Can You Expedite the Sale?

At the beginning of your property search, no one can tell you how long it will take to find that property that fits your purchasing requirements. This is a process that should not to be rushed; and perhaps a subject for another day. Taking it from the top; say, you’ve found that property that makes sense for you, here are some ideas on saving time, as well as your money:

• The Sale Agreement: Getting both parties to agree on the price and special terms of the sale agreement can take some time. Take into consideration that one of the parties is off on a remote Ireland with no internet access or has taken a cruise ship; has left no power of attorney to transact on their behalf, and they are somewhere close to the Bermuda triangle. The Sale Agreement should stipulate terms for acceptance or rejection by the Seller. How long the Seller has to accept/reject the offer: Avoid situations where the property is being bid up by either the seller or the broker, as this will waste a lot of time in silences between offers and alleged counter offers. Before making your offer on a Sale Agreement, make sure the agreement is worth signing. If it is not, have a comprehensive agreement drafted by an attorney and use that instead.

• One of the most common Suspensive conditions is a condition to secure financing. A buyer is entitled to research the amount of funding and terms of funding before signing an offer or even finding a prperty. By having pre-approved finance the buyer saves time between signing the offer and securing funding. It is important that a buyer should understand the terms of their funding before making an offer. This requires investing in a relationship with one’s bank or mortgage origination institution. A pre-approval ensures that there is an existing relationship with the institution; a lot of time will be saved from signing the offer and getting confirmation of financing. What is not always appreciated with a pre-approval is the counselling that the potential buyer receives from their funding institution regarding their affordability, personal rating as well as the rating of the areas they may be considering. Too often buyers will sign an offer to purchase, then look to apply for finance. The application may come with stringent measures because of the area the purchaser is looking to purchase, or the funding may be rejected because the buyer has slightly exceeded their affordability, making the transaction more expensive, requiring higher deposit or interest charges.

• In KZN, in the absence of special conditions the purchaser has a right to nominate conveyancers; otherwise it is normal for the seller to nominate the conveyancers. Some of the express duties of conveyancers include, cancelling existing (seller) bonds, registration of new bond, as well as the transfer of deed of ownership. Some of the delays in conveyancing may be out of the control of the conveyancing attorney. Delays may be in the form of issue of certifications; electrical, bugs, rates clearance – these can be anticipated by the seller and buyer and provided well in advance. By selecting a reliable conveyance attorney delays may be minimised. In terms of the rates clearance certificate, buyers should be aware that the clearance in most municipality covers the last 24 months. Should there be unpaid rates and taxes prior to that period the buyer and seller are still liable.

• Other than the cost of your time and the purchase price; fees will also include conveyancing which can be for three different attorneys, other fees include bond initiation fees, VAT or Transfer Duty. Currently transfer duty exemptions apply to the first R750 000.00; properties under R1.25 Million but above R0.75 Million have 3% duty on the non-exempt portion; values above R1.25 Million but below R1.75 Million attract 6% duty, values bove R1.75 Million but below R2.25 Million have 8% duty; and finally the portion above R2.25 Million attract 11% duty. (As from March 2015)

As an illustration; consider transfer duty on a R2.3 Million purchase price:

• First R1M: R.4M*0.03 = R12 000.00

• R1 M – R1.5 M: R0.5M*0.05 = R25 000.00

• R1.5 M- R2.3M: R0.8M*0.08 = R64 000.00

Transfer Duty = R101000.00

If the transaction was Vatable, no transfer duty would apply but a VAT amount between R282 460.00 and R322 000.00 would be payable depending on whether the quoted purchase amount was inclusive or exclusive of VAT.

It is uncommon that a private treaty process should take less than 3 months, but it is not impossible; just ask the auction people.