5 costly mistakes to avoid before you get the keys

The period between signing an Offer to Purchase and taking ownership is not simply a waiting game. What buyers do during these crucial months can affect their finances, transfer and first months of homeownership.

• Signing the OTP starts the transaction, but buyers still face deadlines, documents, payments and important financial decisions before registration.
• Your deposit could sit for months before transfer, making its security, interest earned and the wording of your sale agreement important.
• Buying at your affordability ceiling leaves little protection against rates, levies, maintenance, insurance and other costs once you take ownership.

The deal is signed. Now the real process begins

Finding the property, negotiating the price and signing the Offer to Purchase (OTP) can feel like the hard part of buying a home.

It isn’t the end of the process. In many respects, it is the beginning.

Between signature and receiving the keys, a property transaction typically has to move through bond approval, fulfilment of suspensive conditions, FICA and other documentation, conveyancing, payment of costs, municipal and other clearances, bond registration and ultimately registration of transfer.

That process can take approximately three to four months, depending on the transaction and whether delays arise.

During that period, buyers can make decisions that affect their cash flow, delay transfer or leave them financially stretched once the property finally becomes theirs.

Jackie Smith, CEO of Buyers Trust, a secure bank-hosted deposit platform for homebuyers, says buyers should resist treating this period as dead time.

“Once the OTP is signed, some homebuyers may feel the urge to sit back and wait but the reality is that there is still a lot to do. It’s a crucial time to set yourself up for success and plan ahead.”

Five mistakes buyers should avoid between signing the OTP and getting the keys

1. Spending before you know the true cost of the purchase

A signed deal often triggers excitement: furniture, appliances, renovations and moving plans suddenly become real.

But spending too early can be expensive.

The purchase price and monthly bond repayment are only part of the financial equation. Depending on the transaction, buyers may still need money for transfer-related costs, moving expenses, deposits, insurance and expenses associated with preparing the property for occupation.

“It’s easy to get excited about the move and start spending money on the new home straight away,” says Smith.

Her advice is to keep sufficient liquidity available until buyers understand exactly what remains payable.

“Keeping money in reserve provides buyers with breathing room should an unexpected cost arise.”

There is another consideration: don’t allow money earmarked for the transaction to become financially idle unnecessarily.

If a deposit is going to be held for several months, buyers should understand whether it is earning interest, at what rate and who ultimately receives that interest.

Before spending additional cash, know:

• Your remaining transfer-related costs.
• What still has to be paid before registration.
• Your moving and immediate occupation costs.
• How much emergency cash will remain afterwards.
• Where your deposit is held and whether it is earning interest.

2. Assuming a delayed transfer means the deal is in trouble

Few stages of buying property test patience quite like waiting for transfer.

Once buyers mentally move into a home, every additional week can feel like something has gone wrong.

Not necessarily.

A transfer involves multiple parties and processes. Delays can arise from outstanding suspensive conditions, bond approvals, documentation, signatures, compliance requirements and the various clearances required before registration.

“Once you can picture yourself living in the property, every additional week can feel like a setback. But a longer-than-expected transfer doesn’t automatically mean something has gone wrong,” Smith says.

The distinction is important.

Buyers shouldn’t ignore delays — but neither should they automatically assume that a delay means the transaction is collapsing.

Instead, establish what is causing the delay, who is responsible for the next step and whether anything is required from you.

There can also be a financial upside to waiting where a buyer’s deposit is properly invested in an interest-bearing account: the longer transfer takes, the longer those funds potentially have to earn interest.

3. Negotiating your bond rate but ignoring your deposit

Homebuyers quite rightly spend time trying to secure the lowest possible home-loan rate.

A fraction of a percentage point can make a substantial difference over a 20-year bond.

But there is another interest rate buyers frequently overlook: the rate being earned on their deposit while they wait for transfer.

“Deposits are hard-earned money, often saved over months or even years, and it should be treated with the same care and attention as any other investment.”

A sizeable deposit sitting for three or four months can generate interest — but buyers need to understand precisely how the money is being held.

This issue has attracted additional attention following litigation concerning a property deposit paid into a conveyancing attorney’s trust account.

Attorney Richard Spoor highlighted a matter in which the sale agreement provided for the deposit to be held in the buyer’s name and for the buyer’s benefit in an interest-bearing account. When a suspensive condition was not fulfilled and the sale fell through, a dispute arose concerning entitlement to the deposit and accrued interest.

At the time of the supplied information, the Supreme Court of Appeal had not yet delivered its decision.

The broader lesson for buyers is nevertheless straightforward: read the OTP and understand exactly what it says about your money.

Ask four questions:

• Where will my deposit actually be held?
• Is it being placed in an interest-bearing account?
• Who receives the interest?
• What happens to the capital and interest if the transaction fails?

Smith says Buyers Trust provides a secure, audited and bank-integrated alternative for holding deposits, with the net interest accrued ultimately paid to the buyer.

There is also a security consideration. Property transactions have been targeted by phishing and email-interception fraud, making independent verification of banking and payment instructions particularly important whenever substantial amounts change hands.

Never change payment details purely because an email tells you to. Verify instructions through a trusted, independent channel first.

4. Switching off after the OTP is signed

Signing the OTP does not mean the buyer’s administrative responsibilities are finished.

The agreement itself can contain important deadlines and suspensive conditions, while banks, attorneys and other parties may subsequently require documents, signatures, FICA information and payments.

Missing one seemingly routine request can slow down the transaction.

“One of the best things a buyer can do during this stage is simply remain contactable and responsive,” says Smith.

Her advice is practical:

“Read requests carefully, understand what is required from you and respond promptly. You don’t want an avoidable delay because a document or signature has been sitting in your inbox.”

This is especially important for first-time buyers, who may not understand every document or request they receive.

Don’t guess.

Ask the conveyancer, bond originator or relevant professional what the document means, why it is required and when it must be completed.

A simple transaction checklist can also help buyers track:

• Bond approval and conditions.
• OTP suspensive-condition deadlines.
• FICA documentation.
• Transfer and bond costs.
• Deposit requirements.
• Insurance requirements.
• Attorney documentation and signatures.
• Expected lodgement and registration.

5. Budgeting to buy the property — but not to own it

Perhaps the biggest affordability mistake happens before buyers receive the keys.

A bank may determine that you qualify for a particular loan. That does not necessarily mean borrowing to the maximum is financially comfortable.

The real question is: what will the property cost every month once you own it?

Depending on the property, recurring expenses could include:

• Bond repayments.
• Municipal rates and taxes.
• Body corporate or homeowners’ association levies.
• Electricity, water and other utilities.
• Building and household insurance.
• Security.
• Repairs and maintenance.
• Special levies or unexpected capital expenditure.

“Buying at the absolute limit of what you can afford can make the first few months of homeownership very stressful,” Smith says.

And her warning is worth remembering:

“Your budget shouldn’t end on transfer day.”

A buyer who can technically afford a R20,000 monthly bond but has little capacity left for levies, rates, insurance and maintenance may be taking on more property than their household finances can comfortably support.

Building a homeownership buffer before transfer is therefore just as important as saving the deposit.

Use the waiting period to strengthen your position

The months between signing an OTP and receiving the keys are not administrative dead space.

They are an opportunity to get the finances right.

Buyers should use the period to protect and optimise their deposit, stay ahead of contractual deadlines, preserve cash, understand their future monthly expenses and prepare for the financial reality of ownership.

As Smith puts it:

“Buyers put enormous effort into saving a deposit, finding the right property and securing a home loan. That same financial awareness should continue right through to transfer.”

The principle is simple: don’t mentally complete the transaction when you sign the OTP.

The property only becomes yours on transfer — and some of the most important financial decisions happen in the months between the signature and the keys.