and do not have the finances in place to afford a home. This creates a lot of stress and heartache for the seller.
Just like buying a home, selling a home is also an emotional process. “Vendors are usually fully invested in the process. There’s a lot of money tied to a home, so it’s important to think rationally and work with a real estate agent who truly understands the process and can vet a buyer before making an offer to purchase.
Smee details the red flags sellers should be aware of as follows:
Not all real estate agents are equal: “Look for a credible real estate agent with a reputable track record that matches your goals. They should know what type of buyer you’re looking for, what offer you’d be willing to accept, and what it takes to ‘close the deal’. If, on the other hand, they are rushed, not detail oriented and do not pre-check potential buyers, they are probably wasting your time.
· Due diligence: “Again, a potential buyer may be earning R60,000 a month, which is enough to acquire your house, but its affordability or credit rating is lacking. Here, the agent should clearly establish whether it has received pre-approval from a bond originator. In case they did not get the pre-approval, they can still submit an offer, but it is advisable not to hope until they get the bank’s approval. »
Doubtful Buyers: “Some potential buyers will say what the agent wants to hear. They will indicate that they are excited or that they need to talk to their partner, when in fact they just don’t know how to let you down easily. In cases where they are hard to reach and noncommittal, continue to push the sale of your home to other potential buyers rather than putting all your eggs in one basket.
Conditions precedent: A condition precedent is a condition that must be fulfilled before a contract can become legally binding. “Check all the conditions precedent of the purchase offer carefully before signing it. An example of a common condition precedent is that of a “subject to” clause which means that the buyer can only buy your house if he sells his. A time limit is normally included in the contract for this and if you sign it, you cannot accept another offer until the time has elapsed,” he concludes.