Finding the right home is only one step in the process to becoming a homeowner. Once you have narrowed down the search and found the home that meets your criteria, the next step is to put pen to paper and make an offer to purchase. While some may find this a rather overwhelming undertaking, following a few simple guidelines will make it a far less daunting experience.
An offer to purchase (OTP) is essentially an agreement that lays out the terms and conditions of the property transaction between the buyer and seller. As with any contract, an OTP serves to protect the parties involved in the transaction and ensure that nothing is left to interpretation. If there is any ambiguity it could lead to a misunderstanding or conflict, so is best to be avoided. The document must cover all the agreed upon terms, which should include issues such as the date of occupation, occupational rent, fixtures and fittings and the conditions of sale. Once the OTP has been concluded and signed by each party, it becomes the deed of sale on the property.
The OTP should be as detailed and as specific as possible. While it may seem tedious, making the agreement as detailed as possible will provide protection to both parties. If every detail of the transaction is covered within the document, there will be little or no chance of either party negating on the agreed upon terms at a later stage.
Both parties must be in agreement as to what items are included in the sale of the property and what aren’t. As a general rule of thumb, any fixtures or fittings that have been attached to the property (nailed, bolted, glued or screwed down) will stay.
It is fairly common in today’s market to submit an offer while currently owning another property. It is also common practice to include a condition which states that you have submitted the offer subject to bond approval. In these situations, the OTP will include a suspensive condition.
A suspensive condition will normally include an agreed upon time limit. Once the suspensive condition has been fulfilled, the real estate agent should be notified so that the OTP can be made unconditional. This step is vital because the contract could become null and void and the whole transaction could fall through if the requirements are not met within the allotted time.
An essential inclusion in any agreement is the date of occupation, which stipulates the date on which the seller will vacate the property, and you will take occupation. Apart from the fact that it will provide a clear date to work around regarding moving, it will also determine whether either party may need to pay occupational rent. You will be required to pay occupational rent to the seller if you move into the property before it is registered in your name. Conversely, occupational rent is paid to you as the news owner, should the seller not be out by the time the transfer of ownership has occurred. The rental amount should be market-related and can be agreed on by both parties with the help of an agent.
Once signed by you and the seller it is contractually binding, so it is imperative you are fully satisfied before putting pen to paper. If there is any clause that needs clarification, ask your agent for an explanation or obtain a professional opinion from a lawyer.
An offer to purchase is a vital part of a property transaction, and if used correctly, it will make the process of buying a home as easy and transparent as possible, assisting you and the seller to avoid any misunderstandings.