Property sale agreements: Everything you need to know

Article summary

• The sales agreement is also known as the offer to purchase.
• It stipulates the conditions that need to be fulfilled (by buyer and seller) for a property sale to go ahead.
• The sales agreement is binding, and withdrawing incurs severe penalties, unless one of the parties has failed to fulfill a condition of the agreement.

The sales agreement needs to be signed before you can apply for a home loan. Find out what you need to know here.

What is a property sale agreement?

The property sale agreement is also known as an offer to purchase.

It is an agreement between the buyer and seller of a property that stipulates the conditions that need to be fulfilled for the sale to go ahead.

If you’re a buyer, you need to make an offer to purchase on a property in order to make your interest official.

Once the offer to purchase / sales agreement is signed by the seller, the buyer can proceed with the rest of the home buying process, such as applying for a home loan.

What does the property sale agreement contain?

• Details of the buyer, such as their name, identity number, marital status, address, and so on.
• Details of the property, such as its size.
• Conditions that need to be fulfilled for the sale to go ahead.

What conditions should a sale agreement contain?

The sale agreement is an important opportunity for the buyer to protect themselves.

Two common conditions for the home buyer to include:

• The sale cannot go ahead until the buyer has obtained a home loan.
• The sale cannot go ahead until the buyer has sold their existing property.

These conditions ensure the buyer will have the money available to go ahead with the purchase. This benefits the seller as well, as they know they can pull out of the deal if the buyer does not acquire the necessary funds.

The requirement for the seller to perform a property inspection

Another important condition the buyer should include.

The seller has no obligation to fix defects in the home but the buyer can insist they do so before the sale goes ahead. In order to do this, the buyer needs to know what defects there are. A property inspection can reveal patent defects.

Latent defects may not be revealed by an inspection. Unfortunately the buyer will have to resolve such issues themselves when they become evident, unless they can prove the seller hid the defect.

Can you pull out of a sales agreement?

The sales agreement is a binding document. Neither buyer nor seller can pull out without incurring severe penalties.

Of course, if a condition stipulated in the agreement is not fulfilled, the party that inserted that condition can withdraw without penalties.

Buyers need to know about the 72-hour clause

This clause will usually be included in the sales agreement. It gives the seller permission to continue marketing the property. If they receive a better offer, they can accept it but only after giving the buyer 72 hours notice.

Most sellers will not agree to remove this clause.

The next step: the home loan

Once the seller and buyer has signed the sales agreement, the buyer can begin the process of applying for a home loan.

Applying with a home loan comparison service such as ooba Home Loans will get you the best deal on your home loan. We submit your application to multiple banks, allowing you to compare the packages they offer and choose the most favourable option.

It’s a way to improve your chances of home loan approval, and secure low interest rates.

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.