Offer to purchase explained
For many home buyers, the intricacies of making an Offer to Purchase remain a mystery. Adrian Goslett, CEO of RE/MAX Southern Africa, offers some enlightenment: Essentially, it is an agreement that contains the terms and conditions for the purchase and sale of a property. Both parties need to come to an agreement about all sorts of issues before the document is signed. Everything that is agreed upon must be listed in the Offer to Purchase 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 so the seller 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 both the seller and buyer can make moving arrangements accordingly.
Occupational rent: Occupational rent is a monthly amount paid to the seller by the buyer, which allows the buyer to occupy the home before it is registered in his or her name. This rental price can be agreed on by both parties with the help of an agent. If the seller needs to stay in the home after it has been registered in the name of the buyer, he too will have to pay occupational rent to the buyer, as he is now legally staying in the buyers 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: In order 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 buyers bank within a realistic amount of time. This is usually comprises a time limit of seven to 10 working days. In some cases the sale can be subject to the buyers home being sold first, and the time limit for this also has to be agreed upon. 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 their offer becomes unconditional, enabling the process to continue. This is an essential part of any sale, as should the Offer to Purchase terminate, 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 purchasing before signing anything. They ought to visit the house regularly to make sure that 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, explains Goslett.
He says that 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 purchaser. If used correctly, the Offer to Purchase makes the buying and selling of a property as transparent as possible, however, it needs to be clearly understood by both the seller and the buyer, Goslett concludes.
Article by: www.remax.co.za