There are currently very few restrictions preventing buyers from foreign countries to buy South African real estate. But government has made some noises that seem to point to some stricter controls in the future. So, lets quickly look at buying South African real estate, before things change.
Funding a South African real estate purchase
Foreign buyers who don't have permanent residence status in South Africa can still buy South African property. Unfortunately they will not be able to obtain mortgage financing from the formal lenders in South Africa. They can, however, buy the property for cash. The South African government will then normally granted the new owners a ninety-day visa for each visit. It is also possible to obtain visa extensions.
Foreigners who intend to immigrate to South Africa and have already applied for permanent residence may qualify for a mortgage bond of up to 50% of the value of a property they wish to purchase. But they will have to be able to prove that they already have a secure source of income and to verify that they already have the additional funds in transit to SA.
Real estate agency commission
There is no fixed rate of commission in South Africa. Sales commissions in South Africa are totally subject to negotiation. The real estate agency commission usually falls somewhere between 1% and 10%, depending on the level of service required.
If the sellers approached a real estate agent to sell the property, the price normally includes the real estate agent' s commission, which is negotiated between the agent and seller. In this case, the real estate agency commission is payable by the seller. Note that the real estate agent will be representing the seller's interests in this case (with due regard for the interests of the buyer).
If the buyer approaches a real estate agent to find a suitable property for them, and the real estate agent does not have a mandate from the seller, the agent's commission will be added on to the purchase price. The buyer and real estate agent negotiates the commission and the buyer is responsible for paying the commission, but now the real estate agent will be representing the buyer's interests (with due regard for the interests of the seller).
Buyer's agents are not general practice in South Africa. The Code of Conduct for real estate agents in South Africa, instituted by the Estate Agency Affairs Board of South Africa, determines that such an agreement between buyer and agent must be in writing. The buyer's agent is also obliged to inform the seller that he/she will be representing the interests of the buyer.
Buyers should also note that the costs associated with the purchase of a property in South Africa are payable before the process of transfer can take place. These costs will be significant, so be sure to prepare for them.
Buying real estate in South Africa
Most of the real estate in South Africa is freehold title real estate. Some forms of ownership may be more complex, such as sectional title real estate, but the purchase process is still quick and (relatively) easy.
The offer to purchase is usually drawn up by the estate agent. The offer to purchase document is usually available in English and one or more of the languages native to South Africa. No attorneys need to get involved at this stage, unless either party feels that they need legal representation.
Since an attorney is not required before an agreement has been reached, buyers should be aware that a written offer to purchase a property is normally irrevocable and becomes a binding legal contract once accepted by the seller. So, head your mother's words and don't sign anything without reading it first.
Transfer of ownership
A specialist conveyancing attorney, normally nominated by the seller, will however be required to register the transfer of ownership in the applicable South African deeds office. The conveyancing attorney's fees and transfer duties are for the buyer's account.
Note that the law does not prescribe the appointment of the transferring attorney. It is a matter that can be negotiated between the parties to the sale.
The deeds office property transfer process can require anywhere from one to three months, depending on the complexity of the real estate transaction. The South African title deeds registration system is excellent and buyers can be sure that their ownership of the property will not be subject to dispute later on.
