Offer to purchase question

newby_investor said:
I'd suggest making sure that you have a few grand in the bank because any property will have some latent issues that are going to come up at the most inconvenient time. In my case everything seemed fine but about a year in I needed to replace the roof which ... cost quite a bit.
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Spot on and unforeseen things as random as it sounds things like curtains 15k on basic curtains when we moved in. "little" things like that catch you
 
Snyper564 said:
Spot on and unforeseen things as random as it sounds things like curtains 15k on basic curtains when we moved in. "little" things like that catch you
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I personally don't feel the need for curtains. If the neighbours don't want to see me when I get out of the shower, it's their problem.
 
Foxhound5366 said:
Well it is possible … we’ve seen cases where owners ARE allowing inspections before OTPs are signed, so it feels like a no-brainer for me to do it this way if I have the option. If the owner pushes back that’s ok, then I’ll just rely on the extra clause … but currently “voetstoots” is a concept I’m not keen on. And it’s not that easy for owners to just get OTPs, so they’re obligated to make things work (if they’re not hiding anything).

In your experience, what made dealing directly with banks better than going through bond originators … and which originator had you used that gave you the bad experience?
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As other have said from a sellers perspective, if there are other potential buyers and if one buyer puts more stipulations in the OTP than others or wants to do many inspection prior to purchasing, the seller will out of convenience accept another buyers OTP considering the property is still on the market. So one also has to be cognizant of this.

I know that buying your first house is a big deal and you don't want any buyers remorse but if its a house you really want and have not been on the market for long, you will need to move fast with everything and stipulate such things in the OTP.
 
I mean only issue I'd have with doing an inspection before an OTP is, as a seller if someone does that and then submits and offer, I might be less likely to negotiate with them as they've already spent a few thousand. I'd take the chance they're emotionally and financially invested and would be less likely to walk away. The other side is if I get two identical offers I'd go with the one that did the inspection.

Saying the interest rate needs to be acceptable is fine and actually protects the buyer more than the seller I reckon. No-ones (or very few people are) going to come for you because you declined a prime interest rate - you showed your commitment in applying for the loan and all that. But again most aren't not going to buy a house because your interest rate is 0.25% higher than you wanted. Like if all banks come back with a rate within 0.5% of each other, that's where you're at.
Now if you get cold feet and want to use the rate as a get-out-jail card, I reckon you still could. I question how many folk will bother trying to force you to go ahead; maybe agents will want some sort of compensation I guess.
 
Sepeng said:
I mean only issue I'd have with doing an inspection before an OTP is, as a seller if someone does that and then submits and offer, I might be less likely to negotiate with them as they've already spent a few thousand. I'd take the chance they're emotionally and financially invested and would be less likely to walk away. The other side is if I get two identical offers I'd go with the one that did the inspection.

Saying the interest rate needs to be acceptable is fine and actually protects the buyer more than the seller I reckon. No-ones (or very few people are) going to come for you because you declined a prime interest rate - you showed your commitment in applying for the loan and all that. But again most aren't not going to buy a house because your interest rate is 0.25% higher than you wanted. Like if all banks come back with a rate within 0.5% of each other, that's where you're at.
Now if you get cold feet and want to use the rate as a get-out-jail card, I reckon you still could. I question how many folk will bother trying to force you to go ahead; maybe agents will want some sort of compensation I guess.
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I agree with the general sentiment. As an anecdote though, I have walked away from a deal before due to unfavorable lending circumstances.

I still think no harm in protecting yourself.
 
Foxhound5366 said:
My wonder is why banks are allowing it through financing. Aren’t they also potentially in the firing line? I guess they wash their hands of it. I wonder who is ultimately liable: the agent who sells people into illegal arrangements, or the person who unwittingly buys in without knowing any better.
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The asset is secured, so the banks do not care for much besides that. How a community scheme's trustees run the BC governance is on them, not the banks.

Plus most are new developments, so the deal is sweetened for the buyer because there isn't any transfer duty. Problem would only come in when the owner decides to sell, and if the non-cash buyer's bank asks for BC finances.
 
RonSwanson said:
The asset is secured, so the banks do not care for much besides that. How a community scheme's trustees run the BC governance is on them, not the banks.

Plus most are new developments, so the deal is sweetened for the buyer because there isn't any transfer duty. Problem would only come in when the owner decides to sell, and if the non-cash buyer's bank asks for BC finances.
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That is the problem, very few banks ask for the financial statements from the Scheme.

I will be VERY wary to buy into an unregulated Sectional Scheme. Everything may be fine for you, but you must also get a willing buyer once you sell.
 
Quick question for the experts in this thread

I bought my property in 2020, I quite a good chunk of the bond paid up already (about 40%). I am emigrating in the next few months and my place is now rented out.

Is it wise to keep that extra money in the bond or will it be better to invest that money for tax purposes? My interest on my bond is reduced because of the extra funds that I have saved in the bond. Currently the rent pays for the bond, rates and levies with about 3k profit.

My thinking is that by removing the funds I prepaid into the bond the interest will increase and can be claimed back from sars next tax season.

Alternatively, I can sell the property for about 400k profit (excluding all the maintenance and upgrades I've done). The previous owners daughter called me to ask if I will sell it back to them, and some agents called me saying they get some buyers willing to put in an offer for my place.
 
MidnightZA said:
Quick question for the experts in this thread

I bought my property in 2020, I quite a good chunk of the bond paid up already (about 40%). I am emigrating in the next few months and my place is now rented out.

Is it wise to keep that extra money in the bond or will it be better to invest that money for tax purposes? My interest on my bond is reduced because of the extra funds that I have saved in the bond. Currently the rent pays for the bond, rates and levies with about 3k profit.

My thinking is that by removing the funds I prepaid into the bond the interest will increase and can be claimed back from sars next tax season.

Alternatively, I can sell the property for about 400k profit (excluding all the maintenance and upgrades I've done). The previous owners daughter called me to ask if I will sell it back to them, and some agents called me saying they get some buyers willing to put in an offer for my place.
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This is similar to people who say that you should donate R100 to a registered charity because you will get a tax benefit (let's say 45% at the top marginal tax rate). So you donate R100, and you get R45 back from SARS. BUT, and this is big BUT, you've still lost out on R55. So you might as well not have donated anything, from a purely financial point of view. You haven't saved anything, in fact it's cost you R55.

So, yes, in theory you can take your money out of your bond and pay more interest, and claim more interest back as a tax expense, but you will still be out of pocket compared to if you had kept the money in your bond.
 
MidnightZA said:
Quick question for the experts in this thread

I bought my property in 2020, I quite a good chunk of the bond paid up already (about 40%). I am emigrating in the next few months and my place is now rented out.

Is it wise to keep that extra money in the bond or will it be better to invest that money for tax purposes? My interest on my bond is reduced because of the extra funds that I have saved in the bond. Currently the rent pays for the bond, rates and levies with about 3k profit.

My thinking is that by removing the funds I prepaid into the bond the interest will increase and can be claimed back from sars next tax season.

Alternatively, I can sell the property for about 400k profit (excluding all the maintenance and upgrades I've done). The previous owners daughter called me to ask if I will sell it back to them, and some agents called me saying they get some buyers willing to put in an offer for my place.
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At a quick thought, seeing as you have a tenant in the property, wouldn't it make sense to withdraw enough from the bond to make that R3k profit = zero so that it's tax neutral for you?

Alternatively, sell the property if you can recover the transfer fees etc and dive headfirst into your new life?
 
Harmonic said:
At a quick thought, seeing as you have a tenant in the property, wouldn't it make sense to withdraw enough from the bond to make that R3k profit = zero so that it's tax neutral for you?

Alternatively, sell the property if you can recover the transfer fees etc and dive headfirst into your new life?
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That's what I want to find out, am I shooting myself in the foot by keeping extra funds in the bond.

The other question Im asking myself, why sell the property if it will pay for itself, and any I ever return to SA then at least I'll have a property or some passive income.

On the other hand, if I sell the property I can financially emigrate after 5 years (?).

But I can wait to cross that bridge when the time comes and sell the property at a later date if needed
 
MidnightZA said:
That's what I want to find out, am I shooting myself in the foot by keeping extra funds in the bond.
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I think so but I'm not a tax lawyer. Best is to consult one. R20k on a lawyer can literally save you millions

MidnightZA said:
The other question Im asking myself, why sell the property if it will pay for itself, and any I ever return to SA then at least I'll have a property or some passive income.
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This depends on many factors. The location of the property, it's condition, your outlook for the future of SA etc. Only you can make the judgement call relative to you and your circumstances/outlook
 
MidnightZA said:
That's what I want to find out, am I shooting myself in the foot by keeping extra funds in the bond.

The other question Im asking myself, why sell the property if it will pay for itself, and any I ever return to SA then at least I'll have a property or some passive income.

On the other hand, if I sell the property I can financially emigrate after 5 years (?).

But I can wait to cross that bridge when the time comes and sell the property at a later date if needed
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I would say if you are planning to emigrate the either make the call never to come back or make the emigration a rotating 5 yr cycle or something and then base your decisions off that.
 
MidnightZA said:
Quick question for the experts in this thread

I bought my property in 2020, I quite a good chunk of the bond paid up already (about 40%). I am emigrating in the next few months and my place is now rented out.

Is it wise to keep that extra money in the bond or will it be better to invest that money for tax purposes? My interest on my bond is reduced because of the extra funds that I have saved in the bond. Currently the rent pays for the bond, rates and levies with about 3k profit.

My thinking is that by removing the funds I prepaid into the bond the interest will increase and can be claimed back from sars next tax season.

Alternatively, I can sell the property for about 400k profit (excluding all the maintenance and upgrades I've done). The previous owners daughter called me to ask if I will sell it back to them, and some agents called me saying they get some buyers willing to put in an offer for my place.
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I would sell, especially if you have willing buyers already. I speak from experience - we rented out our property after emigrating and it was a nightmare. We should have sold it before we left.
 
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Harmonic said:
At a quick thought, seeing as you have a tenant in the property, wouldn't it make sense to withdraw enough from the bond to make that R3k profit = zero so that it's tax neutral for you?

Alternatively, sell the property if you can recover the transfer fees etc and dive headfirst into your new life?
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Always good to remember that a tenant is not forever. Consider unoccupied periods!
 
I am interested in a property ... and asked the seller for a FEE quote from his legal team. Its seriously beyond funny.

I see on the item list :
1) Clearance certificate costs
2) Agents being used to submit (as in runners)

These 2 things are for the SELLER, not the BUYER!

Watch out if you get an invoice ... and query things you aint happy with
 
I am also considering selling my property and leaving the country by the end of the year/after completing my education/after selling the house. I have observed how some of my friends left their houses on rent and the current condition is quite terrible. The expenses for repairs and renovations may not be worth the rental income, especially if you end up with tenants who don't pay, resulting in further losses.

It becomes challenging to find buyers when the interest rate is as high as 11.75%, even if the property has a great location. I have chosen to list the property myself as I am not willing to pay agents. It's amusing how some people offer ridiculously low prices, while others don't even bother to respond. To avoid unnecessary crowds, I have intentionally scheduled showings on working days.
 
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