In an active property market with an unbelievably low interest rate and a favourable bank lending climate driving high demand for property, you would typically find many buyers and if you do not make an attractive offer to the seller, you may well find yourself losing out, says Gerhard van Linde, MD for Seeff Pretoria East.
To purchase a property, start with a good offer. This, he says, is known as an Offer to Purchase which is a legal document outlining the price you are offering, how you intend paying and other key terms including any conditions to the offer such as securing mortgage finance, needing to first sell a property, or sometimes both.
He says further that to make a great offer to purchase, you need to do your homework, investigate, ask questions, then put your best offer forward. To avoid disappointment, start with doing your due diligence upfront so that you can put your offer in with confidence. Check “for sale” and “sold” prices of similar properties for comparison.
If you need finance, ensure you are prequalified as this will carry a lot of weight. Sellers do not want time wasters or bargain hunters. Ask questions and get a sense from the agent about how the property is priced and if there is room to negotiate, then says Van der Linde, put forward your best offer. The closer to the asking price and more favourable the terms, the better the likelihood of it being accepted.
Sweeten the deal with a deposit
If you are a cash buyer, it will definitely count in your favour. If not, then Van der Linde recommends a substantial deposit which, together with your pre-approval, will make your offer more attractive. Remember, if you are reliant on mortgage finance, the “72-hour clause” which is a feature of Offers to Purchase will allow the seller to continue marketing the property for this period. If he receives a better offer and you are unable to match it, you could lose out. It is therefore best to ensure your offer is as solid as possible.
Sell before you buy
Tiaan Pretorius, manager for Seeff Centurion says that it is always advisable to minimise contingencies in your offer. Making your offer subject to first selling a home is unlikely to put your offer at the top of the pile. Time is money and there is risk involved for the seller. Thus, if you need to sell before you buy, especially if you need the equity on your current home to finance your new home, you are best advised to first sell your property before you put in your offer, especially if it is “hot property” that you have your heart set on.
Inspect before you sign
Inspect the property before you sign, recommends Heinrich Möller, manager for the Benoni, Boksburg and Germiston areas. You do not want to put in an offer only to find the property does not live up to your expectations. While there is an onus on the seller and agent to point out defects, you should still do a thorough inspection, especially if the property is older. You can make use of an inspection service which will provide a report. Ask for the building plans to check that the property is compliant and there are no unapproved additions. Check the swimming pool and potential structural cracks and damp.
Be ready with a counteroffer
While these tips should get your offer accepted, you should always be ready with a counteroffer. Before you put in your initial offer, you should consider whether you would be able to come back with a higher counteroffer. If there is a lot of interest in the property, it is best to rather ensure that your first offer is close to, or at the full asking price if you really have your heart set on the property. The highest offer will generally always win the day. Work with the agent and take their advice upfront.