When you’re looking for a pet to love, the best – and least expensive – option is usually to adopt one from your local animal shelter, even if your new best friend is not in the greatest condition at first. He or she will usually soon respond positively to your TLC and reward you with the warm glow of satisfaction that comes from doing something good.
And in the same way, when you’re looking for a home to buy, you shouldn’t immediately give up on properties that look grubby, cluttered or a bit neglected, says Rudi Botha, CEO of BetterBond, national bond originator.
“Most homes for sale are scrupulously scrubbed and tidied, and prospective buyers will often turn on their heel when taken to view a property that is not in show-house condition,” says Botha.
“But those who are prepared to look past some superficial negatives may just get to experience the ongoing satisfaction that also comes from acquiring an excellent home at a ‘bargain’ price – and then saving on your bond repayments every month because you needed a smaller home loan to buy the property.”
For example, he says in a forced sale where the owners have passed away, divorced or been suddenly transferred to another town, there may not have been time for anyone to pack properly or prepare the property for sale, and a load of clutter can easily disguise good underlying value.
Do some research on what similar properties have sold for in the complex or street – what’s it really worth?
“Similarly, a dirty or dingy home could indicate long-term neglect and the possibility of substantial repair bills for a new owner – but often a closer inspection will reveal that all that is actually required to make the home highly desirable is a good scrub and a few coats of paint,” says Botha.
“It’s all about being able to spot substance over style – and then about being confident enough to negotiate a substantial discount on the asking price in return for the energy and effort (and money) you will need to expend to bring the property up to standard.”
However, before you make any offer to buy, it would really be worth your while to have the property professionally inspected to check that the structure, plumbing and wiring are sound and will not end up costing you more to fix or replace than you are saving on the price, Botha cautions.
“Assuming they are, though, all that will remain is to roll up your sleeves and start turning your bargain into a clean and tidy home to be proud of, while the savings on your monthly bond repayments mount up,” he says.
If you have negotiated a 10% discount on a property originally priced at R1 million, for example, your monthly bond repayment on a 20-year bond will be around R900 lower than it would have been. If you are buying a pre-owned property you will also save a chunk of cash on transfer duty, says Botha.
And if you then obtain your bond through a reputable originator, you will be paying the lowest available rate of interest on your loan and save even more money in the longer term, he says.
“We are currently finding a variance of at least 0.5% between the best and worst rates being offered on the average bond approval – and even on a R500 000 loan, for example, the lower interest rate would translate into a monthly saving of about R200 on your home loan repayment, and a total interest saving of almost R42 000 over the life of the bond.”