Buying a house is one of most people’s largest investment decisions and usually has a big financial outlay. As you make one of the most important financial decisions, knowing what do no and not to do is key. The process of buying a house in Kenya can be challenging more so when buying a house for the first time. Whether you are a foreigner seeking to buy a house in Kenya or a citizen, there are several steps, tasks and regulations you need to be aware of to avoid making an expensive mistake. To ease your anxiety and ensure you are on the right path, we have created a step by step guide to buying a house. Whether you are a seasoned real estate investor or a beginner in real estate, the top 5 factors to consider when buying a house in Kenya are:
1. Determine your real estate investment needs
As you start looking for a house to buy, determine your
wants and both current and long-term needs. If you plan to expand your family,
you should consider buying a house with an extra room to grow into. For
instance, if you are living in a one-bedroom house and plan to expand your
family, the best option is to search for not less than a 2-bedroom house. As
buying a house is a long-term decision, this helps to ensure you can live in
the house for some time before the need to move arises.
Make a consideration of the amenities that you need the
neighborhood to have. Some factors include schools, access to public transport,
parking, entertainment spots, shopping malls and your social network. Consider
factors like schools if you have or plan to have kids. Ideally, houses should
be close to good schools so that the commute for kids is easier. If you drive a
car and you are buying a house to live in, then you should only buy a house
with a designated parking. If you do not drive, then the house should have ease
of access to public transport.
As you think though your decision, consider the house
type that best suits your needs. This could range from apartments, bungalows,
villas, townhouses or whether you prefer a single or a multiple dwelling house.
Also consider if you prefer to live in a gated neighborhood.
Itemize all the features that your house should have. This
is for both must haves and good to have features. If you have an idea of sizes,
itemize these as well. Some features could range from swimming pool, front and
backyard, electric fence or the finishing’s as well. If you need a house with a
certain type of roofing, have that itemized as it will make the search faster.
Once you identify your needs, factor in some flexibility as
well because other considerations like price could affect some of the items you
have identified. Determine what the property you buy must have and what you can
do without while still ensuring that the final house you purchase fits both
your needs and wants as closely as possible.
2. Determine the available budget
We have now determined our needs and to narrow down our
search further, you need to have a look at your finances. How much money do you
anticipate spending while buying your house? If you are unsure of the amount
you need, you can use a mortgage calculator to determine the price range to
operate within. This will help determine readiness to move ahead with the
process of searching for a house. Determining the available funds allow us to
assess ability to pay for both upfront and any recurring costs associated with
the purchase of the house. Most people buy houses in three ways- either through
cash, mortgage or through an off-plan purchase.
If you are buying on cash, consider if you have all the cash
needed or a top up is necessary. Saccos and banks offer unsecured and secured
loans which can help bridge the gap between the savings you have and the cost
of purchasing the house. If you plan to buy a house in cash, you may also
consider liquidating some of your existing investments to ensure you have the
full cash amount needed.
If you are using a bank issued mortgage, its advisable check
out several banks offers before settling on a lender. Banks have different
offers on amount they can pay for a house with banks offering up to 105%
financing on properties for sale. The 5% is meant to cover stamp duty costs
payable to the government and other government fees. Some banks require
you to meet certain upfront costs like a down payment while others offer to pay
all fees from legal, transfer and stamp duty costs. Banks also differ on loan
terms, interest rates and processing fees. You need to ensure that the rates
offered are the most advantageous you can find.
Other than the purchase price of the property, consider
stamp duty costs in Kenya. It is the responsibility of the buyer to pay the
stamp duty.
There are many companies currently offering off plan
purchases. The way this works is you make an initial deposit and then make the
remaining payments within a given period as construction progresses. This
method has the flexibility of getting a house at a relatively affordable price
while offering affordability. There are however risks with delayed completion
periods and developer integrity that have made this a sub optimal avenue for
most first-time home buyers.
After you buy a property, you will also incur additional
costs like moving costs, furniture costs and purchasing new appliances to make
your home comfortable. You may also need to make a few renovations on the
property. Include these as well in your budget.
3. Selecting a real estate agent.
While reading the blog articles like First-Time
Homebuyer’s Guide helps, it may not be specific enough for the market
you are in. it is very important to have someone guide you in the process
of buying a house. This could be a friend, family member or a real estate
agent. Our recommendation is to have both a real estate agent and a
trusted person to work with. if you do not know a real estate agent, you could
ask friends and family members for references. An online search also helps but
you would then need to do a background check
When choosing a real estate agent, find someone with the
right experience, local knowledge and you can ‘click’ with. An agent helps to
their extensive network and can alert you on even property that have not been
advertised yet. A good agent should communicate with you as often as needed.
Check on the real estate agents negotiating skills. If they are good negotiators, this will be critical in ensuring you are able to get the best deal from the property purchase act as the advocate for you and your interests throughout the process of purchase. An experienced agent helps you prepare the correct paperwork and protects you from minefields that you could encounter if you go it alone. Most agents are conversant with the process of buying and selling a house which leaves you to concentrate on working on the finer aspects of the actual house you need and not the process.
4. Analysing the Property Market and Selecting a House.
Now that you have nailed down your budget, house
specifications and have an agent, it’s time to start the legwork. The first
option would be to use online real estate listing platforms in Kenya to start
your property search. On the online listing platform, filter homes that are
available for sale within your preferred neighborhood and for a price you can
afford. Online platforms help compare prices with other houses within the
neighborhood. Review the photos available and see if any of the houses appear
within your preferences.
When reviewing online listings, a description of the house
for sale is key. Lok out for description on the number of rooms, bedrooms and
bathrooms to know if this meets your needs. Most agent explain other factors
within the description like finishing’s, whether in a gated estate or not,
parking availability, Wi-Fi and cable internet availability. This description
will help you narrow down your options and save you time.
The real estate agent will support you to identify properties
that are not on listing platforms. Most agents have a network they can call or
are members of various online platforms for real estate providers.
When you have time, take a walk or drive within the
preferred neighborhood. Look out for any for sale signs and make
enquiries. As you make visits to various houses make reviews on items like
space, lighting and finishes on the house. Your agent will support you inspect
the house for any defects. While there are so many unscrupulous agents
and conmen, ensure that your real estate agent accompanies you to any property
that you want to view. Additionally, do not make any deposits or payment for
potential properties before enlisting the services of a conveyancing lawyer. As
you make these tours, determine how the neighborhood feels in terms of safety
and security. Assess the noise levels as well. Visit the neighbourhood at
various times of the day to determine how safe it is and how comfortable you
feel at night. Do a morning drive to help you estimate the time needed go get
to work to ensure that you can deal with the commute daily. For schools, check
when kids are picked and dropped off. Speaking to neighbors about this
really helps.
When deciding to buy a house, you must take advantage and
use both your emotions and trusting your instincts. Use your emotions to make
sure you are buying a house that you love. As you will be spending a lot of
time in the house, falling in love with the house is advisable. Use your
instincts as well. If you feel the house is overpriced, get a professional
valuer to give you a better assessment of price.
5. Making an Offer, Negotiating and Transfer.
Now that you have viewed several house options and decided
on the house to buy, the final step is making an offer to buy. When
making an offer to buy, consider your budget, the original price offered for
purchase, agents price advise, valuer price and what you consider to be
reasonable and a fair market value of the property.
Make an offer to the seller and include any conditions that
you want included. These conditions include any repairs needed, amount of
deposit needed, documents that you need for due diligence and any payment terms
that you. The seller will either accept your terms or negotiate on them. This
process of offer and counteroffer continues until you either reach a deal or
decide to call it quits. Make sure your agent negotiates on your behalf and
remember you can always change agents if you feel the real estate agent is not
supporting you to make the best deal for you.
When making any purchase deposits, ensure you have guidance
of a lawyer conversant with the conveyancing process in Kenya. This lawyer will
support in the due diligence process of property transfer.
Conclusion
The process of buying a house to live in can be a daunting task and is not for the faint hearted. However, you have not worked hard to fail at the finishing line. There are many companies in Kenya that offer conveyancing services which makes the process of buying a house easier. Most lawyers understand the conveyancing law and practice in Kenya and you don’t have to worry about this.