Offer to purchase question

Aeryn23 said:
I think it will depend on other factors too. I.e. - is the place already well priced at R1.45m for the area and condition? Are there any other offers on the table? How desperate are the sellers?
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The place is new on the market so I guess that counts against them accepting a lower offer but the owner is 89 so that counts in favour of accepting a lower offer but she only wants to vacate in September so that's against..... hmmmm it can't harm to try :unsure:

The final decision might lie with the seller's children who are emigrating next year, hopefully they'd like their mom settled before they leave.
 
Snyper564 said:
just a question how would a "cash offer" differ from an approved loan?

The seller still gets cash?

If I had to sell I would not drop 150k for a waiting a month or two just my 2c
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Thought the agent could play his part too, sell the place, make his commission and

"done, done, on to the next one".

Would expect a counter offer of say R1.35M - isn't that the way they roll?
 
Snyper564 said:
Ah, I guess if I was desperate then. Can't hurt unless other buyers want asap
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And it’s quicker to transfer. Remember especially if the property is empty. The seller is paying rates and maybe levies. Plus there is an opportunity cost they could use the proceed to get rid of their debts and time value of money. A cash sale could quicken the sale by 6-8 months. Considering you should get those offers where the deal fall through due to financing. So a cash deal could easily be with 60-100k in some circumstances. Not all.
 
beefymoocow said:
And it’s quicker to transfer. Remember especially if the property is empty. The seller is paying rates and maybe levies. Plus there is an opportunity cost they could use the proceed to get rid of their debts and time value of money. A cash sale could quicken the sale by 6-8 months. Considering you should get those offers where the deal fall through due to financing. So a cash deal could easily be with 60-100k in some circumstances. Not all.
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Interesting point raised!
 
derp90 said:
Another question, I saw in some other thread that if the interest rate increases, instead of extra owing each month, they just extend your home loan further, so you'll pay more over a longer time? Is this how it works?!
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No, if the rate increases your monthly payment will increase. The only way to extend the term is to negotiate with your bank because that requires an amendment to the contract.

MidnightZA said:
Wouldn't a 30 year bond offer a lower interest rate? And would it be beneficial to convert a 20 year to a 30 year with a lower rate? Especially if you planning on paying it off in 7 to 10 years?
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No, usually longer bonds will have a higher interest rate because you owe the bank more for longer so it's higher risk from their perspective.
 
If you're considered a higher risk, why do banks give higher rates? To get as much money as possible from you before you default? Or to discourage you from taking the loan?
 
derp90 said:
If you're considered a higher risk, why do banks give higher rates? To get as much money as possible from you before you default? Or to discourage you from taking the loan?
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It costs the bank more to provide higher risk loans. They have to hold capital based on the riskiness of each loan, higher risk implying higher capital holding, and that capital has a cost that they have to cover. Additionally, the funding costs for longer dated loans are higher as well. So a loan to the same person for 20 years vs 30 years has a different risk profile. It's not a huge difference (pricing wise it's usually about 0.25% more for the longer loan) but it is different.

Overall, basically no loans that a bank makes are zero risk. There is always a risk that the person/company will default. So they have to decide whether to do the loan at all (every bank has a risk appetite statement that will define what risks they are not willing to take) and then if they are willing to make the loan, then how much they need/want to charge for the risk they are taking.
 
maumau said:
Do you think a seller will come down from R1.45M to R1.3M for a cash offer?
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In SA, on average the offer is 9% less than asking. Your offer isn't laughable.

You need to know the demand/trends in the areas as well.

I.e. A few years we were looking at a flat in Rondebosch. Most of the time on the first viewing there were 50 people and the agent would tell you there are offers already and it would be off the market in a week. You would be wasting your time putting in an offer below asking. Today you can negotiate >10% as supply is high.

When I bought my house last year we went 5% less as we really liked the place and it was new on the market in a high demand area.
 
Brawler said:
In SA, on average the offer is 9% less than asking. Your offer isn't laughable.

You need to know the demand/trends in the areas as well.

I.e. A few years we were looking at a flat in Rondebosch. Most of the time on the first viewing there were 50 people and the agent would tell you there are offers already and it would be off the market in a week. You would be wasting your time putting in an offer below asking. Today you can negotiate >10% as supply is high.

When I bought my house last year we went 5% less as we really liked the place and it was new on the market in a high demand area.
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Agreed demand is very NB in our area there is a waiting list for avaiable houses being listed and has been a shortage for 1.5 years. They literally sell the week they list if they even get as far as listing.
 
MO advised to apply for a 30 year bond and then just pay more as intended. I wonder why if the interest rates are higher on 30 vs 20. I originally wanted to apply for 20.
 
derp90 said:
MO advised to apply for a 30 year bond and then just pay more as intended. I wonder why if the interest rates are higher on 30 vs 20. I originally wanted to apply for 20.
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MO?

I am certain a 30 year bond comes with higher interest.

I would not do it, unless someone else can add why 30 year would be better
 
Snyper564 said:
Im certain they earn more, as I dont see any reason 30 is better than 20 except for them
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They said it gives you more peace of mind as your 'compulsory' payments are lower, you can always make it a 20 year or less by paying more.

Also said it doesn't affect the interest rate but I dunno
 
derp90 said:
They said it gives you more peace of mind as your 'compulsory' payments are lower, you can always make it a 20 year or less by paying more.

Also said it doesn't affect the interest rate but I dunno
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Maybe someone else can chime in, but i am certain it will come at a higher interest rate. Why would the bank give you the same terms
 
derp90 said:
They said it gives you more peace of mind as your 'compulsory' payments are lower, you can always make it a 20 year or less by paying more.

Also said it doesn't affect the interest rate but I dunno
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Interest rate the same but you're paying over a longer period so end up paying more over the term.

They bank on the fact that most people won't pay more than the minimum.

If you pay more and pay off early you score.
 
derp90 said:
I meant a verbal offer, as opposed to just letting them see it when you've handed over the OTP.
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I haven't ever made a verbal offer, always in writing. The agent is obliged to present an offer so received to the seller. The fact that I have gone to the trouble of writing an offer also means that I am serious about the offer, and it leaves less chance for horse trading.
 
Brawler said:
In SA, on average the offer is 9% less than asking. Your offer isn't laughable.

You need to know the demand/trends in the areas as well.

I.e. A few years we were looking at a flat in Rondebosch. Most of the time on the first viewing there were 50 people and the agent would tell you there are offers already and it would be off the market in a week. You would be wasting your time putting in an offer below asking. Today you can negotiate >10% as supply is high.

When I bought my house last year we went 5% less as we really liked the place and it was new on the market in a high demand area.
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This is excellent information, thank you.

Interestingly a second unit has become available in the same complex at the same price.

It's very difficult to choose between them as structure wise they're identical. The second unit is a better buy financially because the floors are tiled as opposed to being carpeted, it has a swimming pool and big tiled area with aluminium louvred roof outside the sliding doors. It's also air conditioned.

but

I'm leaning towards the first unit because it's got an amazing view - can't put a price on that.
 
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