Securing your dream property depends on getting your offer to purchase accepted. Ideally, the seller would be looking for a good price, and the best possible deal while you may want to also secure a good deal for yourself.
READ: Do this before you put in an offer to purchase your dream home
The first thing to know, says Tiaan Pretorius, manager for Seeff Centurion, is that an offer to purchase is legally binding. Prospective buyers must therefore ensure they know what they are getting into, that they are credit-ready and can afford the purchase price, both in terms of the ability to secure a home loan and get a deposit and the transaction costs together.
Buyers must also ensure they are able to meet the conditions of the offer because he says, you cannot just back out of the agreement if you think you made a mistake as there are legal implications. A “cooling-off” period only applies to purchases below R250,000 which allows the buyer to withdraw within 5 business days without a penalty.
A well-crafted offer will demonstrate that you are serious, and appeal to the seller. Michelle Vermeulen, licensee for Seeff Berea and Durban North says the buyer should take guidance from the agent in terms of what the seller is ultimately looking for. Buyers should not overstretch themselves either.
Elaine Vandayar, licensee for Seeff Richards Bay says a home loan pre-qualification is a vital first step so that you know what you can afford, and have some level of surety that you can secure a home loan. You also must ensure you have the means to fund a deposit if required, as well as the costs to get the property transferred into your name.
READ: First-time homebuyers' fears - how to overcome them
Agents from the Seeff 博鱼体育娱乐平台 Group provides a few vital pointers pertaining to offers to purchase:
#1 - You can only put one offer to purchase in at a time. It is legally binding, so be sure that you can meet the conditions.
#2 - Offer a competitive price for the property if you are a serious buyer, or you may risk losing out to another buyer.
#3 - Research the area and current prices before you start your house hunting to avoid disappointment.
#4 - Use online property portals or agency websites to shortlist a few properties which fit with your price range before you start viewing.
#5 - Always get a home loan prequalification done so that you are empowered with the knowledge of how much you can buy for.
#6 - Pay a deposit as extra security. While the current bank deposit requirements average at around 10% of the purchase price, it will depend on the bank and property itself.
#7 - Present a serious offer with minimal conditions to entice the seller to accept, and to avoid disappointment and misunderstandings.
#8 - Keep contingencies to a minimum by avoiding unnecessary requirements as these may be off putting to the seller.
#9 - Know that you are realistically able to afford and be responsive and quick with a counter-offer if needed to avoid disappointment.
#10 - Ensure your paperwork is in order, including all the necessary bank and FICA requirements, so that the deal can move forward quite quickly.
Important, says Samuel Seeff, chairman of the Seeff 博鱼体育娱乐平台 Group, buyers must always work with a reputable local agent as a safeguard. An agent with a track record can guide you through the offer process, provide valuable advice, present your offer effectively to the seller, and help you along the way to finally take possession of your dream home.
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And while it might be tempting to accept the offer with the highest monetary value, it is essential to assess each of the offers based on its own merits, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, who featured in an article in 2020 about how to decide between one or more offers to purchase.
“At first glance, it would seem that the offer with the highest rand figure would be a natural choice. However, it is best to read through each of the offers carefully, paying specific attention to the clauses in each. This is where working with a trusted real estate agent will be beneficial, as the agent will be able to guide the seller through the process of selecting the right offer to purchase,” he advises.
While the highest value offer is the ultimate goal, other elements will have an impact on the transaction and should be considered before making a final decision. When considering each of the offers, Goslett recommends considering three aspects that will help in the decision-making process.
These include the suspensive conditions of the offer, the financing of the deal, as well as the date of occupation.
Suspensive conditions
“The majority of offers that a seller will receive will be subject to certain conditions transpiring first, such as the sale of the buyer’s previous home. While it is not very common to find an offer that is entirely void of conditions, sellers should keep in mind that their home will be off the market while the terms and conditions of the offer are waiting to be met. The offer with fewer conditions presents less risk of the sale falling through and is likely to reduce the time a seller’s home is off the market without the sale having been finalised,” Goslett cautions.
Financing of the Deal - check for pre-approval
When it comes to financing the home, Goslett explains that unless the buyers present a cash offer, sellers should ask whether they have a deposit saved and whether they are prequalified for home finance. “A deposit is an excellent indication that the buyer is in a financial position to purchase a home and are serious about the offer. This deposit will also greatly increase a buyer’s chances of bond approval. Beyond asking whether the buyer has a deposit saved, sellers should check if the buyer has pre-approval for a home loan, as this is the most reliable way to prove that the buyer will be able to access the funds when it comes time to purchase the home,” he says.
Because a cash buyer will not be reliant on the bank for bond approval before they can go ahead with the purchase, Goslett adds that a cash offer makes the transaction far less complicated. Banks are also far more willing to grant finance to a buyer that requires less than 80% of the purchase price of the property.
“When checking the financial credentials of the offer, ask whether the buyer needs a third party to sign surety on their behalf. Although it is normally not an issue, it does increase the chances of problems arising. You should also look at whether the buyer can provide proof from the bank that the funds are available to back up the offer,” Goslett advises.
READ | A complete step-by-step guide to buying your first home
Date of occupation
The last point of issue that sellers should consider is the date of occupation on each of the offers. “If the best offer on the table doesn’t quite meet your timeline, you can counter the occupation date. Ideally, the occupational date should coincide with the transfer date if possible, as this will avoid situations where the buyer takes occupation of the property before the transfer goes through. If the offer contains any suspensive conditions, do not allow occupation of the home until these conditions are met, and all documentation is signed by both you and the buyer at the conveyance attorney. Otherwise, you might have to go through a costly and time-consuming process of evicting the buyer if the sale falls through,” Goslett warns.
Once sellers have considered all these factors and are content to move forward, they can then consider the value of the offer. In some cases, Goslett says that a lower offer might be the right offer depending on the conditions presented.
“This is why working with a trusted real estate advisor is so helpful. Real estate agents can be a great sounding board for advice and can help sellers make informed choices when making the various decisions involved in selling their home,” he says.
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