A good estate agent will ensure that the buyer does not make these mistakes
Category Advice
Although property buyers are prime targets for the educational efforts of a host of SA estate agents, it is alarming how often those same agents find themselves dealing with potential clients, whose lack of understanding of market conditions and the sell-buy process, can be a severe handicap, says Stefan Engelke, one of the top performing agents at the Cape Town estate agency, Alexander Swart Property.
"The longer one works in this very satisfying field," says Engelke, "the more one realises that many buyers need a great deal of guiding and must be carefully advised if they are to avoid making the mistakes that can so easily be made - even by those with some experience in property deals."
Asked to define the most common errors that agents encounter, Engelke said that time and again he comes across cases where the "basic arithmetic" has not been done by the buyer: he or she has often not really learned to budget accurately, has not studied the property market thoroughly and do not know where the money they earn goes. They can be surprised by the costs involved in obtaining and servicing a bond. All too often, he says, this may result in their having inflated ideas about the property they can afford. In these cases the huge advantage of being able to call in the help of a reliable, in-house bond originator, such as Alexander Swart, can provide, can be a real blessing.
"Such consultants, operating hand in hand with the agent, bring realism to the discussions and get the buyer to start budgeting sensibly for his eventual home purchase. Their advice can, and does quite often lead to the buyer settling for a less luxurious home than he had originally set his sights on, but finding later that not being on too tight a budget has greatly improved his lifestyle
"A tendency to be inaccurate about his financial position and over-estimate the amount he can actually afford," says Engelke, "can be really disastrous. If at the same time he is reluctant to be open and honest with the agent or bond originator and tries to hide debts for which he is liable, this will almost always cause serious difficulties. The investigative mechanisms of today's banks and credit agencies are thorough and very few people can get round them."
Another common error, according to Engelke, is buyers who have the perception that almost any price can be brought down if they are really "tough" with the seller and agent. "This way of thinking may work in other fields, but it usually proves to be futile when applied to a home purchase and there are two good reasons why this is so: firstly there will almost always be other possible buyers interested in the property and fully cognisant of price levels in the area - if the price is fair they will recognise this and, fearing they may lose out, will not try to get a bargain. Secondly, good estate agents ALSO know, to within a few thousand rand, what a home is worth in the current market and will persuade the seller to offer his home at close to what it is worth. They are aware that if a home is priced too high, it will stick on the market and gain a stigma. They also do not want to waste their own and the client's time in trying to achieve the impossible."
In trying to beat down a seller's price, buyers sometimes call in a shrewd negotiator such as an attorney, adds Engelke - but this too, is often a mistake. Experience has shown that such people seldom bring anything extra to the table and will usually fail to get a seller and his agent with a fair price to change their minds. In some cases, these high-powered negotiators have so annoyed the seller that he has broken off dealings with them, to their client's detriment.
Another mistake buyers make, is to think that if they are able to offer cash for the purchase, it will entitle them to a discount. The thinking being that cash will usually result in a surer, quicker sale than one reliant on the buyer having to await a bond approval, but in reality this is seldom the case and the time saving is minimal because the funds for the cash sale are almost always tied up elsewhere e.g. in shares or the money market and cannot be immediately released.
So, in the light of Engelke's comments, what lessons does Alexander Swart have for potential buyers?
"The advice that I usually give is much the same as that which we give to sellers i.e. try to build up a relationship with a trustworthy estate agent as early as possible. Be open with him or her and then listen to their advice. Recently, the buyer of a home for sale R1, 649 000 lost out because his counter offer of R1, 6 million fell just R20 000 short of the seller's cut-off price. Later, the buyer who had been urged by the agent to accept the slightly higher price regretted very much not having accepted the very reasonable price - and had to settle for a far less satisfactory purchase."
For further information please contact Stefan Engelke on 082 381 0687 or by email: engelke@asproperty.co.za or the Alexander Swart Director, Rowan Alexander, on 082 581 3116 or by email: rowan@asproperty.co.z
Author: Independent Author
