For many home buyers the intricacies of making an offer to purchase remain a mystery.
Adrian Goslett, chief executive of RE/MAX Southern Africa, says essentially it is an agreement that contains the terms and conditions for the purchase and sale of a property. Both parties need to agree about all sorts of issues before the document is signed. Everything that is agreed upon must be listed in the document.
“The offer to purchase needs to contain all the terms on which the parties agreed, such as date of occupation, occupational rent, fixtures and fittings and the conditions of sale,” he says.
Date of occupation: This is the date agreed upon by both the buyer and the seller, as to when the house will be vacated by the buyer so the buyer can move in. Sellers need to move out of their homes by a certain date, so it is essential to clarify the date beforehand so that sellers and buyers can make moving arrangements accordingly.
Occupational rent is a monthly amount paid, usually to the seller by the buyer, which allows the buyer to occupy the home before it is registered in his name. If the seller needs to stay in the home after it has been registered in the name of the buyer, he will have to pay occupational rent to the buyer, as he is now legally staying in the buyer’s home.
Fixtures and fittings: Both parties need to agree on what actually stays in the home and what goes with the seller. As a rule of thumb, anything that is nailed, glued or screwed down has to stay and everything else can go. Very often, the two parties will come to an arrangement about things like specially fitted curtains and pot plants that actually fit very well into the overall look of the home. Everything must be written into the contract, as if not stated it can lead to confusion down the line on what was promised and what was not.
Conditions of sale: For a buyer to get a mortgage to finance the purchase of a home, the offer to purchase may include a condition that the sale is subject to bond approval being obtained from the buyer’s bank within a realistic amount of time. This is usually a time limit of seven to 10 working days. In some cases the sale can be subject to the buyer’s home being sold first, and the time limit for this also has to be agreed. Once confirmation has been received that the loan has been approved or his home has been sold, then the buyer must notify the agent immediately to ensure that his offer becomes unconditional, enabling the process to continue. This is an essential part of any sale, as if the offer to purchase terminates, the entire agreement will become null and void.
“Buyers need to take time to find out everything they need to know about the property they are buying before signing anything. They ought to visit the house regularly to make sure they have not missed anything. If there is something that is bothering them about the house, it is essential they speak to their agent and get everything sorted out before signing the contract,” says Goslett.
He says buyers should never sign an offer to purchase until they are perfectly happy with everything that is written in it, because once they have signed and it has been accepted in writing by the seller, they will be legally bound to the transaction.
“Read each clause in the contract and make sure you understand everything. Ask the agent questions about anything you are unsure of. If you are still not sure, get your lawyer to read it and give advice where necessary. If you want to make changes, fill in and initial each of the changes.
“Once the sale has been negotiated, the deposit should be placed in a trust account until transfer of ownership is completed, with interest being for the benefit of the buyer. If used correctly, the offer to purchase agreement makes the buying and selling of a property as transparent as possible, however, it needs to be clearly understood by sellers and buyers,” Goslett says.
