AN OFFER TO PURCHASE/AGREEMENT OF SALE EXPLAINED
An offer to purchase (OTP) is the document governing the sale agreement of a property between the buyer and seller. It is a legally binding contract, so it is important to take your time and complete it accurately.
What's the difference?
An Offer to Purchase is exactly that - an offer from a buyer to a seller and not yet signed or "agreed upon" by the seller. Once the seller has accepted the offer, it is legally binding and becomes an "Agreement of Sale", also known as the Deed of Sale.
Signing an OTP
Step 1. Get your finances in order
Do a bit of research into the sales prices of similar properties in the area and ensure that you have set aside the funds you require for your deposit, transfer and bond registration costs. Obtain a bond pre-approval in the price range that you’re looking at when you’ve decided that you are ready to make an offer.
Step 2. Declare your offer
Let the seller or estate agent know you are interested in making an offer and be encouraged to go below the asking price.
Step 3. Complete the Paperwork
As previously mentioned, an Offer to Purchase is a legally binding agreement, so it is of utmost importance that you have read through it thoroughly. a comprehensive list of defects (both latent and patent), should be provided, and included in the OTP.
What to look for in an OTP
It's essential that you read the OTP with attention. Don't hesitate to ask if you're unsure about something. If you don't clarify at this stage, you could regret it later. Important aspects to look out for, include:
Are the buyer's and seller's details correct?
Is the property description correct, and does it match that of the title deed?
Is the purchase price accurate?
Are the occupation date and occupational rent amount in order?
Are there any special conditions, e.g. securing a bond, or selling another property?
Are the fixtures and fittings set out clearly in terms of which ones are staying or going?
Has a list of defects been included?
Once you have thoroughly gone through the Offer to Purchase and both the Buyer and Seller are happy with all the minor details, you will be informed whether or not the offer has been accepted, and thereafter you can apply for your home loan.
What if I change my mind after signing an OTP?
Should you decide, for whatever reason, not to go through with your OTP, this could unfortunately be an expensive change of mind. If the seller signs your OTP, the sale agreement is in effect legally binding. If you do not fulfil your share, there could be serious financial implications. For example, you could forfeit your deposit, if you paid one, or be held responsible for the estate agent's commission, if such a fee was part of the deal. That's why you must understand the terms and conditions of the OTP before signing. Saying you didn't know what you were committing to will not stand up to legal scrutiny.
Despite these words of caution, don't let an OTP fill you with fear or dread - just do your homework. This is an exciting part of buying property. You're taking the next big step on your journey to owning a home!
READY TO MAKE THAT MOVE?
click here or on this banner to get in touch
What's the difference?
An Offer to Purchase is exactly that - an offer from a buyer to a seller and not yet signed or "agreed upon" by the seller. Once the seller has accepted the offer, it is legally binding and becomes an "Agreement of Sale", also known as the Deed of Sale.
Signing an OTP
Step 1. Get your finances in order
Do a bit of research into the sales prices of similar properties in the area and ensure that you have set aside the funds you require for your deposit, transfer and bond registration costs. Obtain a bond pre-approval in the price range that you’re looking at when you’ve decided that you are ready to make an offer.
Step 2. Declare your offer
Let the seller or estate agent know you are interested in making an offer and be encouraged to go below the asking price.
Step 3. Complete the Paperwork
As previously mentioned, an Offer to Purchase is a legally binding agreement, so it is of utmost importance that you have read through it thoroughly. a comprehensive list of defects (both latent and patent), should be provided, and included in the OTP.
What to look for in an OTP
It's essential that you read the OTP with attention. Don't hesitate to ask if you're unsure about something. If you don't clarify at this stage, you could regret it later. Important aspects to look out for, include:
Are the buyer's and seller's details correct?
Is the property description correct, and does it match that of the title deed?
Is the purchase price accurate?
Are the occupation date and occupational rent amount in order?
Are there any special conditions, e.g. securing a bond, or selling another property?
Are the fixtures and fittings set out clearly in terms of which ones are staying or going?
Has a list of defects been included?
Once you have thoroughly gone through the Offer to Purchase and both the Buyer and Seller are happy with all the minor details, you will be informed whether or not the offer has been accepted, and thereafter you can apply for your home loan.
What if I change my mind after signing an OTP?
Should you decide, for whatever reason, not to go through with your OTP, this could unfortunately be an expensive change of mind. If the seller signs your OTP, the sale agreement is in effect legally binding. If you do not fulfil your share, there could be serious financial implications. For example, you could forfeit your deposit, if you paid one, or be held responsible for the estate agent's commission, if such a fee was part of the deal. That's why you must understand the terms and conditions of the OTP before signing. Saying you didn't know what you were committing to will not stand up to legal scrutiny.
Despite these words of caution, don't let an OTP fill you with fear or dread - just do your homework. This is an exciting part of buying property. You're taking the next big step on your journey to owning a home!
READY TO MAKE THAT MOVE?
click here or on this banner to get in touch
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