Questions you need to ask when buying a property
PUBLISHED 7 MAR 2013
While property has been one of the best performing long term investments in recent years, despite the economic downturn and price decreases, a property investment will only be as sound as the knowledge buyers have about it.
A bad property investment can severely affect the buyer’s return on investment or in the worst case, result in them continuously losing money over the long term. “However,” says Adrian Goslett, CEO of RE/MAX of Southern Africa, “knowing what to look for and what questions to ask when viewing a property will help the buyer distinguish between a good investment and a bad one.”
Goslett gives the following tips for buyers to take heed of before deciding to buy a property:
Will the property be a long term investment?
It is important that buyers view property as a long term investment and as such plan accordingly. According to Goslett, as a general rule, buyers will need to stay in a home for at least seven to ten years before they see any real return on their investment. Essentially this means that the property should meet the requirements of buyer for that period. He notes that buyers should consider their future plans and how the property would fit into those plans. While a property may meet the buyer’s immediate requirements and current situation, it may not fit into their future plans, which could include starting a family. While location is always a vital aspect to consider, different amenities would appeal to buyers in different life stages. For example, Goslett says that while a young couple may initially want a home that is close to trendy restaurants and entertainment hotspots, when they decide to start a family, proximity to good schools and medical facilities will be become more important.
Is the home in good repair?
Although buying a home in need of some attention might seem more cost effective at the outset, homes with a great number of problems can end up costing a lot of money to repair. ”Buyers should check aspects such as the reliability of the utilities, which include the electricity and water supplies, as well as checking all water and electrical installations to that they are functional and in good repair. It may also be worthwhile to enquire about the monthly utility costs,” he says.
Goslett says buyers should also check the property for any water damage or rising damp, as both could present a variety of problems and result in costly repairs. Bubbling or scaling paint on walls is generally an indication of water damage, as are brown markings on the ceiling.
According to Goslett, when looking at a property with a swimming pool, buyers should check for cracks in the structure or lining as well the condition of the paving around the pool. It is also advisable that buyers check the filtration equipment such as the pump to ensure it is in good working order and enquire about the costs of maintaining the pool.
Does the home have a sound structure?
While building standards in South Africa are generally high, Goslett says that buyers should never assume that a building is structurally sound. Although rare, it is possible that even aesthetically pleasing, relatively new buildings can have serious faults. Goslett says that buyers may need to pay particularly close attention when looking for structural damage as it might be hidden with heavy filling work and a coat of paint. An indication of structural damage is diagonal cracks running from the corners of window or door frames and deformation along roof lines. “Structural damage to a property will be extremely expensive to repair, if it can be repaired at all. Repairs could include demolishing parts of the home and having them rebuilt. If a buyer is in doubt, a full structural survey can be carried out by a master builder who will be able to advise the buyer what work needs to be done to the property and at what cost.”Does the property correspond with the description on the title deed?
Goslett says that buyers should check that all buildings on the property correspond to the description on the title deed, making sure of the legality of the buildings. He notes that it is possible for buyers to obtain the necessary information from the local municipality and determine whether in fact the property has been built to the required standards. The description on the title deed will provide the number of rooms, the area of the property, terraces and the plot. In the case of a sectional title unit, it is important to check the exclusive use areas to which you are entitled. Any additions such as rooms, garages or a swimming pool that do not appear, may not have been built and approved through the correct channels and should be queried. ”Buyers should ask the owner if they have proof of planning permission as the property may require new registration for the entire property. If this is the case, it will be more cost effective for the buyer to get the current owner to register the change before they purchase the property.”
Goslett says that once a buyer has contemplated these questions and completed the necessary research, they will have the required information to make a positive investment decision. “A wise investment choice today will allow the buyer to reap the financial benefits in future,” he concludes.