UNDERSTANDING AN OFFER TO PURCHASE
Once a qualified candidate has shown significant interest in buying your home, you will most likely receive an Offer to Purchase. This is the first formal communication that leads to the final deal on both ends of the real estate transaction, and being on the receiving end requires you to weigh the offer carefully and proceed with caution as it may differ from your asking price. You will need to be as transparent as possible to prevent the deal from falling through, therefore, you may have to be ready and willing to adapt to any factors that place the buyer at an advantage over you. As a seller, you should expect to receive offers lower than your asking price - it’s best to know from the outset what kind of price you’re willing to accept in order to proceed with the sale.
The basic terms that are specified in the Offer to Purchase are the conditions of sale, fixtures and fittings, date of occupancy, occupational rent, deposits, purchase price and other small clauses.
Conditions of sale primarily include the sale being subject to: bond approval, a sale of another property, as well as specialist inspection approvals. Stipulations such as the sale being subject to obtaining a bond approval within a realistic time frame must be specified so that a potential buyer can notify the agent that their offer is valid and proceed with the buying process. Property is generally sold “voetstoots”, meaning you sell it as is - a condition of sale can however include the buyer negotiating repairs and other maintenance jobs.
Fixtures and fittings are items found on the interior and exterior of the property and included in its purchase price. These can include light fittings, carpets, built-in-cupboards, curtain rails, satellite dishes, as well as freestanding furniture and appliances. You are not legally obligated to leave any fixtures or fittings in the house, however, the onus is on you to specify what will remain. Unless both parties disagree, all items fixed to a surface in the house should generally remain as a rule of thumb.
Both parties need to agree on and stipulate a date of occupancy; this is the date when the seller vacates the premises in order for the buyer to occupy it. It is crucial to specify a date so that either party can make the necessary moving arrangements accordingly. You are entitled to charge the buyer occupational rent if they occupy the property prior to the date specified on the agreement. Likewise, the buyer is also entitled to charge you occupational rent if you do not vacate the premises following that particular date.
The buyer is not legally obligated to produce a deposit, however, this action can be seen as a sign of commitment. If the buyer chooses to place a down payment on the property, it must be stipulated in the Offer to Purchase and held in a trust account until they take transfer of ownership. The most anticipated point of the Offer to Purchase, however, is the purchase price - the price offered by a willing buyer that is subject to your acceptance. There should ideally be a time limit for this kind of offer in order for you to either accept, reject or negotiate with a counter-offer. Along with the offer’s expiry date, other important clauses to stipulate include in the agreement are the agent’s commission, compliance certificate requirements, and anything else deemed necessary by you or the buyer.
Once both parties have signed the Offer to Purchase agreement, it constitutes the Deed of Sale. In order to prevent issues at a later stage, it’s best to have an attorney check these terms and conditions of the property transaction before signing takes place. To learn more, speak to one of our helpful agents who are committed to ensure that every stage of the selling process goes as smoothly as possible.
Author: Dormehl Phalane Property Group