Finding the house of your dreams and making an offer
should be the end of a long, hard slog. Make sure, however, that you
understand the implications of signing an offer to purchase, says
Mutual Bank marketing manager René Roux.
The offer to purchase is a formal document offering a certain price
for a specific property. Its vital to give it careful thought,
Roux explains, because once your offer to purchase is signed by you
and the seller, it becomes a binding legal contract known as the deed
So before you make an offer, keep the following guidelines in mind:
Firm or conditional
A firm offer means that you will buy the property and there are no
conditions attached. Once accepted by the seller, you are bound by
the agreement. A conditional offer means that you will buy the property
if certain conditions are met. You must list these conditions on the
offer to purchase. For example, your offer may depend on you getting
a homeloan. If you cant get a homeloan within a certain period,
no deal will take place.
Estate agents offer standard offer to purchase agreements, but this
does not mean you cant change them. You can amend or delete
clauses that you believe are not in your best interests. Get help
from a lawyer if you are unsure about anything. If it is a private
sale you can ask your lawyer to draw up the offer to purchase.
Check the basics
Double-check that the offer to purchase has the correct name of the
seller, the property address, erf number etc.
First offers are often rejected so you may want to start below your
maximum affordable cost.
Dont assume that all home items will be included in the purchase
price. These may or may not include light fittings, large pot plants,
the satellite dish, carpeting and so on. Whatever items are in or
around the home that you think are included in the sale should be
specifically stated in writing in your offer. Any additional requests,
such as a land survey of the property, electrical inspection certificate
must also be specified.
Repairs and faults
Faults to be repaired and renovations that are to be completed by
the seller should also be included in the offer to purchase. Property
is almost always sold "voetstoots" or "as is".
This means that you buy the property with all its latent defects and
may not claim damages from the seller arising from those defects if
you discover them at a later date.
The "voetstoots" clause is an effective shield protecting
the seller, and you can only get past it if you are able to prove
fraud on the part of the seller, which is tough to do. Sellers must
provide buyers with an electrical compliance certificate verifying
that the property's electrical installations are in order. It is issued
by a registered contractor and paid for by the seller. The certificate
means that if there are any electrical faults, the seller will have
to pay for the repairs before the property is transferred into your
Details of the deposit that you will be putting down on the property
must be included in the offer to purchase. You do not have to pay
a deposit, but this is usually done as a sign of commitment. Bear
in mind that if you do pay a deposit and you are unable to go through
with the deal, you forfeit that money.
Include a clause relating to interest on your deposit. The offer
should state that the deposit should be held in an interest-bearing
trust account and that you are entitled to receive interest on your
Specify all financial details such as the deposit amount, any interest
to be paid and details of homeloan financing. If you are relying on
getting a bank loan to buy a property, make sure you make the offer
subject to you obtaining a loan of a minimum amount from a bank. If
you leave this clause out of the offer, you will be bound to buy the
property whether or not you are granted a loan.
If you are relying on selling one property to afford another, you
must link the sale of the existing property to your new purchase.
If you do not, you can find yourself legally bound to buy the new
property without the funds to pay for it.
It might be a good idea to apply for a pre-approved bond with your
bank. This will give you a good indication of how much you can afford.
Close the deal
Expiration date and time indicates when the offer becomes null and
void. To put pressure on a seller to accept your offer, you can limit
the time in which your offer remains valid for acceptance.
The occupation date should be stated in the offer. If you move into
the property before all conditions in the offer have been fulfilled,
you could be forced to move out because the sale falls through.
Specify the date of possession
This is the date on which you take responsibility for a property and
may be, for example, responsible for paying rates or levies. The date
of possession may differ from the date of occupation (when you occupy
the property), but ideally these dates should be the same. You may
take possession of a property but not occupation, in instances where
there is a tenant in the property.
Occupational rent is the rental that you pay the seller if you move
into the property before it has been transferred into your name. The
process of transferring a property into your name can take several
weeks. You become the legal owner of a property only on the day that
registration of transfer takes place at the Deeds Office. It is important
to negotiate occupational rent at the time when the deal it being
Ideally the seller accepts your offer and the deal is concluded, but
its wise to prepare for rejection. The seller may make a counter
offer, asking a higher price. You can sign an offer with a higher
price than your original offer, but lower than the sellers counter-offer.
Ideally the seller accepts this counter-offer and the deal is concluded.
If you are able to pay cash, you are in a strong bargaining position.
If you get a counter offer, ensure that you know exactly how
much you can afford before you start negotiating. You dont want
to get caught up in the heat of the moment with costs you cant
afford, warns Roux.
If you can take the time to keep a cool head initially and
track the details, then the long-term enjoyment of your property and
the lower costs involved will be worth the wait, she says.