Offer to purchase question

[newby_investor]

So a question (more out of idle curiosity than anything else) for those in the know.

I have a very elderly neighbour who passed away last week. He was in the process of selling up his flat, with the intention of moving into a care facility closer to his children, but sadly his heart didn't have enough left in it to let the process complete.

I'm not sure what stage they were at, whether he'd accepted any offers (I do know that quite a few people came to view) but what happens to the sale process if the seller dies? That must suck for the buyer, I'm sure it'll hold things up.

I know that the executor of an estate can sell the deceased's property if needed to distribute proceeds to the heirs, but what about property that's already under a sale agreement?

 

[RonSwanson]

So a question (more out of idle curiosity than anything else) for those in the know.

I have a very elderly neighbour who passed away last week. He was in the process of selling up his flat, with the intention of moving into a care facility closer to his children, but sadly his heart didn't have enough left in it to let the process complete.

I'm not sure what stage they were at, whether he'd accepted any offers (I do know that quite a few people came to view) but what happens to the sale process if the seller dies? That must suck for the buyer, I'm sure it'll hold things up.

I know that the executor of an estate can sell the deceased's property if needed to distribute proceeds to the heirs, but what about property that's already under a sale agreement?

It's an agreement that was concluded by the deceased, so the executor of the estate would still be bound by it.

 

[Marsie27]

I'm not sure what stage they were at, whether he'd accepted any offers (I do know that quite a few people came to view) but what happens to the sale process if the seller dies? That must suck for the buyer, I'm sure it'll hold things up.

I know that the executor of an estate can sell the deceased's property if needed to distribute proceeds to the heirs, but what about property that's already under a sale agreement?

Been there, doing that, with a good friend, who bought a house in mid-Jan from the estate of a recently deceased person. Yes for sure COVID hasn't helped, and I am not sure the conveyancers (also the estate executors) didn't drag their heels, but it's still not finalised. The last hurdle before lodging is the rates clearance certificate, apparently, but despite everything else being ticked off by mid-Nov, the attorneys still didn't manage to get that sorted, and this is in Cape Town. Those in the know, is that the norm in CoCT at the moment? So now the buyer waits till things open again in Jan... In the case of my friend, the delay isn't a huge issue, but just a heads-up to anyone thinking of buying from an estate.

 

[Toxxyc]

OK so Absa is offering 100% loan at Prime + 0.5%. Now to wait for the rest.

 

[newby_investor]

OK so Absa is offering 100% loan at Prime + 0.5%. Now to wait for the rest.

Even prime +0.5 isn't bad at the moment, with rates so low. Be sure to over-pay as much as possible, so that if when interest rates do start rising, you aren't bitten by increased bond payments.

My first property I bought in 2015 at the start of an increasing interest rate cycle, and the increases in the monthly payments were initially quite tough, because I hadn't budgeted properly.

 

[Toxxyc]

Yep. After seeing the numbers, I know I'll have to sell my car to pay the house. I'm happy with that though. Rather drive a cheaper car and live in a better place than the other way around. The car's payment is more than half the house payment, so it makes no sense to just keep going with it.

 

[Toxxyc]

Another update. I might not have to sell the car. I spoke to a guy who does refinancing on cars and stuff. Yes, it's a bad long-term solution, but it's a great one for the next 3 to 4 years. He's going to re-finance my own car, saving me a pretty penny each month. I'll pay the car off for longer, but I'll be able to keep it (I know it by now), and I'll be able to afford the house's payments. So that's great news!

 

[Fcon_Vpro]

Another update. I might not have to sell the car. I spoke to a guy who does refinancing on cars and stuff. Yes, it's a bad long-term solution, but it's a great one for the next 3 to 4 years. He's going to re-finance my own car, saving me a pretty penny each month. I'll pay the car off for longer, but I'll be able to keep it (I know it by now), and I'll be able to afford the house's payments. So that's great news!

Were you not able to afford the house payments prior to the bond application?

 

[McGuywer]

Another update. I might not have to sell the car. I spoke to a guy who does refinancing on cars and stuff. Yes, it's a bad long-term solution, but it's a great one for the next 3 to 4 years. He's going to re-finance my own car, saving me a pretty penny each month. I'll pay the car off for longer, but I'll be able to keep it (I know it by now), and I'll be able to afford the house's payments. So that's great news!

Just calculate the extra initerest aswell.

 

[Toxxyc]

Were you not able to afford the house payments prior to the bond application?

I could, but it would be tight. I don't like living tight.

Just calculate the extra initerest aswell.

Yeah there's more interest, but it's not a trainsmash. I'm happy with it. I intend on driving that car for a while to come anyway.

 

[newby_investor]

While we are on the topic of houses / cars. I've found myself in the position where I need to replace mine pretty soon after buying the house.

How soon is too soon to start applying for car finance?

 

[Pho3nix]

While we are on the topic of houses / cars. I've found myself in the position where I need to replace mine pretty soon after buying the house.

How soon is too soon to start applying for car finance?

You can apply.. never hurts to try

 

[newby_investor]

You can apply.. never hurts to try

It does though, for up to two years, because credit applications do get noted at TransUnion or one of the other credit bureaus. Too many applications in a short space of time is a warning sign and could lead to problems in the future. As far as I understand it anyway.

 

[mercurial]

I was told not to get any extra credit services until everything is 100% official. They do one more credit check before everything goes through.

 

[Pho3nix]

It does though, for up to two years, because credit applications do get noted at TransUnion or one of the other credit bureaus. Too many applications in a short space of time is a warning sign and could lead to problems in the future. As far as I understand it anyway.

If you've moved in already, applying for VAF won't hurt you. You can always wait the 3 months after everything is registered if you prefer.

 

[newby_investor]

I was told not to get any extra credit services until everything is 100% official. They do one more credit check before everything goes through.

Yeah this does make sense. I have moved in already, waiting for transfer to conclude is reasonable. Thanks!

 

[zerocool2009]

So I got a call from a friend who needs advice.

He wants to get ... as in “buy” his parents house for R0 (purchase price).

I cant believe thats possible!

He said he is supporting his parents, and can easily justify R1 000 000 “off”.

I know something like that ain’t really possible/feasible, as Sars would query it.

I am bowled over with this question! “A golden duck” lol

 

[Speedster]

So I got a call from a friend who needs advice.

He wants to get ... as in “buy” his parents house for R0 (purchase price).

I cant believe thats possible!

He said he is supporting his parents, and can easily justify R1 000 000 “off”.

I know something like that ain’t really possible/feasible, as Sars would query it.

I am bowled over with this question! “A golden duck” lol

This isn't as far fetched as it seems although, as you say, SARS would still want their cut in the form of donations tax. There are ways to minimise this, such as him loaning the funds from his parents and then they write off R100k each year.

At R1m there is no transfer duty to worry about but I'm not sure how the lawyers would price their services.

 

[zerocool2009]

This isn't as far fetched as it seems although, as you say, SARS would still want their cut in the form of donations tax. There are ways to minimise this, such as him loaning the funds from his parents and then they write off R100k each year.

At R1m there is no transfer duty to worry about but I'm not sure how the lawyers would price their services.

I totally get that. What the friend want to only pay the transfer fees, which is R20k roughly.

I told him get legal advise from the lawyers.
To think about it, if donations is allowed, every Tom, Dick and Harry would “fund” (as in support) their parents.

The best solution I could give, put the house on his parents will, and only do the transfer is something bad happens

 

[Speedster]

I totally get that. What the friend want to only pay the transfer fees, which is R20k roughly.

I told him get legal advise from the lawyers.
To think about it, if donations is allowed, every Tom, Dick and Harry would “fund” (as in support) their parents.

The best solution I could give, put the house on his parents will, and only do the transfer is something bad happens

An easier option is to buy the house from the parents with a loan account from them. Assuming the house is registered in their names jointly, they can write off R100k each every year, so the debt will be settled in 5 years.