Owning a home is the dream of most Kenyans, if not all. There is a spot that renting does not seem to hit in the hearts of many. A thirst that is only quenched with homeownership. I am even 100% sure that you who are reading this article are thinking of the same.
Having that space to raise your kids, retire to, and even chill on the weekends. All without the strain and worry of making monthly rent payments is nothing short of a blessing. While home ownership is something that we all look forward we know that investing several million without the proper guide can be really dangerous. That is why we have put together a guide detailing the entire home-buying process.
The Do’s and Don’ts as well as some street knowledge.
Before you buy a home, there is a really important question that you first need to ask yourself, which forms our first step. This is the question of how much. How much are you willing to spend on buying a home?
1. ASSESS YOUR BUDGET
Knowing your budget will enable your real estate agent to get you the very best properties and deals at your price range. The cost of a home is determined by various factors, but the most critical are
- Location
- Size of the home (that is, the plinth area)
- Amenities such as a pool
2. ENGAGE A TRUSTED REAL ESTATE AGENT
The second step is to seek guidance from a trusted real estate agent. You can get some on our platform. But this is up to you. After you have a solid figure of how much you are willing to spend, a real estate agent will assist you in getting the right deals. They could even save you from losing your money to fraud or overpriced homes.
It is also important to know what type of home you are buying. Is it an off-plan apartment or a completely developed house? Knowing this will help you in knowing how to structure your payments as well as what areas of due diligence you ought to carry out.
3. VIEW THE POTENTIAL PROPERTIES
After getting you the best fit for your pocket & heart. The next step is to pay a physical visit to the shortlisted properties. Think of this like a date with the property. The visits assist you in familiarizing yourself with the location as well as inspecting the home.
If you are not familiar with construction, I would suggest seeking the help of a real estate agent in this step as well.
During inspection, if you notice some issues such as leaking fixtures or minor damages, you have a good basis to renegotiate the price of the house. This is what we call the pre-purchase house inspection.
The visit is also important for you and your family to try out the space and get a feel for how living there would be like.
You also get to sample the environment and know more details, such as if it’s noisy or if the home receives a constant water supply. I would recommend talking to neighbors if they exist and digging into some more details.
If you are buying off-plan, make sure that you visit other finished developments done by your developer. This will assist you in getting first-hand information about the developer from another buyer.
This may seem nosy, but remember you are putting your hard-earned millions into this. Be ruthless with due diligence.
4. PRICE NEGOTIATIONS
As Kenyans in general, we have mastered the art of bargaining when buying anything. Property is no different. Negotiating the price is important as it helps you save some cash that you may need for repairs or organizing your housewarming.
In doing your price negotiations, make sure that you have legal representation from a lawyer. They will help you navigate any hurdles or legal clauses when you are signing the offer letter.
The offer letter contains your interest in purchase, the payment plan, home price details, and the mode of payment. The accepted mode of payment varies depending on what you agree on. But common methods include
- Cash payment
- Mortgage payment
- Installment payment
In most cases, cash payments are lower than the rest but offer the least flexibility, as the seller may demand the full price upfront. Structured forms of payment such as mortgages may offer you some level of flexibility but are costly in the long run.
5. REQUEST LEGAL DOCUMENTS & DUE DILIGENCE
Upon getting the offer letter, you have now distinguished yourself as a potential buyer. And have the right to request the property’s legal documents. A letter of offer is, however, not legally binding, and if you notice any red flags, you can pull out of the deal without any legal issues.
The legal documents will include the property title deed, clearing certificate, land rates, and necessary approvals. After you have received the title documents, you need to do official searches at various offices, including the:
- Land Registry
- Company Registry
- Survey department
For this part, you may also consider having a land surveyor. Their role is to help you verify that the given lot dimensions are as the seller gave.
You also need to check if the property has any court cases tied to it by confirming court records. A major rule that we use is the rule of “buyer beware,” which applies in this case. For this reason, it is prudent that you get all information about the property before signing the sale agreement.
Clean documents are a sign of a legitimate property, and the vice versa is also true. If the seller is hesitant in giving the documents or provides a lot of excuses on the same, you could mark this as a red flag.
Make sure to engage professional consultants on your due diligence phase. This is to leave no stone unturned in the process and avoid the chances of getting defrauded.
6. SIGN THE SALES AGREEMENT
You then proceed to sign the sales agreement in the presence of a lawyer. It is important to note that the sales agreement is a legally binding document. And at this point, pulling out from the deal can subject you to legal or monetary losses.
The sales agreement contains the following areas:
| Area of interest | Description |
| Details of the buyer | this includes their full names, ID/passport number, and contact information |
| Property description | this is the title number, size of the property, and location of the property. |
| Agreed purchase price | This is the sum of the agree price for the property which may even involve the currency agreed upon. |
| Payment terms agreed | here terms such as the deposit and how it is to be paid are included. |
| Completion date | which is the date by which the final price should be paid and ownership transferred |
| Obligations of the seller | the seller’s responsibility is to provide you as the buyer with valid ownership documents that are clear from any legalities. |
| Obligations of the buyer | As the buyer, it is your duty to pay the purchase price and other costs such as legal fees based on agreed timelines. |
| Default clauses | This part denotes what should happen if either party breaches the terms of the agreement. This may include penalties. Just make sure you are okay with any consequence that may come into play incase you breach. |
| Dispute resolution | this is how any future disagreement should be handled. The sale agreement may recommend negotiation or arbitration |
| Signature of both parties | Both the buyer and the seller, plus their advocates must sign the document |
7. PAY THE DEPOSIT
The next step in your homeownership journey is paying the deposit. This is after you have verified without a single doubt that the property is free from any legal issues. And that every document given by the seller checks out.
The deposit should be paid in a reputable bank, and you must have a witness. Also make sure you get a receipt for the payment. The deposit amount varies depending on the seller, but at most times it is around 20% of the property’s value.
Also important to note is that not all sellers will be comfortable with selling on deposit. Some will want you to clear the whole amount, but this can be negotiated.
8. PAY BALANCE & TRANSFER OWNERSHIP
The last step is completing the remaining balance under the time agreed upon. And afterwards transferring ownership of the property to your name. This will be followed by the issuance of a new title deed.
And just like that, you are a homeowner.
