After years of saving every last cent, and another couple of months spent searching through some of the most dreadful properties in the market, you have finally found your dream home. Now what?
Making an offer to purchase a property can seem daunting, especially if no real estate agent is involved. Skilful negotiation of the purchase agreement aside, there are a few basic rules about making an offer that you should know about.
Firstly, no contract for the sale of immovable property is valid, unless it is in writing. It doesn't matter what the parties agree - if it is not in writing, it does not count.
There is no such thing as an oral contract to buy or sell a property. So, buyers and sellers must reduce the terms of their agreement to a written contract of sale.
Secondly, the offer you are making should reflect what you are willing to commit to.
Most of the real estate sales agreements used in South Africa are the fill-in-the-blank "offer to purchase" document type most real estate agents use. These offer to purchase documents may incorporate several addendum pages (also called annexures) to reflect additions and amendments to the basic agreement.
Shaping a "basic" or "standard" offer to purchase document to reflect the actual agreement between buyer and seller can be quite a task. It may involve much more than simply filling in the blanks. But buyers and sellers should not be afraid of adding some clauses, modifying others and even scrapping some of those "standard" clauses completely.
Your mission is to get to a written offer to purchase the property that reflects what you are willing to agree to.
Important items that should be covered when making an offer to purchase include the purchase price, the financing terms the buyer seeks, inspections the buyer deems important, who appoints the transferring attorney, any seller contributions toward transfer costs and transfer duty, the dates of possession and occupation by the buyer etc. and any personal property or fixtures associated with the property which are included in the purchase. These are only of the few of the conditions that are addressed in the typical purchase contract. But practically ANYTHING can be written into an offer to purchase.
Thirdly, no contract of sale for immovable property is valid and binding, unless both parties sign it. So, unless the seller agrees and signs your offer, you don't have a contract of sale.
But as soon as the seller puts hand to paper and signs your offer to purchase the property, the offer "magically" transforms into a binding contract of sale. And this is why you have to be sure to get your offer right, right off the bat, when making your first offer to buy a house.
Fact number four: The seller does not have to accept your offer, even if it is for the full asking price.
Neither party has any legal obligation to buy or sell the property until both parties have executed (signed) a written contract of sale, even though they may have verbally agreed to an offer.
The seller has to make sure that ALL the terms and conditions in the offer you make are acceptable. Stuff that you don't think is important might be very important to the seller.
Trying to put yourself in the seller's shoes can help you to predict what the seller might want included in the offer to purchase document. A good guess, which leaves little for the seller to object to, can go a long way when making an offer to purchase.
In the end, the seller will make one of three choices. He will reject, accept or counter the offer you make.
If he rejects your offer, the seller doesn't have to do anything. But a good, kind seller will at least let you know that your offer was rejected.
To accept your offer, the seller simply has to sign the offer to purchase document. The offer document then becomes a binding contract of sale.
To "counter" your offer, the seller can either draw up a totally new offer document, entitled "offer to sell". But if the seller signs your offer to purchase the property after making an amendment or amendments, by adding something, changing something or deleting something, that constitutes a counter-offer as well.
Fact number five: A counter-offer effectively rejects any previous offers.
When the buyer or seller counters an offer, they are rejecting the offer from the other party and making a new offer. So, making a counter-offer takes any previous offer off the table. A person cannot decide to accept an "old" offer later, after making a counter-offer of his/her own.
This means that you have to make very sure that the offer in front of you is not acceptable, before making a counter-offer. There is no guarantee that the other party will accept your counter offer, or even make the same offer again later.
Fact number six: As soon as both parties sign the offer, you have to take care of your end of the bargain.
The buyer should formally apply for a mortgage loan if it is not a cash (and it usually isn't). This may require some documents to be signed and some others to be provided to the lender. Do it!
You have to take care of all the obligations placed on you by the contract of sale, or you might face legal procedures or any other penalties written into the contract. It is too late to change your mind now (in most cases).
The process of buying your dream property costs money. So, make sure that you have enough cash available BEFORE making an offer to purchase.
Making an offer to buy a property is not brain surgery, but if you go about it like a total buffoon, you are not going to get anywhere. You may even lose a lot of money!
Making an offer is one of those things in life a person should do his/her utmost to get right the first time around.
