Should you sell before you buy a new home?
Category Advice
If you are looking to take advantage of the property market opportunities right now, you will not want to waste any time. If you have an existing property that you need to first sell, you may want to get it on the market sooner rather than later.
While you do not need to sell your existing property before you buy another, it could help avoid disappointment if you have your heart set on a new dream home. According to experts, selling first might also put you in a better bargaining position, but it depends on the circumstances.
Experts recommend that the ideal is usually a "clean" offer which is not subject to the sale of another property. Where a buyer first needs to sell an existing property, this will be included in the Offer to Purchase by way of a suspensive condition to the offer.
The risk arises with buyers who frequently make an offer on another property based on what they expect for their own property which has not yet been sold. On the other hand, if you sell first, you could also run the risk of not finding a suitable new home in time.
Nonetheless, experts have said that offers which are subject to the sale of another property are not discouraged, and many transactions are concluded in this way. In this instance, the agreement would include a condition which allows the seller to continue marketing their property. If another unconditional offer is received, the buyer will have an agreed period in which to make his transaction unconditional or abandon the offer.
On the other hand, if you sell before you buy, then there would be no obstacles which can prevent you from getting your dream home. If you still have to sell and had made an offer on another property, there is the risk that your property does not sell in time, or you might not get your asking price.
Offers which are not linked to a "subject to" sale also usually register a lot faster, and it might suit the seller better to rather take a "clean offer" with no suspensive conditions. It is the seller's choice, but he recommends that the seller makes an informed decision by consulting with their agent regarding factors such as the potential of the buyer succeeding in selling, whether the property is priced correctly, or what other suspensive conditions there might be.
A transaction linked to the sale of another property also usually means a longer transfer period as additional parties are introduced to the transaction since there is a second sale involved, and all of those are linked to the first seller's transaction.
Buyers, however, do not need to wait until registration before they can start to look for a new property. Pretorius says they can start looking as soon as the suspensive conditions are fulfilled on their sale.
In addition, there are there are up to 5 compliance certificates to be obtained when selling.
According to Conveyancing and Property Law attorneys, the following list includes some important aspects in respect of each compliance certificate.
Electrical compliance
- Certifies that the electrical installation on the property complies with the required safety standards (governed by the occupational health and safety Act)
- Often remedial work is required which may take some time (best to attend as soon as possible)
- The certificate is valid for two years unless alterations are made prior to the expiration date
- Parties cannot contract out of/agree to waive
Beetle certificates
Certifies that the accessible wood of permanent structures, on the property, does not contain any wood destroying beetles
- Usually valid for 3 to 6 months
- Not governed by any specific law, but has become practise upon change of ownership of property
- If parties agree that no certificate is necessary and the bank requires it for the purchaser's bond, then this is for the purchaser's expenses
Gas certificates
Certifies that the gas installation on the property complies with the Occupational Health and Safety Act and requires safety standards
- A certificate must be obtained on installation
- If any change or amendment is made, a new certificate must be obtained
- Cannot contract out of or agree to waive
Plumbing certificates
Only applicable to transfers within the municipal jurisdiction of the City of Cape Town
- Certifies that the water installation at the property is in line with the City of Cape Town Water By-laws
- A new certificate must be obtained upon every change of ownership
- Parties cannot contract out of this or agree to waive
- NB! Does not confirm all plumbing works in perfect condition!
What does the plumbing certificate confirm?
- the water installation conforms to the national building regulations;
- the property's water meter is in working order;
- there are no defects that can cause water to run to waste; and
- no rainwater leaks into the sewerage system
Electric fence
Certifies that the electric fence installation complies with the required safety standards in terms of the Occupational Health and Safety Act.
- An existing certificate may be transferred by the seller to the purchaser
- A seller need only provide a new certificate to the purchaser if a change was made to the installation after the current certificate was issued
- If sectional title, obtain from the body corporate
- Parties cannot contract out of/agree to waive
Get expert property advice
It is always recommended that sellers do their inspections at the listing stage and then they will know what they are in for in terms of repairs. In addition, although it is usually required that the seller should provide the purchaser with the certificate by no later than the date of transfer, it is best that the inspection and remedial work is at least done before occupation by the purchaser and better still even earlier, as most banks now request a copy for purposes of clearance of the bond for lodgement.
Author: Property24