Whether you are selling property or buying it, the offer to purchase is the first step of the transaction. It serves as an agreement between Buyer and Seller, outlining the conditions under which the property will be sold. Let’s look at some of factors that should be included in the agreement:
1. Purchase Price
Of all the elements in the Offer of Purchase, the purchase price is one both the Buyer and Seller are most interested in. The Buyer of the property proposes an amount he or she would like to purchase the property for. The Seller then has a set period of time to accept, decline or make changes to this offer.
2. Accompanying Costs
When determining the purchase price, there are certain costs that need to be considered. Some of these include Agent commissions, compliance certificate fees and tax costs. The purchase price is also influenced by fittings and fixtures in the property.
If the Buyer wants to purchase the property with furniture, light fixtures and any other pieces of décor attached to surfaces, this may drive the price up. In some cases, the Buyer may opt to exclude these features to lower the price.
3. Conditions of Sale
The conditions of sale are terms that have to be met before the transaction can continue. One of the most common conditions is for the Buyer to secure a loan from the bank. Another condition that needs to be negotiated is whether the Buyer will purchase the property with its defects (voetstoots) or after the Seller has made repairs.
There are a few other conditions of sale that can be included in the Offer of Purchase. It depends on the type, size and condition of the property. It is best to consult an Estate Agent to ensure all the necessary aspects are covered in the agreement.
4. Deposits
In South Africa, putting down a deposit is optional. It is recommended if a Buyer wants to show they are committed to purchasing the property. It is also beneficial because the Buyer will receive a better interest rate if he or she is willing to put down a large sum.
The deposit should not be given to the Seller directly. It is good practice to hold the funds in a trust account and release it when ownership is transferred.
5. Occupation Date and Rent
One other important detail in the Offer of Purchase is the date of occupation. Both parties need to agree when the Seller will vacate the premises. Should the Seller occupy the property after it has been sold, he or she would need to pay occupational rent to the Buyer. If the Buyer moves in before the sale, he or she will pay rent to the Seller until after the transaction is complete.