Everything you need to know about an offer to purchase
Category Advice
Purchasing a property is an exciting journey, and it would be even better if making the purchase was as simple as signing your name on a dotted line. However, to protect both buyer and seller, there are certain procedures in place. One of these is a document called the offer to purchase. An offer to purchase comes into play once a buyer has expressed interest in purchasing a property, and makes things more "official". Interested in learning more about it? Here are five things you should know about an offer to purchase:
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An offer to purchase (OTP) is legally binding
An OTP is a legally binding document that is signed by both buyer and seller. It outlines all the details of the sale, including the state of the property, the purchasing price, the occupation date, etc. Since it is a legally binding document, it is crucial to go through it in detail before you sign it.
"Having a trusted property advisor is especially important when it comes to signing legally binding documents like an OTP", says Silvana Dos Reis Marques, Franchisee Leapfrog Pretoria East and Irene. "You will want to speak to an advisor that can explain any unclear terms to you, and ensure that you are comfortable with all the information put forward in the document."
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Keep an eye out for the 72-hour clause
If you are the buyer, check to see if the 72-hour clause is included in your OTP. This clause is often included and gives the seller time to accept an offer from a different buyer. You will then have the opportunity to make a counteroffer if you are in a financial position to do so.
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You apply for your home loan after the offer to purchase is accepted
Once you and the seller have agreed upon the terms in the OTP and it is signed, you may then apply for your home loan. As mentioned previously, once you submit your signed OTP, there are still 72 hours for the seller to accept new offers. It's important to wait until this period has concluded before taking any further steps.
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You might want to request a home inspection before signing the OTP
It is very important to be aware of any damages or repairs that need to be made to the property. The seller is legally obligated to list any and all defects in the offer to purchase, but it is still important to inspect the home yourself (or with a trusted property advisor) before you sign the document. Make sure to check for any plumbing or electrical issues, rotting wood, wall damages, etc. Whenever possible, have a professional with you if you need any advice on reporting additional defects.
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Make sure all the details add up
When reading through legal documents, we can become so focused on the big details that we may let little things slide. Take your time to go through every little detail on the OTP, including correct names of both the seller and the buyer, and that the purchase price is exactly as agreed. You should also make sure that the property description matches what is presented on the title deed, and that you are comfortable with the occupation date. Last but not least, confirm that all the fixtures in the home are listed.
Author: Leapfrog Property Group
