Four things to know before making an offer to purchase

Four things to understand if you have your eye on a property

TIP You can sign only one offer to purchase at a time, unless you intend buying more than one property.

DESPITE the pandemic, the property market is thriving, with the most important drivers being low interest rates and banks keen to grant loans. If you find a house you’d like to buy, you first have to make an offer on it, which is a contractual undertaking you give the seller. It often happens, especially with firsttime buyers, that you’re so excited about the property you don’t pay enough attention to the contract. But this could have a long-term impact on your finances. Here’s what you need to know before signing.

1 THE OFFER TO PURCHASE

Many people think this simply indicates that they’re seriously considering buying a property. But it’s a binding contract and once you’ve signed it you can’t easily change it. This is why the contract must have an expiry date. If the purchaser doesn’t accept the offer by then, it becomes void. Ask the estate agent to clarify everything that’s unclear before you sign.

2 WHAT IT SHOULD INCLUDE

Because the contract is binding, the information contained in it should be complete. Make sure all your details are correct as well as the following:

● The date, full particulars of the purchaser, the seller and the property’s address and erf number.

● The precise amount of the purchase price and the date on which the offer expires.

● Any conditions of sale, such as the purchase price, depend on whether the buyer is granted a bond to buy the property. The date whereby the purchaser must get the bond could be added.

● All fixed fittings and fixtures that are part of the purchase agreement. This includes things such as mirrors, pot plants, blinds and chandeliers. Don’t assume anything is included. If you’re unsure, include it in the contract, warns Gerhard van der Linde from Seeff Pretoria East.

He says it often causes conflict when a purchaser had expectations of what will stay but then it’s not there when they move in.

● The owner declaring that to the best of their knowledge the house is structurally sound. The voetstoots clause only protects sellers against claims in cases where they weren’t aware of defects or faults. If the owner was aware of the fault, concealed it or didn’t declare it, this protection falls away.

It’s advisable for buyers to thoroughly inspect the property before making an offer. Request the building plans and check for any extensions that were never approved.

By law the seller and estate agent must point out defects, but there could also be faults that aren’t obvious. You can use a property inspection service, who then issue a report on the structure and any defects.

If the seller says they’ll repair something, make sure the repair is clearly stipulated, plus its cost and by when it must be finalised.

● If the house is recently built, ask for a copy of the NHBRC (National Home Builders Registration Council) certificate.

● Complying with legal requirements for electrical and plumbing installations, electrical fencing and gas appliances are essential. You must request these certificates too.

3 UNDERSTAND THESE CLAUSES

● Date of occupation When you’ll move in or when the property will be transferred into your name. If the seller is still in the house after this, they should be paying you an agreed sum in rental until they vacate.

● Deposit Some purchasers pay a deposit to indicate their serious interest in the property. This must form part of the offer to purchase. You must make sure the amount is correct, and when and how it’ll be paid.

You could state in the contract that the deposit should be held in a trust pending the conclusion of the sale and that you and not the seller receive the interest on the deposit.

● 72-hour clause This means the seller is allowed to consider other purchasers. When you sign an offer to purchase, there usually are certain conditions to comply with before the sale can be completed, such as the sale of your existing house or you must get a bond.

This is where the 72-hour clause comes into play. The purchaser may continue to market the property even after they’ve accepted your offer. If they get a better offer, they can notify you in writing and request you fulfil the offer to purchase within 72 hours, otherwise your offer becomes void.

It’s recommended that you get prior approval for a bond from banks or bond originators, which helps you to get the bond finance available faster.

4 IS IT ENFORCEABLE?

Yes, as soon as all the contract conditions are met. If as the purchaser you want to withdraw, for example, or change something, the seller could take legal action against you.

Ask the estate agent to explain the possible consequences should you have a change of heart and no longer want to proceed with the sale.

For example, could it result in you losing your deposit, or do you still have to pay commission to the estate agent?