Property Buying Tip #5 – Negotiate, negotiate & negotiate
When you are looking to purchase a property, always keep in mind that the listed price is often made up of the ideal amount the Seller wants, including commission if there is an Agent involved. Agent’s commission can range between 3% – 7%, which makes up a significant part of the purchase price.
Seller’s Desired Price: R1 300 000
Agents Commission of 5% (Normally excl VAT): R74 100 Incl VAT
Listed Price: R1 374 100
When negotiating a sales price down, remember that there are two parties involved and by getting both to lower their price, it might increase your chances of a better deal. Negotiate the Seller and Agent to reduce their prices for a better outcome.
A bank is a business! And they are usually very eager to get your business. Use this to your advantage to negotiate a better interest rate deal. As you have seen from our examples in Property Buying Tip #9 we showed what a huge difference a small drop in interest rate can mean on your bond finance. This highlights the importance of negotiating a good deal with the banks. Don’t be afraid to ask for a better rate, and we always advise our clients to apply to all the banks, not just your own. You might get a better deal or at least leverage to negotiate a better deal with your own bank.
Transfer & Bond Registration Cost
Although these fees are prescribed by the Law Society of South Africa, attorneys can be negotiable on fees sometimes. It will never hurt you to ask. If you have a contact at a law firm that can give you better rates for the transfer of the property, request the Seller to use that attorney (remember the Seller nominates the transfer attorney). They might be impartial and won’t mind using an attorney that can benefit you financially.
The Sales Agreement or Offer to Purchase
The first couple of points all related to negotiating the money aspect of the deal. Every cent will make a difference on your deal, especially if calculated over 20 years.
There are however other aspects of the deal that you can negotiate to suit you better as well. When carefully perusing your Offer to Purchase, remember that you can request changes to the document to suit you better such as:
- Occupational Rent & Date
- Period Allowed to apply for finance
- Deposit payment dates
- Other clauses regarding the property, such as inspections or guarantees
If both parties agree, the contract can be amended. It is always worth asking, the worst that can happen is the Seller doesn’t agree to the changes.
*Although every effort was made to ensure the accuracy of our calculations, Foce Property Investments and its subsidiaries accept no liability in respect to any errors contained herein. Under no circumstances will Foce Property Investments be liable for any loss or damage arising from these examples