Make me an offer!

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 Old

Mutual Bank marketing manager René Roux.

The offer to purchase is a formal document offering a certain price for a specific property. It’s 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 of sale.

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 can’t get a homeloan within a certain period, no deal will take place.

Documentation
Estate agents offer standard offer to purchase agreements, but this does not mean you can’t 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.

Start low
First offers are often rejected so you may want to start below your maximum affordable cost.

Sale specifics
Don’t 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 name.

Deposit details
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 deposit.

Finance
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.

Rent
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 concluded.

Negotiation
Ideally the seller accepts your offer and the deal is concluded, but it’s 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 seller’s 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 don’t want to get caught up in the heat of the moment with costs you can’t 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.