Evaluating multiple offers

Sellers sometimes receive more than one offer to purchase (OTP) on their properties at a time, especially for homes in sought-after areas, says Adrian Goslett, regional director and chief executive of RE/MAX of Southern Africa.

“It might be tempting to simply accept the highest offer, but this isn’t always the best one and it’s important to look at all offers on their own merits, paying particular attention to the clauses of each contract,” he says.

“Your estate agent should be able to provide some valuable insight when going through each offer to determine which is the most beneficial. In terms of their mandates, agents must act in the best interest of the homeowner to ensure that the optimum outcome is achieved during the property transaction,” says Goslett.

“The highest value offer might seem the best choice from the outset and achieving the highest possible sales price is the obvious end goal. However, there are other aspects that need to be considered before making a final decision.”

Goslett says that before you think about accepting an offer, the following should be in place:

Copies of any council-approved plans on the property, as well as checking all other documentation is up-to-date and correct. This will expedite the time it takes for the property to be transferred, ensuring the process goes more smoothly.

Ensure that the contract is easy to understand and covers all aspects that are to be agreed upon by both parties. This should include factors such as which items will be regarded as fixtures and fittings. Having these aspects in a written document will reduce any chance of a misunderstanding or disagreement in the future.

When reviewing each OTP you need to pay attention to a few critical elements to help differentiate between the various offers.

Is the offer conditional? Most offers are subject to certain suspensive conditions that need to be satisfied before the transaction can come to fruition. These could include the buyers first having to sell their current bond before they can buy your property. Though not entirely out of the ordinary for an OTP to be void of any suspensive conditions, you need to consider that the property will be off the market while the terms and conditions are waiting to be met, should you choose to accept the offer.

Does the buyer have a deposit? Most buyers will be required by the bank to have at least 10 percent of the purchase price of the property as a deposit, however, in certain instances, a buyer may be asked to provide as much as 30 percent of the purchase price. The more money the buyers have available to put down as a deposit, the greater the chance the buyers will have of obtaining the required finance to buy the home. Often a deposit is also a good indication of the buyers’ financial position and how serious they are about buying the home.

Is it a cash deal or financed? Ideally, the fewer complications involved in the financing of the purchase, the better, as it means that less can go wrong further down the line. Cash is king, but only a small percentage of transactions are completely cash deals. Most buyers will require a bond, but banks are far more willing to approve a bond if the buyers require less than 80 percent of the purchase price of the home. Although generally not an issue, it is advisable to be cautious of buyers that require third parties to sign a surety on their behalf.

The date of occupation. In the perfect scenario the occupational date and the transfer date would coincide. To a large degree, this will mitigate the amount of stress and complications in the event that the deal does not materialise. If the offer contains any suspensive conditions, you should not allow occupation of the home until these conditions are met and all documentation has been signed by buyers and sellers at the conveyancing attorney.

“Once you have examined all aspects of each offer you can consider the price the buyers are offering. There are instances where you could find that the lower offer is actually the right one, depending on your needs and the conditions of the offer,” Goslett says.

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