Determining the merits of a good Offer to Purchase
Real Estate Matters – By Laura-Jean & Allan
In trying to determine the merits of any offer to purchase presented to you, for the sale of your property, we would like to convey some thoughts which may assist you in making a decision whether to put your pen to paper. The key aspects being: knowing your purchaser, understanding the stipulations of the contract in front of you and attaining additional information to assist you in making your decision.
What constitutes a good offer?
The best offer that can be presented to you as a seller, and one which every agent strives for is a full cash offer, at your full asking price without any suspensive conditions. Unfortunately this is seldom the norm. You are more likely to be presented with an offer suggesting a deposit of a certain amount and the balance to be achieved via a bond grant from a financial institution. This could also be a very good offer but is prone to hiccups along the way. If your buyer has been pre-qualified, the chances of success are greater in them being granted a bond. Unfortunately, banks no longer guarantee a pre-qualified buyer a bond. Banks will only commit once an offer to purchase is on the table. The pre-qualification, whilst it is a useful tool, does not always guarantee success.
The devil is in the detail
As a seller it is paramount that you understand the consequences of the suspensive and/or resolutive conditions contained in your contract. An excessively long period of time given in a contract to obtain a bond effectively takes your property off the market for that time period. You cannot accept another offer until that time has lapsed. Anything in excess 45 days can be considered to be unusually long. Remember most contracts will contain a clause giving the agent permission to extend the bond application time by a certain number of days, without having to revert to the seller.
In our industry you may be presented with an offer which is subject to the sale of another property. In accepting such an offer there are things one can bear in mind. Contact the selling agent to determine how long the property has been on the market, if the property is correctly priced as well as the market’s reaction to the property. Get an indication from the sales agent as to what their opinion is in achieving a sale within the stipulated timeframe of your contract. If you take the time to inform yourself correctly before you sign such a contract, depending on the information you are given, such a condition could very well have a favourable outcome.
By following these simple guidelines you can avoid disappointment and wasting precious time. If you are at all concerned about the implications of signing a contract, you owe it to yourself to seek expert advice. A registered real estate agent or legal person will be able to assist you in this regard and give you peace of mind!