When sellers sign an Offer to Purchase (OTP), they often believe that the sale is secure. However, the reality is that numerous factors can cause a sale to fall through even after the OTP has been signed. Understanding these pitfalls can help sellers navigate the process more effectively and ensure a successful transaction.
What are some of the common pitfalls to avoid?
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Unmet Suspensive Conditions: Most OTPs include suspensive conditions that must be met for the transaction to proceed. One common condition is the buyer's requirement to receive bond approval within a specified time frame. If these conditions are not met, the contract becomes null and void, leading to the sale falling through. Cash offers are often preferred over offers that are contingent on bond approval or the sale of the buyer's current home.
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Failed Home Inspection: Another common reason for offers to fall through is a failed home inspection. Many OTPs stipulate that the offer is contingent on the home passing an inspection. If issues are identified during the inspection, the seller must either address the problems or reach an agreement with the buyer.
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Incomplete or Incorrect Planning Approvals: To transfer ownership of a property, all existing structures on the property must have the necessary planning approvals. If the seller is unable to obtain these approvals, they may be required to demolish the structures, leading to the sale falling through. It is advisable to obtain planning approval before undertaking any additions or renovations to the property.
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Communication with Real Estate Professionals: Sellers are encouraged to be open and honest with their real estate agent to avoid complications. Providing as much information as possible allows the agent to anticipate and address potential issues before they become problems, increasing the likelihood of a successful sale.
Tips to avoid a sale falling through
The best way to avoid a sale falling through is by preparing as best you can. Here we take a look at ways to prepare as buyer and seller.
Understanding the Purpose of a Home Inspection
Before diving into the preparation process, it's essential to understand the purpose of a home inspection. The primary objective is to assess the overall condition of the property, including its structural integrity, safety, and functionality. A thorough inspection can uncover issues that may not be immediately apparent, such as hidden water damage, electrical problems, or pest infestations. For buyers, a home inspection provides peace of mind, knowing that they are making an informed decision. For sellers, it offers an opportunity to address any issues before listing the property, potentially increasing its value.
Common Home Inspection Hurdles
Several common issues can arise during a home inspection, potentially causing delays or complications. These include:
- Structural problems, such as foundation issues or roof damage.
- Plumbing and electrical issues, including leaks or outdated wiring.
- Pest infestations, such as termites or rodents.
- Mold and mildew, which can indicate moisture problems.
After the inspection, the inspector will provide you with a detailed report outlining any issues they found, along with recommendations for repairs or further evaluation. This information can be extremely valuable in negotiating the purchase price or deciding whether to proceed with the purchase at all.
The crucial role of communication between home buyers and real estate agents
A transparent and open communication channel is not just beneficial; it's imperative for agents to fully grasp the desires and needs of their clients.
However, often agents are faced with a common hurdle: some buyers hesitate to disclose their financial information. This reluctance often stems from a desire to secure a bargain or make offers on properties beyond their means, assuming agents prioritize their commission over the buyer's best interests.
buyers who say they can afford more than they can are only hurting themselves. Being 100% honest with your real estate professional means that your agent can show you homes that you should be able to afford, even if the initial asking price is beyond your budget. Estate agents usually know the sellers and can tell if they would be willing to accept a lower offer. If you’re honest with your agent, the agent can then recommend an amount within your budget that the seller would be willing to consider
Beyond finances, buyers should define their home preferences clearly. Creating a list of must-haves and negotiable aspects aids agents in understanding and fulfilling their clients' needs efficiently. Agents can only succeed in finding the ideal property when clients provide detailed information. Trust and openness facilitate a smoother process, ensuring buyers find their dream home swiftly and satisfactorily.
Do sellers need approved plans before selling their home?
As a general principle, any major structural changes will mean that plans must be submitted to the municipality before building can proceed. However, minor building work does not need planning permission. Some examples include:
- Outdoor structures like a garden shed, a pergola, or a gazebo that are less than 5m²
- Repairing or replacing your roof with similar materials
- Internal alterations that do not affect the structural safety of the building
If the changes are significant structural alterations (for example, if there is an additional room), then plans need to have been submitted. If not, the responsibility then lies on the current homeowner to have new plans drawn up and approved to reflect the changes. The municipality could either reject the plans and/or penalise the owner and could even demand that any illegal structures be demolished. That is why many buyers will insist that the seller provides up-to-date approved plans of the property before they will agree to sign an OTP.
Those who are trying to sell without the necessary planning approval are encouraged to contact their nearest real estate office for some advice on how to address this.
