Finding a home that checks most of your boxes and your budget is no easy task - and in some cases, it might even feel like a victory. There is however one more thing you need to do before you can call it yours and that is to submit an offer to purchase. We take a look at what you need to know before you sign on the dotted line.
Buyers, particularly first-time buyers, are usually very eager to sign the offer to purchase the second it’s drawn from the agent’s folder of paperwork. It is exciting and, yes, with well-priced properties, you need to move quickly, but don’t be so hasty that you don’t pay careful attention to the terms laid out in the offer to purchase before signing anything.
It is a legally binding document and if you cannot honour the terms of the contract you could be opening yourself up to a world of serious long-term financial implications.
This however shouldn't scare you - the offer to purchase is simply a document outlining the terms of the sale and purchase of a property, to ensure that both parties are in agreement about various matters concerning the property.
Pay careful attention to the following terms, specifications, and clauses in the document before putting pen to paper.
Conditions of sale
Both the buyer and the seller stipulate conditions in the offer to purchase. Typically this section states that the purchase is subject to finance and bond approval on the part of the buyer, subject to the sale of another property, or even to the outcome of specialist inspection approvals.
The clause that states that the sale is dependent on bond approval should allow a realistic timeframe for this to be achieved. Where this is the case the potential buyer should notify the property agent as soon as the home loan is granted for the offer to purchase to become valid and to set the process in motion. Be cautious and ensure that the timeframe given for any deposit or cash payment is realistic and that you have sufficient time to notify your bank to release the funds. Money that is on 32-day notice (or similar) can only be transferred after the notice period is up.
More here on suspensive conditions
Fixtures and fittings
The rule of thumb is that items that are fixed to the surface of the property, such as burglar bars and safety gates, are included in the purchase price. Movable items, like curtains, mirrors, and garden pots, are generally not, unless specified, and would thus be removed by the seller.
It is not uncommon for the buyer and seller to agree about fixtures and fittings that have been custom-made for the property to stay, or pieces that add to the specific aesthetic of the property.
Whatever is decided, make sure you have it in writing to avoid confusion or unhappiness further down the line.
Occupation date
The buyer and the seller need to agree on the date when the house will be vacated by the seller so that the buyer can move in. Most buyers and sellers usually need to make various moving arrangements so it is helpful to determine and clarify this date well in advance.
Occupational rent
Occupational rent is paid if the buyer needs to move into the property before it has been transferred and registered in their name. Conversely, it also applies when a seller remains in occupation of the property after it has been registered and transferred to the new owner.
Very simply, it is compensation for the use of a property that you’re not the owner of, and will only be occupying for a short-term period.
More here on how occupational rent is calculated
Purchase price
The purchase price is the most important stipulation in the offer to purchase document. The price offered by the buyer should be stipulated, together with a timeframe within which the seller needs to accept, reject or negotiate it.
Other
Also make sure you’re acquainted with the clauses that stipulate the commissions to agents, the expiry date of the offer, and the need for various compliance certificates.
Lastly, take care to ensure that any verbal discussions and decisions to change anything in the contract are put in writing and signed by all parties.
Familiarising yourself with the offer to purchase not only allows for the buying and selling process to run more smoothly but also protects the parties involved against hassles that may arise later on.
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