The excitement of finding your dream home is quite unique and should be enjoyed, but before you get carried away you should put pen to paper to submit your offer to purchase.
While some may find this a rather overwhelming undertaking, following a few simple guidelines will make it a far less daunting experience.
An offer to purchase is essentially an agreement that lays out the terms and conditions of the property transaction between the buyer and seller.
All of the terms and conditions will need to be agreed upon by both parties before the contract is signed. It is imperative that everything that each party has agreed to is put down on paper and listed in the offer to purchase document to avoid possible conflict further down the road. Once the document is signed by both parties it is a legal and binding document.
An offer to purchase serves to protect the parties involved in the transaction and ensure that nothing is left to interpretation. If there is any ambiguity it could lead to a misunderstanding or conflict, so its best to be avoided.
It is vital that the offer to purchase thoroughly covers all the agreed-upon terms, which should include issues such as the date of occupation, occupational rent, fixtures and fittings, and the conditions of sale. Once the offer to purchase has been concluded and signed by both parties it will become the deed of sale on that property.
According to Goslett the offer to purchase should be as detailed and as specific as possible. It may seem like a tedious task, but making the offer to purchase as detailed as possible will provide protection to both parties.
If every detail of the transaction is covered within the document, there will be little or no chance of either party negating the agreed-upon terms at a later stage. For example, if a house has floor-to-ceiling windows, it would make sense for the seller to sell the custom curtains with the house - this means that the curtains would need to be listed in the offer to purchase. If the item is not listed, there is no obligation for the seller to leave it. This is where the details in the document become important.
Both parties must be in agreement as to what items are included in the sale of the property and what aren’t. As a general rule of thumb, any fixtures or fittings that have been attached to the property (nailed, bolted, glued, or screwed down) will stay.
It is fairly common in today’s market for a buyer to submit an offer to purchase while they currently own another property. It is also common practice for buyers to include a condition which states they have submitted the offer subject to bond approval. In these situations, the offer to purchase will include a suspensive condition that states that the sale is only subject to the buyer’s other property being sold or them receiving the necessary finance.
A suspensive condition will normally include a time limit that will depend on the agreement made between the buyer and seller. Once the suspensive condition has been fulfilled, the buyer should notify the real estate agent without delay so that the offer to purchase can be made unconditional.
This step in the process is vital because the offer to purchase could become null and void and the whole transaction could fall through if the requirements have not been met in a timeous fashion.
An essential inclusion in any offer to purchase agreement is the date of occupation, which stipulates the date on which the seller will vacate the property and the buyer will take occupation.
Apart from the fact that it will provide both parties with a clear date to work around in terms of moving, it will also determine whether either party may need to pay occupational rent. The buyer will be required to pay occupational rent to the seller if they move into the property before it is registered in their name. Conversely, occupational rent will be paid to the buyer should the seller not be out by the time the transfer of ownership has occurred.
The rental amount should be market-related and can be agreed on by both parties with the help of an agent. The occupational rent amount should be included in the offer to purchase.
Once the document has been signed by both parties it is contractually binding, so it is imperative that the buyer is fully satisfied before they put pen to paper. Buyers should go through the document thoroughly dotting their proverbial ‘I’s and crossing their ‘T’s. If there is any clause that they need clarification on, they should ask their agent for an explanation or obtain a professional opinion from a lawyer.
An offer to purchase is a vital part of a property transaction and if used correctly, it will make the process of buying a home as easy and transparent as possible, helping buyers and sellers avoid any misunderstandings.
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