You have found your dream home and you are ready to make an offer. While this is exciting it can be somewhat stressful. This is when an estate agent really shows their value, for it is they that will assist you in clarifying what the Offer to Purchase should contain, keeping your best interests at heart and those of the seller. The idea is to reach a point where both buyer and seller agree on the conditions of sale. Ideally, if the agent is able to convince the seller verbally that your offer is a good one, the acceptance of the official Offer to Purchase should go smoothly.
What is an Offer to Purchase?
The Offer to Purchase is a written agreement between the buyer and the seller, but is only legally binding when signed by both the buyer and the seller. Once signed, a buyer cannot withdraw from the deal without incurring a penalty. However, if either the buyer or seller fails to fulfil the conditions of the contract, the contract is no longer valid.
What does the Offer to Purchase contract contain?
- The buyer and seller’s name and ID numbers.
- The price the buyer is offering for the property.
- An accurate description and address of the property and any land titles attached to it.
- Terms and conditions such as whether the property is sold Voetstoots.
- Deposit arrangements, such as date by which it will be paid, and to which conveyancer it will be paid, who will hold it in a special interest-bearing trust.
- How the balance intends to be paid. This may be through the application of a homeloan facility, or the sale of your existing property.
- Agreement to pay transfer fees and other associated costs, such as stamp duties, conveyancer fees etc.
- Inclusions such as appliances and fitments that are immovable, and any other that the buyer and seller agree to.
- Any known defects.
- Any occupational rental agreement.
- A validity or revocation date of the offer (by when the offer should be accepted).
- Time and date of the agreement, and space to sign.
Conditions
Failure to comply with the conditions of the signed contract, may compromise the sale. These are also included in the Offer to Purchase impacting on both the buyer and the seller. A breach of contract by the buyer allows the seller to pursue claim damages and interest, and worst case may mean the seller can retain any money already paid by the buyer even in so far as to sue for the full purchase price and accumulated interest in unique circumstances.
The following conditions are usually standard, and must be complied with:
- That a property inspection by a credible professional should be carried out, which will confirm the condition of the property or reveal latent defects that must be addressed by the seller.
- A deadline date by which the buyer and seller must fulfil their obligations as agreed to in the contract.
- Whether the sale is conditional, such as whether the buyer needs to acquire a home loan (and by what date) or if the buyer will need to sell their existing property and by when.
- Failure by the seller to supply necessary compliance certificates, such as electricity, insect infestations or any other compliance mandated by local municipal laws.
Before signing:
Buyers:
- Do a final property check to ensure you haven’t missed anything, including neighbour noise and traffic conditions.
- Check whether your finances are healthy enough to afford the property.
- Do a homeloan pre-qualification check with your bank.
- Check all personal details are accurate, the offer price is exactly as you proposed.
Sellers:
- Check your personal details and property description is accurate.
- Ensure the deadline date for the buyer to fulfil their obligations is reasonable and under what circumstances you may continue to market the property.