Buy­ing a house through an es­tate agent is the con­ven­tional way to buy prop­erty, but true bar­gains are of­ten sold through sher­iffs’ auc­tions. A reader has asked our panel of ex­perts about buy­ing a prop­erty un­der the ham­mer. re­ports

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Sa­muke­lisiwe Dlamini is a 27-year-old sin­gle mother who works as an at­tor­ney.

“I de­cided to buy prop­erty be­cause I do not think that it is wise to rent. I have been rent­ing since Fe­bru­ary this year and I hate it. I think it is time for me to buy my first home.

“As an at­tor­ney, I have been ex­posed to the sher­iff’s of­fice and its work­ings. Houses are re­pos­sessed from peo­ple who are un­able to keep up with the bond re­pay­ments – or levy pay­ments if they re­side in a com­plex.

“The houses of de­ceased peo­ple are some­times also auc­tioned through the sher­iff’s of­fice. It is cheaper to pur­chase a house from the sher­iff’s of­fice than through an es­tate agent.

“A house on the mar­ket for R900 000 can easily sell for R500 000 through the sher­iff’s of­fice. For me, it makes so much sense to ac­quire a prop­erty us­ing this av­enue.

“I am a sin­gle mother of a 14month-old boy. I need us to have a home to call our own. The money I am cur­rently us­ing for rent will go to­wards monthly bond re­pay­ments.” Prop­er­ties can be bought at great value when at­tend­ing such sales in ex­e­cu­tion. The bank can­not ac­cept or de­cline of­fers on these prop­er­ties, as the bank is not the le­gal owner. Ndlovu says: “The im­por­tant thing is the abil­ity to re­pay monthly in­stal­ments on a loan and the vari­ables [in­ter­est rate, loan term, loan amount, monthly fees and in­sur­ance] that make up the monthly re­pay­ments.

Adds Nel: “It’s best to know how much you can qual­ify for be­fore buy­ing a prop­erty. The loan amount is de­pen­dent on your in­come and ex­pen­di­ture, as well as how you man­age your cur­rent cred­its.” Fi­nance from banks is avail­able, up to a max­i­mum 100% loan-to-value ra­tio, but would be de­pen­dent on the value of the prop­erty, as well as an in­di­vid­ual risk as­sess­ment of both the prop­erty and the ap­pli­cant – and lim­ited to what

the client will be able to af­ford.

How to buy a prop­erty on sher­iff’s auc­tion

You are re­quired to pay a de­posit to the sher­iff to al­low you to bid. The de­posit will be for 10% of the ex­pected bid price.

It is ad­vis­able for you to make sure that you have pre-ap­proval from your bank for the mort­gage, as this min­imises your risk of los­ing the de­posit if you are un­able to raise fi­nance.

Should you be the win­ning bid­der, you will be ex­pected to ob­tain fi­nal loan ap­proval from a fi­nan­cial in­sti­tu­tion within a time­frame set by the sher­iff.

Costs in­volved

The sher­iff’s com­mis­sion is payable by the suc­cess­ful buyer at the auc­tion and is based on the pur­chase price, cal­cu­lated as fol­lows: 6% on the first R30 000, plus VAT; and 3.5% on the bal­ance of the price. The min­i­mum com­mis­sion payable is R440, plus

VAT, and the max­i­mum is R8 750, plus VAT.



Con­di­tions of sale

A sale agree­ment is signed by the sher­iff and the buyer.

The buyer’s re­spon­si­bil­i­ties in­clude:

Pay­ing a de­posit of 10% of the pur­chase price in cash, bank-guar­an­teed cheque or elec­tronic trans­fer in the sher­iff’s of­fice, im­me­di­ately on buy­ing;

Pay­ing com­mis­sion on the date of pur­chase; Guar­an­tees for the bal­ance of the pur­chase price, to­gether with in­ter­est, within 14 or 30 days;

The pay­ment of any out­stand­ing levies, wa­ter and elec­tric­ity, rates and taxes; and

Oc­cu­pa­tion of the prop­erty, which in­cludes the evic­tion of the for­mer owner, ten­ants or other per­sons on the prop­erty.

Fur­ther, in the case of any breach of the agree­ment, the sale may be sum­mar­ily can­celled by a judge on re­quest of the sher­iff af­ter due no­tice to the pur­chaser, and the pur­chaser shall be re­spon­si­ble for any loss sus­tained by rea­son of de­fault. If you have any prop­erty-re­lated ques­tions, send them to us at projects@city­, or SMS us on 35697 us­ing the key­word HOME. In­clude your name and con­tact de­tails. Each SMS costs R1.50



Calvin Ndlovu

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