A written
proposal is the foundation of a real estate transaction. Oral promises are not
legally enforceable when it comes to the sale of real estate. Therefore, you
need to enter into a written contract, which starts with your written Offer to
Purchase. This proposal not only specifies price, but also all the terms and
conditions of the purchase. For example, if the seller offered to help with R2,000
toward your closing costs, make sure that's included in your written offer and
in the final completed contract, or you won't have grounds for collecting it
later. See the Legal Section for detailed information.
Reputable agents have standard purchase agreements and will help you put together a written, legally binding offer that reflects the price as well as terms and conditions that are right for you. International companies such as RE/MAX have drawn upon years of professional and legal experience in proving you the buyer with a solid contract – with no small print.
Make sure your agent guides you through the offer, counteroffer, negotiating and closing processes.
After the offer is drawn up and signed, it is presented to the seller by your real estate agent, by the seller's real estate agent, if that's a different agent, or often by the two together. In a few areas, sales contracts are drawn up by the parties' lawyers but this is not necessary at all.
PRIOR TO MAKING AN OFFER Top
You will want to inform your real estate agent what you like about the house and make a list of your likes and dislikes with the property. You can then get some final professional input on investment values etc. Remember though that the final choice is yours and you must choose a home you will be happy in.
There are three possibilities when making an offer :
Also, at this stage, try not to become emotionally attached to a home. Your offer may not be accepted for any number of reasons. Have backup homes in mind. Be prepared to negotiate through your agent with the sellers – this is what they do best.
FINDING THE RIGHT SELLER Top
The best seller is one who is highly motivated. A highly motivated seller is more likely to sell for less than his or her house is worth. And it matters that you find out why; learning the reason why can help you get the price you want and help the seller get what they want: a timely sale.
This is where you agent will be at work, delving and getting information, finding our as much as possible about the sellers and why they are selling. The reasons could be anything from job change to a new location to financial problems. If you can solve their problem, whether it is cash related or time related, do so. For example, if the sellers are highly motivated because they need to move quickly, give them a fast sale - and a lower price. If you can make an offer, even a low one, that gives them cash in a short time, they are more likely to accept.
There are also some sellers however that you should try and avoid. Not every seller is as genuinely motivated as they make themselves to be and are maybe just testing the market and are not even genuinely interested in selling. Your agent will recognise the delaying tactics and let you know very quickly.
NEGOTIATING TIPS Top
You're in a strong bargaining position, that is, you look particularly welcome to a seller, if:
This is why it’s very helpful to find out why the house is being sold and whether the seller is under pressure. Keep the following considerations in mind:
You may be tempted to make a very low offer in an attempt to grab a bargain but others may also be making offers and if these are higher you could miss out. If you really want the property make sure your offer is realistic and in line with current market value.
Even in a buyers market, every home has a minimum value, regardless of whether the owner is receiving offers or not. A too low offer simply makes the seller withdraw from the market and look to other financial alternatives – and you lose out on a wonderful home.
You have decided on a home, discussed it with you agent and agreed on a price and terms to offer – now GO GO GO! Do not hesitate but get your agent to submit the offer as quickly as possible.
BASICS OF AN OFFER Top
The purchase offer you submit, if accepted as it stands, will become a binding sales contract. So it's important that the purchase offer contains all the items that will serve as a "blueprint for the final sale." Please read the Legal Section if you want more detailed information
The purchase offer includes items such as:
If your offer says "this offer is contingent upon (or subject to) a certain event," you're saying that you will only go through with the purchase if that event occurs. Here are three common contingencies contained in a purchase offer:
You will have a binding contract if the seller, upon receiving your written offer, signs an acceptance just as it stands, unconditionally. The offer becomes a firm contract as soon as you are notified of acceptance. If the offer is rejected, that's that - the sellers could not later change their minds and hold you to it.
If the seller likes everything except the sale price, or the proposed closing date, or the basement pool table you want left with the property, you may receive a written counteroffer including the changes the seller prefers. You are then free to accept it, reject it or even make your own counteroffer. For example, "We accept the counteroffer with the higher price, except that we still insist on having the pool table."
Each time either party makes any change in the terms, the other side is free to accept, reject or counter again. The document becomes a binding contract only when one party finally signs an unconditional acceptance of the other side's proposal.
WITHDRAWING AN OFFER Top
Can you take back an offer? In some cases the answer is yes, right up until the moment it is accepted, or even if you haven't yet been notified of acceptance. Many offers though will clearly state that they are irrevocable until acceptance date has passed. If you do want to revoke your offer, be sure to do so in writing, to all parties. Maybe you will wish to consult a lawyer who is experienced in real estate matters before doing this. You don't want to lose your deposit or find yourself being sued for damages the seller may have suffered by relying on your actions.
In South Africa, under the Alienation of Land Act of 1981, buyers of properties under R250,000 have five working days as a cooling off period in which they can withdraw from the sale.
ONCE AGREEMENT IS REACHED Top
If you and the seller have agreed to terms and both signed, you have a legal contract and your dream home is about to become yours!
The red tape machinery now kicks into gear and your agent, lawyers and other parties begin to make sure everything is processed according to plan. Remember that there are also obligations on you, such as providing certain documents, a deposit etc.
Reputable agents have standard purchase agreements and will help you put together a written, legally binding offer that reflects the price as well as terms and conditions that are right for you. International companies such as RE/MAX have drawn upon years of professional and legal experience in proving you the buyer with a solid contract – with no small print.
Make sure your agent guides you through the offer, counteroffer, negotiating and closing processes.
After the offer is drawn up and signed, it is presented to the seller by your real estate agent, by the seller's real estate agent, if that's a different agent, or often by the two together. In a few areas, sales contracts are drawn up by the parties' lawyers but this is not necessary at all.
PRIOR TO MAKING AN OFFER Top
You will want to inform your real estate agent what you like about the house and make a list of your likes and dislikes with the property. You can then get some final professional input on investment values etc. Remember though that the final choice is yours and you must choose a home you will be happy in.
There are three possibilities when making an offer :
- accept the seller's asking price and have your agent write up the contract,
- reject the seller's asking price and have your agent make a different offer,
- or agree to different terms and have your agent write an offer. This is all a part of the negotiation process.
Also, at this stage, try not to become emotionally attached to a home. Your offer may not be accepted for any number of reasons. Have backup homes in mind. Be prepared to negotiate through your agent with the sellers – this is what they do best.
FINDING THE RIGHT SELLER Top
The best seller is one who is highly motivated. A highly motivated seller is more likely to sell for less than his or her house is worth. And it matters that you find out why; learning the reason why can help you get the price you want and help the seller get what they want: a timely sale.
This is where you agent will be at work, delving and getting information, finding our as much as possible about the sellers and why they are selling. The reasons could be anything from job change to a new location to financial problems. If you can solve their problem, whether it is cash related or time related, do so. For example, if the sellers are highly motivated because they need to move quickly, give them a fast sale - and a lower price. If you can make an offer, even a low one, that gives them cash in a short time, they are more likely to accept.
There are also some sellers however that you should try and avoid. Not every seller is as genuinely motivated as they make themselves to be and are maybe just testing the market and are not even genuinely interested in selling. Your agent will recognise the delaying tactics and let you know very quickly.
NEGOTIATING TIPS Top
You're in a strong bargaining position, that is, you look particularly welcome to a seller, if:
- you're an all-cash buyer
- you're already have a preapproved mortgage and you don't have a present house that has to be sold before you can afford to buy
- you’re able to close and take possession at a time that is especially convenient for the seller
This is why it’s very helpful to find out why the house is being sold and whether the seller is under pressure. Keep the following considerations in mind:
- every month a vacant house remains unsold represents considerable extra expense for the seller
- if the sellers are divorcing, they may want to sell quickly
You may be tempted to make a very low offer in an attempt to grab a bargain but others may also be making offers and if these are higher you could miss out. If you really want the property make sure your offer is realistic and in line with current market value.
Even in a buyers market, every home has a minimum value, regardless of whether the owner is receiving offers or not. A too low offer simply makes the seller withdraw from the market and look to other financial alternatives – and you lose out on a wonderful home.
You have decided on a home, discussed it with you agent and agreed on a price and terms to offer – now GO GO GO! Do not hesitate but get your agent to submit the offer as quickly as possible.
BASICS OF AN OFFER Top
The purchase offer you submit, if accepted as it stands, will become a binding sales contract. So it's important that the purchase offer contains all the items that will serve as a "blueprint for the final sale." Please read the Legal Section if you want more detailed information
The purchase offer includes items such as:
- address and the legal description of the property
- sale price
- terms: for example, all cash or subject to you obtaining a bond for a given amount
- seller's promise to provide clear title (ownership)
- target date for closing (the actual sale)
- amount of the deposit accompanying the offer, whether it's a cheque, cash or promissory note, and how it's to be returned to you if the offer is rejected - or kept as damages if you later back out for no good reason
- method by which real estate taxes, rents, fuel, water bills and utilities payments are to be adjusted (prorated) between buyer and seller
- provisions about who will pay for any surveying, borer beetle inspections, etc.
- disclosure of specific environmental hazards or other known defects
- a provision that the buyer may make a last-minute walkthrough inspection of the property just before the closing
- a time limit (preferably short) after which the offer will expire
- contingencies, which are an extremely important matter and that are discussed in detail below
If your offer says "this offer is contingent upon (or subject to) a certain event," you're saying that you will only go through with the purchase if that event occurs. Here are three common contingencies contained in a purchase offer:
- The buyer obtaining specific financing from a lending institution: If the loan can't be found, the buyer won't be bound by the contract.
- A satisfactory report by a home inspector: for example, "within 10 days after acceptance of the offer." The seller must wait 10 days to see if the inspector submits a report that satisfies the buyer. If not, the contract would become void. Again, make sure that all the details are explicitly stated in the written contract.
- The buyer successfully selling their own home first and by a certain date.
You will have a binding contract if the seller, upon receiving your written offer, signs an acceptance just as it stands, unconditionally. The offer becomes a firm contract as soon as you are notified of acceptance. If the offer is rejected, that's that - the sellers could not later change their minds and hold you to it.
If the seller likes everything except the sale price, or the proposed closing date, or the basement pool table you want left with the property, you may receive a written counteroffer including the changes the seller prefers. You are then free to accept it, reject it or even make your own counteroffer. For example, "We accept the counteroffer with the higher price, except that we still insist on having the pool table."
Each time either party makes any change in the terms, the other side is free to accept, reject or counter again. The document becomes a binding contract only when one party finally signs an unconditional acceptance of the other side's proposal.
WITHDRAWING AN OFFER Top
Can you take back an offer? In some cases the answer is yes, right up until the moment it is accepted, or even if you haven't yet been notified of acceptance. Many offers though will clearly state that they are irrevocable until acceptance date has passed. If you do want to revoke your offer, be sure to do so in writing, to all parties. Maybe you will wish to consult a lawyer who is experienced in real estate matters before doing this. You don't want to lose your deposit or find yourself being sued for damages the seller may have suffered by relying on your actions.
In South Africa, under the Alienation of Land Act of 1981, buyers of properties under R250,000 have five working days as a cooling off period in which they can withdraw from the sale.
ONCE AGREEMENT IS REACHED Top
If you and the seller have agreed to terms and both signed, you have a legal contract and your dream home is about to become yours!
The red tape machinery now kicks into gear and your agent, lawyers and other parties begin to make sure everything is processed according to plan. Remember that there are also obligations on you, such as providing certain documents, a deposit etc.
