Hello and welcome to the second in a series of articles on buying property in Cape Town.
I’m Marco Garuti, the Director of Property at SAHomeBuyers, and over the following weeks and months I’ll be bringing you all the useful information, tips and hints you need to make a successful purchase of property in Cape Town, South Africa.
Last week we looked at the different professionals that may play a role in your Cape Town house purchase, how they can help you and what to watch out for. We learnt that when buying Cape Town property the appointed professionals, being the estate agent and the transferring attorney, all work on behalf of the seller.
Further, we learnt that the buyer has little in the way of expert support and that this can be damaging to them in their search for the ‘right property at the right price’.
By explaining what the role players in the the property buying process do, and the support you as a buyer will get, our aim was to assist you in making your first decision as to whether to appoint a property buyers consultant to work with you or just go the estate agent route.
Following on from this today we look specifically at the property buyers consultants role and why you should consider using their services.
Property buyers consultants are not a new concept, in fact in many countries such as the USA and Australia they are a common part of the property buying and selling process.
In a real estate transaction it is important to note that there are two distinct processes and as such two distinct parties – the buyer and the seller.
The seller has long been well represented with the estate agent and attorney looking after their interests. The buyer has has to resort to their own efforts and has had little in the way of any assistance. This lack of support sees buyers of Cape Town property often resort to seeking the assistance of the estate agent. The very same estate agent who is paid by the seller to obtain the best possible sales price and look after the sellers interests.
Not an ideal situation and there is no doubt that this puts the buyer at a huge disadvantage.
Enter the buyers property consultant. A property expert retained by the buyer to purely look after their interests.
How do property buyers consultants work?
The first and most important point to note is that true Property Buyers Consultants work only for the buyer. They do not market any properties and represent no sellers, this should include developers as well as private sellers. Nor should they be affiliated or owned by a selling agency. This is essential in keeping the impartiality that is so important to their ability to add true value to your purchase process.
We will explore more fully their service offering later, but most will offer two types of service. These obviously differ slightly from consultant to consultant but can broadly be described as:
1. A full search and secure service with legal assistance – here the buyers consultant is with you every step of the ways. From the initial fact finding exercise (as to your requirements), accompanied viewings, negotiations and legal assistance
2. A legal assistance and offer to purchase service – where you have found a property but require assistance in formulating the offer and terms and conditions.
In both cases they represent the buyers best interests and employ legal assistance on your behalf. This balances the scales of the buying and selling process, putting expertise on either side and providing buyers with much needed support.
Why don’t more people use the services of a buyers consultant?
To the South African property market, buyers consultants are a fairly new concept. Despite this a surprising amount of people already employ their services. In the USA, where property consultants have been operating somewhat longer, some 50 – 60% of all property transactions now involve a property buyers consultant.
Many buyers are simply unaware that they have the option of using a buyers consultant or indeed what one is. Others believe them to be too expensive or add no value.
Why use a property buyers consultant?
Buyers’ consultants are property agents who are experienced in searching and securing property with the buyers interests at heart. They help the buyer to find that perfect house and are paid by the sellers / builders / listing agents.
Below we talk through just some of the main points as to why buyers of Cape Town property should seek the services of a buyers consultant. The full list of benefits can be viewed here.
The difference in using a buyers consultant is immediately noticeable. They will not put glossy leaflets with glowing descriptions in front of you, in fact nothing but a plain piece of paper. They will thoroughly discuss both the requirements of the property you seek and the type of area you wish to live in. They will provide you with suggestions, question your assumptions, finalise budgets and agree the search criteria. As well as a series of consultations this process may also involve field trips, showing you other potential areas you may wish to consider or have not been aware of.
Only when all this is agreed will the house search begin in earnest.
Importantly they are not restricted in their search. Estate agents of course have no interest in giving you access to private sales or property for sale elsewhere that is not in their catchment area or ‘on their books’. As independents, appointed by you to look after your interests, buyers consultants will search the entire market place for suitable properties. The result a much wider and more encompassing search with no bias towards area or particular house or development.
Your appointed buyers consultant should accompany all viewings. They will provide unbiased advice telling you the bad points as well as good points. Of course it is your decision as to what you buy but you will be making that decision with the full facts in a measured manner, not because of some sharp sales techniques.
All offers to buy property in South Africa are made in writing via an offer to purchase. This is legally biding and has no cooling off period in 99% of cases. It specifies both the price and terms and conditions of the sale.
In negotiating price, the buyers consultant can really save you money. They know how long the property has been on the market for. They know how keen the seller is and how the area as a whole is fairing. At their disposal are industry tools showing historic sales prices, the original purchase price of the property and the bond registered against it. Their local knowledge is invaluable and as trained negotiators they take the emotion out of the negotiations.
As do the important terms and conditions, these are pre preprinted by the sellers estate agents, so you can guess whose interests they favour.
The importance of these terms and conditions cannot be stressed enough. They are the very legal points that will govern the sale of the property, and as mentioned before, there is no cooling off period applicable to an offer to purchase – once signed it is set in stone.
What many buyers do not know, or are maybe not told, is that these pre printed terms and conditions can be amended, crossed out and others added.
You are about to make one of the largest purchases of your life and I would suggest that if ever professional and legal assistance was needed it is formulating this offer to purchase and getting the content correct. Property consultants will provide this appropriate input and indeed consult with their retained lawyer.
Just from the the above points it is easy to see why a buyers consultant is so important to any prospective buyer of Cape Town property. A property buyers consultant provides the buyer peace of mind from a legal prospective, the satisfaction of knowing they are buying at the best price they can and that their property search has been extensive and all inclusive. All this and 99% of the time at no cost to the buyer.
How do buyers agents get paid?
Only a small amount of properties are ever marketed without the services of an estate agent. When a seller instructs an estate agent to sell their property they agree a fee. This fee is a commission based fee normally between 5% and 7.5% of the property price achieved. In exchange for this fee the agent agrees to advertise the property, show the property and negotiate a sale for and on behalf of the seller and their best interests.
Most of the outgoings an estate agent suffers are in advertising costs, advertising costs to find you the buyer.
In the event the buyers consultant introduces a buyer, for one of the estate agents properties for sale, most are very happy to share their sales commission. In effect making their services free of charge to a buyer.
Who uses a buyers consultant?
Typically buyers consultants clients will be investors and clients purchasing for in excess of R1.5 million rand. A great many of the clients are people relocating to Cape Town, immigrants and busy professionals.
Buying without the use of a property buyers consultant means not having expertise that could be vital to you finding, securing and negotiating the very best property at the most attractive price. It provides the legal security and peace of mind to the buyer and secures a service that matches the level of investment you the buyer are making.
It turns you from a potential buyer into a client, this means you are treated with appropriate due care and diligence that a transaction of this size and importance dictates you should.
Finding out more
If you want to find out more you are welcome to visit our website www.sahomebuyers.co.za or feel free to e-mail me here or call me on + (27) 832658800
Our next article will deal with some tips and hints about preparing yourself for your property search, including must knows about the budgeting, costs involved and things to look out for when buying Cape Town property.