All foreigners purchasing a property in South Africa are faced with a purchase process that is heavily slanted towards the seller. The buying process contains many pitfalls including clauses such as sold as seen, a lack of independent legal support and offer to purchase documents that are per-formatted in the sellers favor (normally with no cooling off period).
In short the buyer has little support in what is probably the biggest financial investment they are likely to make in South Africa.
The advent and rise of buyers agents, who look exclusively after the purchaser negates many of the issues buyers face and companies such as SAHomeBuyers have been helping buyers to find the right property, in the right area at the right price for nearly a decade.
Even with this added assistance, there remained a gap in protecting the buyer, due to the lack of a proper survey being carried out on the property to be purchased, which was fully backed up by a warranty. In short, even if a home inspection (survey) was carried out, if it was later proven to be inaccurate there was little the buyer could do.
Some good news!
The good news is that there is now an insurance product that pays for the repair of faults or defects in a new home which were not evident when it was bought.
Hollard Home Warranty
“Hollard Home Warranty™ offers protection against a list of defects that may surface in a property in the first two years after a buyer takes ownership,” says Lee-Ann Dobrescu, Group Business Development Manager at Hollard. The product covers faulty or defective design, structure or workmanship for a number of the key areas of the home, including the roof, walls, foundations, tiling and paving. Faulty electrical, drainage, plumbing and irrigation systems, as well as water waste management issues, will also be covered.”
The home warranty cover does not act as a replacement for conventional homeowners cover – it is rather intended to cover the gap between the sudden and unforeseen events covered by traditional insurance and the uninsured costs of day- to -day maintenance required on a home.
How it works?
Hollard first arranges for various inspections be performed.
Where there are minor defects that would not cause Hollard to decline to provide the warranty, the seller can either opt to repair these or have them fully disclosed and listed as ‘excluded from cover’ on the warranty certificate issued.
“Our research shows that buyers would rather know what they are getting themselves into than have unpleasant surprises later. Most people expect a house to have some problems,” emphasises Simon Griffiths, co-creator of the product. “Through the warranty there is full disclosure and protection from the unknown.” The warranty certificate issued indicates that the cover will be in place once the sales transaction is completed.
Cost of the Hollard Home Warranty
Premiums are determined on an individual basis, but sellers can typically expect to pay around R12,000 for a warranty on a R1 million home, R17 400 for a R2 million home and R27 500 for a R5million home.
In comparison to the investment being made in the property, this is a small price to pay for such a peace of mind.
A welcome addition to the property buying process!
With the ability to now instruct a buyer’s agent and also insist on a home inspection backed up by the Hollard Home Warranty, the playing field between buyers and sellers is fast evening out.
In reality, well informed sellers may well use this new warranty as a great opportunity to attract buyers by demonstrating that the property is in the condition expected and backed up by a warranty that means no nasty surprises for the buyer post purchase.
“Ultimately the Home Warranty makes the home buying process fairer and more transparent for both buyer and seller – it is a product that every seller of a well looked after home should attach to their ‘for sale’ sign,” concludes Dobrescu.
If not, then buyers would be well advised to insist on this in their offer to purchases as to ensure what they think they are buying is indeed what they are buying. After all, would you buy a new car with no warranty?
For more information on the Hollard Home Warranty you can contact your buyer’s agent, or selling agent who will put you in touch with the Hollard team.