This is what happens after signing an offer to purchase

Article summary:

• The offer to purchase is a document signed by the buyer and seller that stipulates conditions that need to be met for the purchase to go ahead.
• Once the document is signed, the buyer applies for a home loan from the bank.
• Once the home loan is approved, the bond registration and transfer of property takes place.

The offer to purchase is a key step in the home buying process, but what happens once the buyer and seller have signed it?

The signing of the offer kicks off the home buying process, which will include some admin and additional expenses. We simplify the process here.

What is the offer to purchase?

A document signed by the seller and buyer to confirm the conditions of the property sale.

Offer to purchase conditions can include the need for a property inspection, or for the buyer to sell off their current property to obtain funding.

How long is a signed offer to purchase valid for in South Africa?

The buyer can stipulate the expiry date when signing the offer. Otherwise it will be deemed valid for what’s called a “reasonable period”, which is a vague term and thus should be avoided by stipulating an expiry date.

Can a buyer cancel an offer to purchase?

Yes, but doing so will be exremely costly. Various parties can claim damages from the buyer, including the seller.

However, the offer to purchase, by its nature, includes conditions that if unmet will allow the buyer to cancel the offer without cost.

Can a seller cancel an offer to purchase?

Like the buyer, the seller is bound by the agreement and will incur damages if they pull out.

However, some sellers do include the 72-hour clause, which means they can pull out of the deal if they receive a better offer, although they have to give the buyer 72 hours notice.

What happens after signing the offer to purchase: 4 Steps

1. The buyer applies for a home loan.
2. Bond registration.
3. Transfer of property.
4. Title Deed registration

1. The buyer applies for a home loan

If you’re buying a property and funding the purchase with a home loan, you apply once your offer has been accepted.

The bank assesses your credit record and determines whether to grant you a home loan.

Factors you need to take into account regarding the home loan:

• The bond term. How long you have to repay the bond. Usually a 20 or 30 year period.
• The monthly repayments. How much you pay into the bond each month.
• The interest rates. What you pay in addition to the monthly repayment. This can fluctuate depending on the market.

You can apply with a home loan comparison service such as ooba Home Loans. We submit your application to multiple banks, allowing you to compare deals and choose the most favourable package

2. Bond registration

The bank hires a bond attorney to cancel the seller’s bond, and register it in the name of the buyer. The buyer has to pay a bond registration fee, which is dependent on the value of the property.

If you’re a buyer, you can use our Transfer Cost Calculator to determine what you will have to pay for bond cancellation.

3. The transfer of property process

The seller hires the transfer attorney (also known as a conveyancing attorney), who will transfer the deed to the buyer’s name.

The buyer will have to pay for this process. The costs include the fees paid to the attorney, and transfer duty, a tax paid to SARS.

Properties valued at less than R1 000 000 are exempt from transfer duty.

If you’re a buyer, you can use our Transfer Cost Calculator to determine what you will have to pay for transfer of property and transfer duty.

4. Title Deed registration

Once the transfer attorney has completed the process, the title deed will be registered in the buyer’s name at the Deeds Office. The buyer now becomes the owner of the property.

The Title Deed registration process usually takes around  2 — 3 weeks. However, this can fluctuate depending on the process. If things go smoothly it may be done in 7 — 8 working days, but if there is a bottleneck it can take as long as two months.

The deed is kept by the bank until the bond is paid off, although copies can be requested at any time.

Get the best deal on your home loan

Once the offer to purchase is signed, the buyer applies for a home loan. As mentioned this is made easier with the help of a home loan comparison service.

We submit your application to multiple banks and allow you to compare deals.

We also offer a range of tools that can make the home buying process easier.  Start with our Bond Calculator, then use our Bond Indicator to determine what you can afford. Finally, when you’re ready, you can apply for a home loan.