OFFER TO PURCHASE – What you need to know!
Before we start looking into some of the pitfalls of the Offer to Purchase (OTP), I need to mention that the Estate Agent gets employed by the Seller and although we need to deliver exceptional service to both the Seller and Buyer, we are obligated to have the Seller’s best interest at heart.
The 72- hour clause: This is a very important clause to have in all OTP’s, as this protects the Seller, and is unfortunately not very popular with the Buyers.
The meaning of this clause: This clause states that the Seller may accept a second offer while waiting on any suspensive conditions of the first offer. Once the second offer becomes unconditional, the first offer can be placed on terms. – Buyer 1 will then have 72 hours to fulfil all the suspensive conditions in his agreement. Failing to do so, the OTP of Buyer 2 will become final.
We often get Buyers who would like to purchase a property and apply for a 100% bond and then fail to see the reason behind this clause. If your agent takes out this clause, it means the agent needs to suspend the marketing of the property while the bond application takes place, which could take up to four weeks. If the bond application is unsuccessful, the agent then needs to start all over, causing unnecessary delays in the selling process, and a frustration to the sellers as most sellers would like to sell their property in the shortest possible time.
The other important clause to understand is the VOETSTOOTS clause. This means you are buying the property as is and neither the Seller nor the Agent will be liable for any defects, patent (obvious flaws) or latent (hidden/undisclosed) flaws. Having said that, the agent should present the Buyer with a disclosure form completed by the Seller, which discloses any defects he/she is aware of. This disclosure form does not mean the Seller will fix the defects; the purpose of this form is just to disclose any defects that the Seller is aware of. My advice to any Buyer will be to get professional trades people to do a proper inspection of the property under suspicion of hidden defects, before signing the OTP. This might be worth your while if you are buying a house with a gunite swimming pool that has been covered for a year and has a low water levels. Please remember, your agent is not a qualified electrician, plumber or structural engineer. The agent’s knowledge will most likely be to the extent of what the seller disclosed to him/her.
I hope you found this newsletter informative.