|South Africa, 26 November 2019: It’s tough out there for second-time home buyers. Trying to sell a first property or get a second home loan from the bank is not always easy. Especially as home prices continue to decline according to the FNB Property Barometer.
Additionally, second-time buyers are sometimes at a disadvantage as banks tend to be more lenient with first-time buyers, who often get loans at 100 percent. “Affordability is one of the largest obstacles,” says Elize Dormehl of PropertyFox, who has a 30-year history as a property agent. “Mainly as you have to sell your first home before you can buy the second. The current property market has an abundance of houses available but there are not many sales.”
However, there is hope for second-time buyers:
While the outlook may seem dim, second-time buyers do have some advantages over their first-time counterparts. “Firstly, they have some experience of owning a home,” says Elize. “Additionally, they may have a better understanding of managing their money as they know what to expect from the property buying process.”
Elize adds that one of the reasons why second-time buyers lose out on offers is the lag in trying to sell their first home. A big issue is often incorrect pricing, with some sellers hoping to make more than the current market permits. That’s why accurate valuation is absolutely crucial.
Louwrens Viljoen – son of Elize Dormehl and also an estate agent – says digitisation is transforming the valuation process, “PropertyFox’s data-rich valuation algorithm, for example, takes historical data and the current market climate into account in order to help a client’s decision-making process before the listing is built. This helps the second-time buyer to sell their home at the correct market value for every situation.”
Viljoen adds, “A recent example is a linked property which we had a sole mandate on. Through our counselling and valuation process, we were able to help the family sell and buy within one month – even in this difficult climate.”
Here are Elize and Louwrens’ other top tips for second-time buyers to bag a new home:
You may think that already owning property automatically helps you get bond approval for a second purchase but that’s not always the case. “It’s important to get an idea of the bond you now qualify for as your financial situation may have changed and lending criteria has too,” says Viljoen. “This process also helps you understand what your credit record looks like and prepares you for what to expect when looking for a home. At PropertyFox, we also refer our clients to bond originators, which not only speeds up the process but also protects the client’s interests.”
SAVE UP FOR A DOWN PAYMENT
While a lot relies on your credit record, it’s a good idea to save up for a down payment, advises home-loan blog Mr Cooper. “Most second-time buyers will not receive a 100% bond unless they earn a very good salary and look amazing on paper,” says Elize. “Typically, if you don’t sell your first property, you will only receive 80% or less, so you will need to manage your finances wisely if you decide to buy a second property as an investment or holiday home.”
TAKE ADVANTAGE OF THE ‘SUBJECT TO SALE’ CLAUSE
According to Property24, this clause states that a buyer who puts an offer down on a house must be given enough time to sell their existing home. “In the current climate, not all sellers will give the option of accepting another offer to wait for you to sell your home,” says Viljoen. “You could end up selling your home for less than its market value so it’s best to speak to your agent about valuations beforehand or use PropertyFox to run your home through their valuation algorithm to get a head start.”