Your first course of action, before bidding to buy a property, should be to carefully read through all of the clauses in the proposed agreement of sale document.
As soon as the seller accepts your proposed agreement to buy the property, the often misunderstood "offer document" miraculously transforms into a binding legal document that summarizes the agreement of sale between parties, and which will remain binding until the eventual transfer of ownership (or sometimes longer).
Many buyers don’t read before they sign
Unfortunately, it is my experience that too many house hunters fall head over heels in love with a property, and then simply don’t have the presence of mind to take the time to read through the sales agreement.
"This is a standard contract, right?", some buyers will ask. And then they will blindly sign any old offer to purchase document put in front of them!
Let' s just get this clear right now: THERE IS NO SUCH THING AS A STANDARD OFFER TO PURCHASE!
Estate Agents are SUPPOSED to be biased
In the Republic of South Africa, sellers employ real estate agents. Agents receive a mandate from the owner of a property to market it for sale, on his/her behalf. The real estate agent has a responsibility towards the seller to protect his/her interests – NOT to the potential buyer! The estate agent merely has a responsibility to “consider” the buyer’s interests.
A real estate agent's " standard" offer to purchase document may therefore contain stipulations that are not in the best interest of the purchaser. The estate agent Code of Conduct merely requires real estate agents to display "due regard" for the interests of the “third party” in the property transaction. Yes, the seller’s agent might see you, the prospective buyer, as just a necessary third party.
The agent’s first priority lies with the person by whom he/she was mandated to sell the property.
Is it then at all surprising that many real estate professionals joke that - if anything in "standard" real estate contracts somehow protects the purchaser, it is because the estate agent' s advisory conveyancer somehow forgot to take those stipulations out of the contract?
The proposed agreement of sale lying in front of you might be the real estate agent' s "standard" contract, but without inspecting and comprehending the implications of each clause in that specific contract, it is impossible to have any inkling of what it may contain.
The buyer can change the offer document
Lucky for you, the purchaser has the right to bid whatever he/she feels comfortable with. Yes, YOU decide what you are willing to offer for a property, in terms of money AND all the other things that gets included in the bid.
The seller' s real estate agent is supposed to have the knowledge and skill required to correctly word the contract clauses you want included in the deed of sale. And if he/she cannot or will not structure the offer according to your instructions, you are free to frame the proposed contract of sale yourself, or to retain an attorney to do so on your behalf.
I can hear some of the more tentative buyers out there moaning, “But I don’t want to P off the agent, you know!”
My advice is, if an estate agent looks as if he/she wants to throw a tantrum, he/she needs to be reminded that it is a whole lot more pleasant getting P-ed off, rather than getting P-ed ON!
The seller' s real estate agent is obliged to submit every single offer to the seller for a decision. That is, unless the seller gave explicit instructions to the agent to hold back any offers that do not meet certain specific criteria.
And if an agent still refuses to submit an offer you made, after a friendly reminder of what an agent’s duties are, you can bring your offer to purchase under the attention of the seller yourself. In such a case, you shouldn’t bargain on saving the agent’s commission, though. The payment of commission is a matter between the seller and the estate agent. Don’t go sticking your head in a hornet’s nest!
Get a grip on your contract of sale
In a property purchase agreement between an emptor and vendor, EVERYTHING is negotiable! So, my dearest prospective homebuyer, read your sales contract very, very thoroughly and make sure that it says what you want it to say.
In virtually every instance, there will be no turning back later...
