Buying a new house is an exciting undertaking. But, after finding the dream home and submitting the Offer To Purchase (OTP), it becomes somewhat of a waiting game to see if the seller will accept the offer.
Adrian Goslett, regional director and CEO of RE/MAX of Southern Africa, explains that knowing how long an offer remains valid can remove some uncertainty.
“The deadline date for the seller to accept the offer is stipulated in the OTP agreement. But, once this date has expired, should the seller not sign the agreement in time, the OTP will become null and void.”
It does, however, sometimes happen that no date is stipulated on the offer. In this case, Goslett explains the OTP will be valid for what is termed a ‘reasonable period’.
“It is best to avoid this situation by stipulating a due date because it can become a drawn-out situation that can make things uncomfortable,” he says.
Goslett adds that there are other ways for an OTP to expire or lapse. “For example, if a buyer has placed the offer pending a few suspensive conditions, the seller will sometimes accept the OTP but will add the ‘72 hour clause’ in the agreement. This means that the seller can continue marketing the house and if they receive a better offer, the buyer will have 72 hours to complete the purchase of the property. If they fail to finalise the sale, the OTP becomes null and void and the seller is allowed to accept the other offer.”
Another way for an OTP to become invalid is if the seller rejects the offer, or if either the seller or the buyer dies before the offer is accepted. That is why Goslett advises buyers to be sure of a home before signing the agreement.
“This is a legally binding document, so buyers cannot change their mind and get out of the deal without incurring any repercussions,” he warns.
It is also important that buyers have their finances in order before signing the offer because once the seller accepts the OTP, the buyer will be held liable for the necessary funds to go through on that offer. “Make sure that you have funds upfront to cover some of the immediate costs, such as the lawyers’ fees for transfer registration, bond registrations and more. Sometimes some of these expenses could be covered by the bond after being paid out, but not always. Speak to your lender or a bond originator to find out what costs will need to be paid upfront.”
Purchasing a home can be an exciting endeavour, but it can also be overwhelming for those who do not know what to expect and do not have the help and guidance of a reliable property professional at their side.
“To help you avoid some of the common pitfalls of purchasing a home, involve your local RE/MAX real estate professional who can help guide you through the process,” Goslett concludes.
For real estate advice or to get in touch with a real estate professional, visit www.remax.co.za.
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