You’ve finally found your dream home, got a bond pre-approval so that you know it fits within your budget and now you are ready to take the next step - putting in an offer.
Your opening Offer to Purchase, also known as the OTP, needs to be realistic yet competitive so that it sets you apart from other interested buyers, says Carl Coetzee, CEO of BetterBond. “An OTP is legally binding so only offer what you can actually afford. As it constitutes a Deed of Sale, there could be financial penalties if you pull out.”
Unfortunately, not everyone is a born negotiator, acknowledges Coetzee. “It’s easy to get emotional about buying a home. After all, this is likely to be one of your biggest investments. But try and take the emotion out of your purchase discussions.” Know before you make an offer whether you will be able to compromise on the price. “While you don’t want to overpay for a home, your offer should be enough for a seller to accept, and be competitive with other offers that may come in.”
This is an exciting and crucial part of your home-buying journey. To make it as straightforward as possible, bear the following six guidelines in mind, says Coetzee:
To decide what to offer, start with looking at whether the home is priced appropriately. You will need to take a look at similar homes in the area and chat with your estate agent. A reasonable seller will accept a fair offer.
Find out why the sellers have put the property on the market. If it is an urgent sale, there may also be room to negotiate.
If the property has been listed for a while, the seller may be more eager to accept an offer lower than the price they originally asked for.
Although the seller is legally obligated to disclose any defects, there may be defects that they are not aware of and it is still worthwhile having the property inspected before you make an offer to purchase. Hidden defects could end up costing you dearly later on.
If you are paying a deposit, make sure it will be refundable if the sale does not go through. The OTP should stipulate that the deposit is in an interest-bearing account until the property transfers into your name. Use an attorney firm’s bank account for the deposit, not a personal bank account. Verify the banking details with the attorney verbally, and not via email, to ensure that any email correspondence is not hacked and that the deposit ends up in the intended account.
Make sure you have read the fine print and understand all the clauses before you sign. Rather clarify first to avoid regrets later. Important details to look out for: