In a contract of sale for immovable property, it's not all about the purchase price. All the terms of the contract are vital.
The sale of a piece of real estate involves a whole lot of different aspects. And it is very important that the little things are sorted out long before they get a chance to sour the whole experience for the parties involved in the transaction.
When you read the offer document, it is imperative that you pay close attention to the detail. A whole lot can go wrong for you if something gets left out, or added to the agreement, that does not reflect what you have in mind.
The "small" things in a sales contract may end up costing you a whole lot of money, or even sabotage your real estate purchase altogether, if not handled properly from the start.
How big a profit the seller will be able to pocket, or how much less the buyer will have to fork out, can be just as important as the date on which he/she will have to move in/out of the property. In fact, the "other terms and conditions", such as this, are quite often more important than the purchase price for the property!
The small things can give you an edge
Especially in a competitive situation, where you are competing against other sellers or buyers, the other party to the agreement is trying very hard to find reasons to accept an offer, but is probably looking just as hard for reasons to reject "bad" contracts.
The other party is looking for an agreement where they can walk away with as much of what they want as possible. And you will be trying to do the same, on your side of the negotiation table. You have to try and come up with a win-win situation for both parties, if you want the sale to go ahead.
Those "little items" may make the difference between your offer to buy or sell being accepted or rejected. Even if your offer competes well against the other options available to the other party, in terms of purchase price, the other terms may stop your offer dead in its tracks.
Some of the big little things
Here are some "small" items that may swing the other party's decision in either direction:
- Mortgage clauses - A mortgage contingency clause should not be up for negotiation, if the buyers need to obtain a mortgage in order to buy the property. But there are a whole lot of things that can be added to a mortgage clause to make it more attractive to either the buyer or the seller.
- Inspection clauses – There are various inspections that buyers can request, to make sure about the condition of the improvements to the property, but in a hot market, buyers may not have the luxury of being too demanding. Once again, either party can alter the inspection clauses to give the other party more of what they want, without compromising on price.
- Disclosures – In South Africa, the law does not require seller disclosures, but buyers can save themselves a lot of later heartache, by insisting on a full written disclosure about the property. Sellers could also offer to make a full disclosure as an incentive in the bargaining process. The disclosure document does not have to be part of the offer contract. It can be a separate document, which is stipulated as a requirement in the offer document.
- Fittings and fixtures clauses - This clause specifies what comes with the property. In common law, everything that is permanently attached to the property would be included in the sale. But if the sellers really want to take along a special light fitting (that was not replaced before the viewing), or even the satellite dish, this may be a golden opportunity for the buyers to bargain for price.
There are many other contract clauses that can also be worded in a way that benefits either party. So, make sure that you pay attention to the little things. Be smart and stipulate exactly what you need. But keep in mind that you need to give the other party some of what they need as well.
Get informed about contract clauses
Don't wait until the day before you actually have to sign a contract to sit down and read it over. Get to know the offer document in advance. Identify the clauses that are so essential to you that it is simply not negotiable. Also identify the clauses that could give your offer to buy or sell the edge over the other options the other party may have.
There' s no good reason for ignorance about what the contract says and what it may require of you. If you need advice, find a good buyer or seller's agent, or consult a good transferring attorney. These people work with contracts every day and will be able to clear up any questions you may have.
One last thing: Be prepared to take control of your emotions when it becomes contract time. Stay calm and keep the little things in mind!
