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Mortgage Financing @16% p.a Versus Renting

Kenya’s mortgage industry has been on the growth path and is now becoming more competitive.
Although on the on a growth path mortgage lending is still really low and as of December 2012 it stood at  3.7% as a percentage of Kenya’s GDP this compared to 70% and 50% in the US and UK respectively.  A  number of obstacles have been identified as impediments to the growth of mortgage accounts;  affordability and insufficient housing supply are among them plus a lack of understanding about mortgage among Kenyans. But still mortgage uptake is on the rise at 30% per year mainly from a growing middle class.

What is a Mortgage
A mortgage is a loan agreement between a home owner or buyer and a financier that gives the conditional right of ownership of the property to the financier as security for the loan, until the interest on the amount is fully paid. The difference between a regular loan and a mortgage is that in a regular loan there is no explicit collateral while in mortgage collateral for the loan is the house itself. If you don’t pay back the lender takes back the house; this is what is referred to as foreclosure.
A better way to look at mortgage is a financier acting as a Landlord. The financier or Mortgage lender will buy the property and then acts as a landlord. The buyer in addition to paying rent contributes monies towards purchasing the property. After making the last payment the property changes hand from the financier to the buyer.

Is a taking up a Mortgage my best option?
Buying vs. renting is a consideration people take in developed countries to buy homes via a mortgage.
Home ownership is cheaper than renting because of low interest rates and longer repayment periods; mortgage rates can be as low as 3% (fixed rate) over a 30 year period. This is done by comparing what mortgage you’ll pay on a property over a property as opposed to the rent over the same period, considering property prices and rent inflation.

Compare the costs of owning and renting; calculating the average rent and for-sale price for certain set of properties in a given area. Let’s take Kilimani for instance a 3 Bedroom apartment in the area will go for about 18 million while a rental for the same property will go for around Ksh.180, 000 per month.

Compare the costs of owning and renting; assume you get the current average mortgage rate of 16.6% on a 20-year variable rate. Using a Mortgage calculator that would translate to around Ksh. 250, 000 per month making just a 38% difference from the rent taking in consideration that rental prices are on the increase with a 12.1 % increase in 2012 alone and property prices increasing by 6.6% in the same year. Also quoted 16.6 % variable rate with the current market trend rates could go down with the growth of the economy and adjustment of the CBK lending rate.

Meaning the mortgage you will be paying will going down as time goes by. In the long run it is better to buy and mortgage the property before the prices and the rental price go up. If you take figures of a different area with a much lower real estate portfolio where rents and property prices will be much lower, you can get a more favorable outlook.

An example will be any upcoming
Gated community in Nairobi outskirts and preferably on an upcoming road reserve. For example, on a Kshs. 2,000,000 mortgage at 15 percent interest, amortized over 20 years, your monthly payment would be Kshs. 26,335.

This can be a good deal as this number can be even lower than the rent.
To manage on the overall construction cost, Prittworld Properties & Mortgages Limited has developed a product called “Nyumba Smart” to assist individual plot owners develop their own dream homes in a plot of their choice. This helps to reduce overall investment price.
Apply for our “Nyumba Smart” product through downloading the “Nyumba Smart Application Form” from our website www.prittworldproperties.co.ke

Mortgage financing options
Over the recent months Kenyans have been introduced to an array of difference home finance promotions.
In fact average mortgage rates fell to 16.6 per cent from 17.7 per cent three months ago. CFC Stanbic led the pack by slashing rates from 17.0 per cent to 13.5 per cent. CBA, National Bank, Housing Finance, Equity all cut their rates by 2%. Standard Chartered Bank introduced the lowest rate with a 45 day offer at 12.9% p.a. However the offer was part of a bundle with other banking products. Foreign currency mortgages are also available at much lower rates (9 to 10%).  This can be a good option if you are earning in foreign currency.

Taking a mortgage is one of the biggest financial commitments you’ll ever make. It’s important to know what these risks are and to be financially prepared for them. As much as it is predicted mortgage rates might come down there is still a potential for them to go up. If also happen to take foreign currency mortgage, be sure you are getting a regular income in the currency you are paying in. Otherwise buying foreign currency can be quite expensive in a volatile exchange rate. Also make sure to buy a home you like and one that you’ll feel comfortable in over the long term.

Research on the mortgage financing has been carried out by:
Investors Relations Unit
Prittworld Properties & Mortgages Limited
P.O Box 10405-10100
0721 292 230/0722 721 525
nyumba@prittworldproperties.co.ke
www.prittworldproperties.co.ke
NAIROBI

Prittworld Properties

The Past, Present and Future of the Kenyan Mortgage Market

The Kenyan mortgage market has been evolving over years although it is still in youth stages and encounters various hindrances that have restrained its growth. However, there have been many changes in the recent past aimed at reducing the overwhelming process of drawing down mortgages and encouraging first time buyers.

The trend in mortgage lending and interest has fairly remained streamlined with the exception of a few rises. In order to understand the Kenyan market, it is important to assess the overall dynamics that have taken place over the last decade. The trend has been a great influencer and affects how the mortgage rates changes over time.

The Mortgage Market
As above mentioned, the Kenyan market is still very young and yet to adapt international frameworks used in more developed countries. The young nature of this industry can be attributed to various factors that range from economic power to general lifestyles of Kenyan citizens. There are about 15 major mortgage lenders in the market including banks and micro-lenders. Some of the renowned mortgage lenders include the following;

– Standard Chartered
– Barclays Bank
– CBA
– KCB S&L
– Barclays Bank
– I&M Bank
– CFC Stanbic Bank
– Diamond Trust Bank
– Equity Bank
– Chase Bank

While there are a considerably good number of lenders in the market, the demand for mortgages is still relatively low. One of the major reasons for this low demand is the fact that Kenya is an agricultural based economy and most rural citizens live in their own houses. Another big contributor to low demand is with the high interest rates. Although the Central Bank of Kenya has a stabilized rate of about 8.5%, the lender banks enjoy a broad deviation of about 10% deviations with some banks charging up to 19% interests. This high rating is sometimes considered purposefully tailored by bankers to reduce demand.

Nonetheless, the rates have dropped over the last few quarters and it is expected that demand will continue to rise though gradually.

The Past
Up until 2011, the mortgage lending rates were below 15% while interest rates may have been as low as 6%. These figures quickly shot up soon into 2011, which saw lending rates break above 15% and interests stemmed above 10%. The situation dropped slightly in 2013 and CBR is currently stable at 8.5% annual interest.

The overall return on investment from mortgage lending have remained low with exception of 2007 and 2008 when returns went as high as 30%. The emergence of micro-lenders such as Equity Bank has also contributed greatly to the current trends in calculation of mortgages. The total returns are derived from adding house price capital appreciation and annual rental income and a mortgage calculator is a great way for working out the monthly repayments. The annual cost of mortgage can be subtracted from total returns to determine whether there was a profit or loss for that particular year.

There have been limited efforts to step up demand for mortgages characterized by insufficient funding for long-term growth and implications. The biggest fear for mortgage lenders in Kenya is the underdeveloped nature of existing market. As market leaders deduce, constantly increasing demand in an underdeveloped scenario may have devastating implications that include falling prices. By 2013 the average lending rates peaked at 16.9% with Standard Chartered, CFC Stanbic and Barclays remaining top lenders.

The Present
The Kenyan mortgage market is definitely moving towards the right direction and several measures have been taken over the last four quarters to subsidize interest rates as a way of attracting first time buyers.

Some of the changes that were witnessed in 2014 include;
– Average mortgage rates fell to 16.3% for the second quarter with banks like CBK designing a Kenya Bankers Reference Rate of 9.13% as part of the strategy for lowering mortgages and attracting demand.

There are other minor changes that have taken place and most measures are aimed at lowering interests to around 5 percentile of Central Bank. The only left part is with standardization, which lacks in the market.

Introducing the KBBR’s rate of 9.19% was the first step towards streamlining and standardizing the Kenyan market. Soon after, Standard Chartered, which is the largest lender in Kenya, lowered their annual rate to 10.9% leaving them only +1.77% of the referential rates. This standard is the equivalent of the London Interbank Offer Rate (LIBOR). Kenya Bankers Association also introduced an Annual Percentage Rate (APR) on 1st July 2014, which was another huge step towards standardizing the Kenyan mortgage market and leveling the mortgage rates across existing lenders.

The standard incorporates values for interest rates, bank charges legal fees, insurance, government levies and valuation costs. This new introduction is aimed at enabling mortgage buyers to assess all contracts and brings transparency in all pricing thus eliminating any hidden costs together with their implications. The land titling process in Kenya was also recently digitized which opens up room for targeting secondary mortgages and lenders will have more metrics that they can use to monitor and predict demand.

What next for Kenyan mortgages?
Standardization will create transparency and open room for new markets including secondary mortgages.
Lenders will also have more useful credit information that can be used to approve requests. Nonetheless, the economy and average income of Kenyan citizens means bank deposits are still awfully insufficient.
Narrowing the gaps between different lenders will be top priority for standard enforcers if the mortgage market is to outgrow its current potential. All in all, predictions for a higher demand in the near future are still sublime and more countrywide developments are still needed to increase bank deposits and expand funding for mortgage lending.

Conclusion
With all the new standards and measures, along with ongoing digitalization, the Kenyan mortgage market
is set for a positive trend. However, one main thing still lacks to streamline the entire lending process. In developed nations, mortgages are standardized such that all documentations look pretty much the same regardless of the lending banks. In Kenya, there is a great gap between different lenders. The current changes are set to open up a fair platform for new lenders, increased demand and other mortgage options.

Investors Relations Unit
Prittworld Properties & Mortgages Limited
P.O Box 10405-10100
0721 292 230/0722 721 525
nyumba@prittworldproperties.co.ke
www.prittworldproperties.co.ke
NAIROBI

solar panels in house construction

SOLAR HEATING PANELS IN GREEN BUILDING TECHNOLOGY

Solar water heating, an example of solar thermal technology, has become increasingly popular with Kenyan homeowners. Using the sun to heat water is efficient, saves money, and reduces pollution. There are over 65,000 solar water heaters in use in Kenya today. In fact, Nairobi ranks number one in Eastern Africa nation when it comes to using energy from the sun to heat water.

HOW SOLAR WATER HEATING WORKS
Sunlight is absorbed by one or more solar collectors, which transfer the absorbed solar heat to water circulated through the collector(s). The heated water is then stored for use throughout the day and night in a hot water storage tank that is highly insulated for it not to lose heat.

THERE ARE TWO BASIC KINDS OF SOLAR WATER HEATERS:
Active (forced circulation) systems that use pumps to circulate the water, and
passive (thermo siphon) systems that rely on natural convection for water circulation

Both types of systems include solar thermal collectors and storage tanks. The collectors can range in size from 3 ft. x 7 ft. up to 4 ft. x 12 ft. and are often used in groups. The storage tanks are usually larger than conventional electric water heaters and generally hold 80 or 120 gallons. The tanks may be plumbed together to increase the storage capacity. The heating efficiencies of either system are approximately the same. In areas that experience freezing temperatures, a heat exchanger system is often used but in tropical areas like Kenya, they are not needed.

An active system (forced circulation) uses an electrical pump to circulate water between the solar collectors and the storage tank. The pump may be either a 120V AC pump or a DC pump.
An AC pump is plugged into regular house current and relies on temperature sensors and a differential controller to turn the pump on and off. The sensors indicate whether the water in the collector is sufficiently hotter than the water at the bottom of the storage tank. If it is, the differential controller turns the pump on. Water will then circulate through the system with the hot water in the collectors flowing to the storage tank and being replaced by colder water; then the pump will automatically turn off while the water in the collector heats again. The pump will cycle on and off repeatedly during the day, depending on the amount of heat generated by the sun.
A DC pump gets its power from a small photovoltaic (PV) panel usually mounted on the roof next to the solar collectors. At the same time electricity is being generated to power the pump, sunlight is shining on the solar collectors heating water. When the sunlight is bright enough to generate electricity and power the pump, it is usually also hot enough to heat water. This synchronous use of the sunlight ensures that when the water in the collector is hot, electricity is generated to pump the hot water to the storage tank. The more sunlight received, the faster the water heats and the faster the pump works.

A passive system
A passive (thermo siphon) system relies on natural convection to circulate the hot water. Hot water naturally raises so no mechanical pump (AC or DC) or access to electricity for a pump is needed. It is essential, however, that in a passive system the storage tank be higher than the collectors. As long as the sun shines, water in the collector will heat and move slowly upward into the tank with the colder water descending to replace it. As the storage tank is usually mounted horizontally above the collectors on the roof, the added weight is a consideration.

SOLAR WATER HEATING / POOLS
Not only is Kenya an ideal location for solar water heating for household use, it is also an ideal location for solar pool heating. Solar pool heaters generally do not have to heat the water to the temperature used in most households and the type of solar collector which is used for pool heating is usually different than the glass covered collectors used for domestic water heating.

SOLAR PANELS
Monocrystalline/Polycrystalline
Solar Modules Solar modules provide some of the highest power density available in the market. They range from 12 Watts to 160 Watts and yield higher current output by 10-17% at operating battery voltage. Ideal for battery charging applications and in stand-alone systems such as rural electrification, lighting, telecommunications, water pumping etc. Supplied and installed in Africa for over 20 years our solar modules have withstood the test of time in some of the toughest working conditions providing much needed free electricity to schools, hospitals, aid project, settlements and missions.

Determining Number of Solar Panels Needed
I. First, reduce your load!

The first thing you need to do (if you haven’t already) is look at ways to reduce your household electrical needs. Big wasteful energy consumers are electric water heaters, stoves and heating systems. If possible, these systems should be converted to gas power – anything besides electrical.
Usually the expense of changing out these systems is less than the added expense of having a solar/wind energy system to power these large electrical energy consumers.

Other obvious things you can do to significantly reduce your energy needs is to convert all incandescent lighting to full-spectrum fluorescent lighting. Again, the added expense of these lighting systems is easily compensated by the reduction in the cost of your needed solar/wind energy system.
Next you need to design as system that will meet your electrical needs. For the sake of simplicity, we’re going to go over the basic steps you would take to design a solar electric system for a home that’s occupied all year around (as opposed to a summer cabin, for instance). The difference being that a home that would be occupied all year round needs to be designed to produce enough energy during the low-sunlight times of the year.

II. Determine the number of solar panels you will need

1) Calculate your electrical load. Determine the number of watt*hours your location will use on a daily basis. For an entire home, this will take some busy work. You need to determine:

What appliances you are going to power.

How many Watts does each appliance consume?

On average, how many hours do you use this appliance per day? (Don’t forget to include those things that you use on a weekly or monthly basis, like a vacuum sweeper or a blender).

Calculate your average daily watt*hour usage for your entire home. That is, multiply the watts of the appliance time the average number of hours used per day.

2) Determine the equivalent number of full-sun hours for your location for the month with the least amount of sunlight (typically December or January).
3) Divide your load calculation from step 1 by the number of full-sun hours from step 2. This is will tell you the number of Watts of solar panels you will need to provide you enough electricity in the lowest sun-light months.
4) Compensate for system inefficiencies. Every part of a solar powered system has some inefficiency in it. The rule of thumb is if you are going to use an inverter (to produce AC) your total system inefficiency will be 30%. For systems that will be using the DC voltage directly from the battery bank, the inefficiency factor is 20%. So, to compensate for inefficiencies multiply your answer to step 3 by 1.3 (or 1.2, if there’s no inverter).
This answer is the number of watts of solar panels you will need to provide enough electricity for your loads.
5) Finally, to determine how many solar panels you will need, take your answer from step 4 and divide it by the rated power output (watts) of the solar panel that you have chosen.

Project Design & Technical Department;
Prittworld Properties & Mortgages Limited;
0722 721 525 / 0739 256 892;
Nyumba@prittworldproperties.co.ke
www.prittworldproperties.co.ke

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Facebook: Prittworld Properties Limited
Twitter: @Prittworldproperties

Nyumba Smart by prittworlproperties

HAVE YOU HEARD OF OUR HOME PRODUCT “NYUMBA SMART??”

Nyumba smart product recently launched by Prittworld Properties & Mortgages Limited to cater for individual home owners wishing to build their dream house tailor made to their recollection of preferential tastes & tastes.
The Kenya’s housing market has developers who usually develop housing units for individuals whereby they dictate the designs without offering room for the buyers’ customized tastes and preference. This paved the birth for the “Nyumba Smart” product by Prittworld Properties & Mortgages Limited.

What are the features for the “Nyumba Smart” product?
“My preference, my design, my home”- Nyumba Smart is a unique concept in that the beneficiary/home owner is given the choice to choose from the variety, the designs which clearly match his choice and preference. Nyumba Smart is a choice and a brand and its main theme is to make the investment dreams of the home owner a reality. We not only give to you a house, we give you a home and a lifestyle.Hassle free development- Have you ever though that an individual can take the ownership of your worries and carry out the mortgage arrangement, design & approvals for the drawings & take charge in development of your home including the landscaped gardens, Gate house & boundary wall and even connecting your house to water & electricity without a drama. This is the cornerstone for the “Nyumba Smart” product. This is the main landscape which Prittworld Properties & Mortgages Limited is bringing to the housing industry in Kenya.
Prittworld takes care of your worries and leaves you to take your day-to-day activities in a hassle free way.

Development Partner: Prittworld Properties & Mortgages Limited is your preferential development partner. We take you through the walk advising you on each and every stage all through from design stage, mortgage processing stage, and construction stage until when your haven will be ready for occupation.
At Prittworld Properties & Mortgage Limited, you can afford to relax and leave it to the experts.

Variety of designs to choose from: That dream house you have dream of having it once. We make your dreams a reality. Do you know of that master en suite you have been dreaming of?. What about that glamorous home you have been dreaming to be your valentine or honeymoon gift to your love of your life. We make your wishes real. You only need to spend time with our team of competent and customer friendly mortgage analysts & technical team who will take you through the walk from your imaginative work to the real world.

Say “bye” to the worrying mortgage application procedures with mortgage banks: Have you been to a banking institution and the banker is so negative that you leave being disappointed. We are here for you. At Prittworld Properties & Mortgages Limited, we provide innovative solutions to all the developments. At Prittworld Properties & Mortgages Limited, we have something for everyone.

Turnaround time: The maximum time it takes to complete your home from the time of designing your house is usually 7 months. However, the time might slightly vary depending on the proposed finishing and the type & complexity of the house.

Professional team: How good it is to have your house designed and built by a team of competent professionals with vast knowledge and experience in the housing industry. We do everything professionally with the clerk of works furnishing us with daily progress report. Thereafter, we hold monthly progress and inspection report whereby we put the contractor to task in case of poor workmanship. We are also obliged to submit monthly progress report to the bank for review at each and every progress.

Ideal customer service: What was your experience the moment you went to a bank in need of a mortgage loan? Maybe it is not an experience to talk about. Prittworld Properties & Mortgages Limited through their product dubbed “Nyumba smart” has made it possible to you that you will never come across that bad experience again during your real estate investments. This is because they are doing everything on your behalf from sourcing & negotiating a good loan package, project design & development & furnishing the financier with the progress report.

Loan grace period: Imagine during the construction period (6 months) you will not pay any interest on the loan. This is your high time to your dream palace. We have all what it takes to make your weird dreams a fountain of reality.

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Why The Demand For a Three Bedroom Unit Still Taking The Lead

Different configurations for creating house plans in Kenya exist which a potential home owner is able to tap into when looking at constructing a home for themselves.

There are different types of plan configurations available, each with its pros and cons. It is the prerogative of the developer to decide what type of house plan best suits their budget and required use. However, probably the most commonly used plans configuration is that of three bedroom house plans.

One would wonder why the overwhelming popularity of the three bedroom house plans. Right from early on when our parents generations were building homes, there was often a need to create a particular house for the patriarch of the home, then several other units in which the matriarchs and their children would reside in. This kind of hierarchy was quite prevalent in that time, and there arose a tradition that was deeply ingrained in many people’s psyche that there needed to be a particular provision for the heads of a home, and subsidiary provisions for the residences of those under their control.

The rationale for this kind of arrangement was quite simple; the need to provide privacy and control at the same time. Privacy was guaranteed for various cadres of people in the nuclear home hierarchy, as they intermingled freely with their own kind.

One would find that three bedroom house plans in Kenya may have thus existed in this kind of rudimentary format when housing was constructed from mud and timber. Of course as more contemporary housing types appeared with the coming of industrialization and urbanization, there was greater emphasis on more compact housing units occupying smaller tracts of land. This coupled with technological advances of sewage provisions and water reticulation meant that no longer did toilets have to be located away from the houses and could now be integrated as part and parcel of house plans in Kenya.

The growth of planned towns and controlled residential development definitely continued to influence the creation of clear housing types that complied with the zoning requirements of each area being governed by town municipalities. Zoning regulations would stipulate which kinds of development were allowable in various parts of towns and cities, according to planned demographic trends and income levels of the population.

The three bedroom house plans in Kenya became a major answer to the housing needs especially of the burgeoning middle class, emerging as a dominant force within the local market. There was a proliferation of several housing developments that were started off by housing authorities such as the National Housing Corporation as well as the City Council of Nairobi and other municipalities. These housing estates were mortgaged to interested individuals who became the proud owners of houses constructed as three bedroom house plans in Kenya.

The growth of the housing sector in Kenya has seen many changes to the aspirations expressed of those who are interested in developing residential developments. While previously housing units may have been very simple in their provisions with regard to residential amenities, today’s three bedroom house plans in Kenya have to be much more ornate in their provisions as times have changed.

Simple economy three bedroom house plans in Kenya typically consist of a living room with a dining area, a kitchen, shared bathroom and water closet, and three adjacent bedrooms. These have now been modified by many subsequent house plans and can now  boast of many additional facilities at the behest of their developers.

Typical three bedroom house plans in Kenya offer minimal plinth or floor area, and for those with well sized usable rooms often offer floor areas ranging from 85 – 100 square meters in area. However this is for a simple configuration of the three bedroom house plans in Kenya. There are other permutations which allow for other auxiliary facilities to be added to the three bedroom house plans in Kenya, giving them a more opulent feel. For example in the Kitchen area, one would ensure that it can connects to an adjacent terrace, while also connecting with an adjacent store and similar ancillary spaces. Having a dining area which connects with the lounge is often the case in three bedroom house plans in Kenya. Having an option of an open plan kitchen can allow a house plan to have a larger feel within these more public areas of the house.

MERITS OF CONSTRUCTING THREE BEDROOM HOUSE PLANS IN KENYA
There are several merits that come to mind to justify the construction of three bedroom house plans in Kenya. The size of the average family in the society generally consist of parents, children of either gender and probably a domestic house worker. The three bedroom house plan lends itself very well to catering for the needs of this kind of home, as every member of the home can be provided for easily.

The three bedroom unit in Kenya is reasonably easy to construct, whether as a bungalow, an apartment flat or as a maisonette. Their space provisions are economical, and someone who is interested in constructing a simple family home can achieve success with minimal effort. In addition, their space considerations are moderate enough such that they do not require to have very large plot sizes in order to construct. For example an individual with a plot as small as a tenth of an acre can construct a three bedroom house plan in Kenya very successfully.

One can use conventional construction systems to construct three bedroom house plans in Kenya, consisting of stone masonry, concrete blocks, or brick and mortar construction. There is also the option of construction using prefabricated construction systems such as timber or panel construction.

With these ideas in consideration, home ownership becomes more achievable by constructing these types of houses. It is therefore evident that a potential home owner is able to successfully construct or purchase three bedroom house plans in Kenya that suits them well.

Home Construction-Prittworld Properties

5 Common Mistakes First Time Home Owners Make

Buying a home will no doubt be one of the biggest purchases you ever make. As a first-time homeowner, you need to be careful to plan out your property purchase. So what are these 5 common mistakes?

  1. Poor financial planning
    Home ownership does not come cheap so you need to plan your finances accordingly. Most first-time homeowners underestimate the costs they will incur. There are additional costs that amount to almost ten percent the value of the house that you will need to take into account in the planning stage. Additional charges you will need to plan for include: stamp duty, which ranges between two to four percent of the value of the house depending on its location; loan appraisal, which is about one percent; and the remaining five percent to be spent on insurance and legal fees. If possible, meet with a lender to get pre-approved for a loan. This will guide you through the house hunting process and in managing your expectations for your ideal house.
  2. Not considering the resale value
    As a first-time homeowner, you first house is more often than not your dream house. You have to keep the option of reselling in mind when purchasing the property. The property is also a long-term investment so you need to consider the potential return on investment over the coming years.
  3. Not conducting a home inspection
    An inspection is essential for every house purchase. It will help you to know the repairs that need to be carried out in your house. You will need to hire a professional home inspector to conduct this for you. The home inspection should cover the structural features of the house – including the electrical system, plumbing, pest and mold infestation – as well as the general condition of the house. This will ensure you get value for money while avoiding incurring the cost of repairs that the seller should be liable for.
  4. Not having agreements on paper
    The rule of thumb is that all real estate agreements should be on paper. This is the only binding document of the sale. The seller may back out of the sale after the offer has been made or not meet to the expectations that you had set together. It is highly advisable that every agreement made between the seller and buyer should be on paper as verbal agreements are not legally binding.