Property Report – Tim Johnson

With the increased reliance on websites and apps, the “bank manager” who previously was the gatekeeper of bond approval has been usurped by various online avenues underpinned by credit scoring processes and weighting scores with regard to a client’s “financial health”.

There is, however, a real need for the personal touch in order for a buyer to understand the bank scoring parameters and be guided through the bond approval process.

Obtaining a mortgage can be a daunting prospect.

Historically, many sales fall through due to an inability to secure finance.

This is not necessarily because the homebuyer is “a bad risk” but often just because he or she did not know how to approach the application process, or have the know-how regarding going from bank to bank in search of the best offer.

Buyers should seek assistance to better understand their financial position and even secure an Approval in Principle (AIP) from a financial institution before an Offer to Purchase (OTP) is negotiated and completed.

Buyers should therefore come to the closing table happy to be there, knowing what they are signing and what they can afford.

This makes for a stronger offer and a quicker sale process.

Many real estate agencies have aligned themselves with mortgage originators such as Ooba, and this collaboration is pivotal in the sales process.

A mortgage consultant prepares, motivates and packages the application so the banks themselves are getting better quality applications, submitted electronically.

This comprehensive service also means that:
1. There is regular and direct contact with a wide variety of lenders and banks.
2. The specialist stays in control of the whole process.
3. If there are minor credit or income issues on application these can be identified upfront and addressed to ensure that any future applications can be successful if it has to be considered at a later date.
4. The consultant has the power to negotiate to achieve the best terms and rates.
5. Communication to the buyer is ongoing so he/she is fully aware of all the outcomes.
6. All buyers are treated with the utmost confidence and respect throughout the bond application process.
7. Once prequalified, buyers have more certainty on their ability to afford their chosen property.
8. It is a convenient and free service.

In many foreign markets, buyers do not begin the house hunting process without a formal bank approval, but the culture and process in South Africa is definitely lagging.

Make sure that if you are selling your property, your agent explains whether or not their buyers have been adequately screened to determine where the finances are coming from, and should they require bond finance, whether or not they have already approached their bank or an originator to determine their eligibility.

It is in everyone’s best interest to speed up the sale process and avoid disappointment.