Offer to purchase: Read this before you sign

Article summary

• An Offer to Purchase is a legally binding contract; once you sign it, you cannot withdraw without incurring penalties.
• As a prospective buyer, you should make sure your finances are in order and obtain bond pre-approval before making an offer.
• Whether buyer or seller, be aware of clauses such as the 72-hour clause.

You’ve found your dream home, and you want to make an offer and sign on the dotted line right there and then. But don’t rush in. The Offer to Purchase is a critical factor in home loan application Signing the Offer to Purchase carries important ramifications that you should be aware of.

Here’s our guide to the Offer to Purchase, so you can go in prepared.

Know this: The Offer to Purchase is a binding agreement

• Once you’ve signed it, you CANNOT get out of it without incurring significant penalties.
• Unless the buyer or seller fails to fulfil their obligations as stipulated in the agreement. Then you have leeway to withdraw.
• Another scenario that allows for withdrawal is if the offer is less than R250 000. However, the buyer has to provide a written notification within 5 days of signing.

Read the Offer to Purchase carefully

• You need to understand your obligations.
• You need to include terms and conditions that protect you.

You should seek advice on what you should include.

Examples of things the buyer should include:

• A requirement that the seller conduct a property inspection and fix patent defects.

Examples of things a seller should include:

• A deadline date for the buyer to fulfil their obligations. You want to be able to seek alternative buyers if the current buyer drags their heels.

Ensure that

• The description of the property is correct.
• Your details are correct.
• The agreed-upon price is correct.

For buyers: Make sure you want the property

• Do a final check of the property before going ahead. This is your last chance to ensure that it meets all your requirements.
• You could ask neighbours about the location, such as how quiet it is, how safe it is, and whether it’s easy to get to business centres, hospitals etc

For buyers: Make sure you can afford the property

• You DO NOT want to commit to the deal and then find that you can’t afford to repay the bond.
• Make sure your finances are in order and that you’ve budgeted accordingly.

For buyers: Be aware of the 72-hour clause

This clause allows the seller to continue marketing the property. If they receive a better offer, they have to give you 72 hours’ notice before they can accept it. If you fulfil your obligations within those 72 hours, the seller can’t accept the other offer.

Most sellers will refuse to remove this clause.

Applying for a home loan

Once the Offer to Purchase is signed, the next step is to apply for a home loan.

We can help you obtain the best deal on your home loan by submitting your application to multiple banks. You will be able to compare the deals offered by the banks and choose the one best suited to your requirements.

So once the Offer to Purchase is signed, apply for a home loan with ooba Home Loans to get the best deal.