Shotgun, rather than rifleshot approach to buying
Category Blog
In this day and age, with the benefit of online convenience, the South African consumer tends to use the rifle shot approach when purchasing just about anything. So much so, that the era of shotgun shopping is fading fast.
Searching for a house to buy is not about "swipe left or swipe right" on a device to select or de-select.
The process demands an intense level of curiosity. As a buyer, you need to give all of your senses a chance to connect with the property that is under consideration. Curiosity is an all-important factor - not least if you consider the mistakes people have made in the past.
A prime example rolled out a year ago when R4-million was paid for a Johannesburg house that the buyer intended to rent out rather than occupy. (Transfer fees of close to 10 per cent increased the price paid to almost R4,4-million.)
It was only after a bond of R3,6-million was raised for the purchase that the seller discovered that the prospective tenants had decided they were prepared to pay no more than R18 000 a month for rental of the property - when, in fact, the bond monthly repayment was in excess of R36 000 a month (R432 000 a year)!
A nasty loss
The market has since declined even further - to the extent that the owner had to chip in R16 000 a month (close to R200 000 a year) ...plus rates and taxes. Furthermore, the home subsequently deteriorated as a result of little, or no, maintenance by the owner.
This brought the sale value of the property down to R3,4-million - almost a R1-million down from the original cost. That is a nasty loss - not least when you take into account that no tenant rental had been paid.
Granted, this is an extreme example of 'little homework beforehand', overestimating the return on investment, the value of the property location and the realistic value of homes in that area at the time. Whichever way you look at it, this is a buyer/owner who made an extremely costly, error of judgement. Sad, but a common mistake. In 2019 sellers who bought in the last 4 years are likely to experience a loss once they have sold.
My overriding point is that it was a hasty purchase, made without taking into account a number of crucial factors - not least the importance of curiosity.
Buying a house demands an intense level of 'need-to-know'. It is essential to good home buying outcomes
Considering the size of the investment you may be about to make as a home buyer, you can never be armed with too much knowledge. So, be curious - extremely curious - and remain curious.
A better outcome
The more questions asked - and answered - the better the outcome will be.
Even though I believe this is the right time to buy, research properly. Visit the suburb or area of your focus, and use all your senses to get to understand fully its property market - even to the extent that you become equally, or even more, knowledgeable than the local estate agents who service the area.
Accept agents' invitations to go and look at properties - even if you are not planning to buy immediately. There is no short cut, and it will therefore be time well spent.
You need to look at a minimum of 15 to 20 properties in your area/suburb of focus before you commit to anything. In doing so, ask 100 questions if you feel you must. It is all part of learning about, and understanding, the ins and outs of the current market and your target suburb.
For the sake of comparison, you should even see properties that you believe may well not appeal to you. You might pick up ideas that lead you to adjust you brief/criteria. You will be doing so in the best and most extreme buyers' market we have seen for decades.
It even pays to ferret out homes that have been on the market a while back and were withdrawn for lack of acceptable offers at the time. They may still be tacitly available for purchase.
Author: Ronald Ennik
