MONEY CLINIC | Buying or selling a home? These are the red flags to look out for
Category Advice
Buyer red flags - and how to avoid them
Buying a home is no small feat. It requires time and a lot of capital to make it happen. And, given the stakes involved, buyers may face pressure from estate agents and sellers to commit. I would advise buyers to disregard external pressures and ensure they approach their dream home fully equipped with a knowledge of the area, the property and the home buying process.
- Check for defects: Before making an offer to purchase, ask to inspect the house one more time - at leisure. Minor issues such as broken door frames, cracked tiles, etc., should be listed as conditions in the offer to purchase, which means that the seller would need to fix these before transfer. In a case where the property is sold 'voetstoots', the seller must disclose any latent defects of which they are aware. Some sellers still hide behind this clause, so inspection is vital.
- Privy to pressure: Both the seller and estate agent want to sell the property as quickly as possible. However, you need some time to go through the paperwork and ensure that this investment is the right decision for you. Stipulate the time required - don't feel pressured to sign on the spot.
- Do your homework: If a home has been on the market for a long time, it's important that you look into all the reasons for this. You would need to take all the emotion out of the purchase by thinking logically and like an investor. Ask yourself: will I be able to resell this home when the time comes?
Seller red flags - and how to avoid them
Like buying a home, selling a home is also an emotional process. Sellers are generally fully invested in the process. There is a lot of money tied into a home; therefore, it's important to reason and work with an estate agent who truly understands the process and can vet a buyer before putting forward an offer to purchase.
- Not all estate agents are equal: Look for a credible estate agent with a reputable track record aligned with your goals. They should know what sort of buyer you are looking for, what offer you would be willing to accept and what it takes to 'close the deal'. If, on the other hand, they're rushed, aren't detail-orientated and aren't pre-vetting potential buyers, they're most likely wasting your time.
- Due diligence: Again, perhaps a potential buyer earns enough to acquire your home, but their affordability or credit score is lacking. Here, the agent must establish whether they've received a pre-approval from a bond originator. If they haven't attained pre-approval - they can still put down an offer, but it's advisable not to get your hopes up until they have approval from the bank.
- Flaky buyers: Some potential buyers will say what the agent wants to hear. They will indicate that they are keen or need to speak to their partner when they don't know how to let you down easily. In cases where they are difficult to reach and non-committal, keep pushing the sale of your home to other potential buyers rather than putting all your eggs in one basket.
- Suspensive conditions: This is a condition that needs to be met before a contract can become legally binding. Check all the suspensive conditions in the offer to purchase carefully before signing. An example of a common suspensive condition is a 'subject to' clause, which means the buyer can only buy your home if they sell theirs. A time frame is normally included in the contract; if you sign it, you can only accept another offer once the time lapses.
https://www.news24.com/fin24/money/money-clinic/money-clinic-buying-or-selling-a-home-these-are-the-red-flags-to-look-out-for-20220709
Author: HPS Team
