IS THERE A DIFFERENCE BETWEEN OFFERS?
It is not uncommon for sellers to receive more than one Offer to Purchase (OTP) on their property at a time, especially if the home is situated in a sought-after area. While it might be tempting to accept the highest offer, this isn’t always the best offer, and it is important to look at all offers in their own merits, paying particular attention to the clauses of each contract.
A real estate agent will be able to provide some valuable insight when going through each offer to determine which one is the most beneficial. In terms of the mandate given to the agent, the agent must act in the best interest of the homeowner to ensure that the optimum outcome is achieved during the property transaction. The highest value offer might seem as though it is the obvious choice from the outset and achieving the highest possible sales price is ultimately the end goal. However, there are other aspects that need to be considered before making a final decision.
When reviewing each OTP, there are a few critical elements that you should pay particular attention to, as this will help them to differentiate between the various offers. Here are a few basic points to consider:
Is the offer conditional?
The majority of offers in today’s market are subject to certain suspensive conditions that need to be satisfied before the transaction can come to fruition. These could include the buyer first having to sell their current home before they can purchase your property. While not entirely out of the ordinary for an OTP to be void of any suspensive conditions, it is important to consider that your property will be off the market while the terms and conditions are waiting to be met.
Does the buyer have a deposit?
Most buyers will be required by the bank to have at least 10% of the purchase price of the property as a deposit, however, in certain instances, a buyer may be asked to provide as much as 30% of the purchase price. The more money the buyer has available to put down as a deposit, the greater the chance they will have of obtaining the required finance to purchase the home. Having a deposit is a good indication of the buyer’s financial position and how serious they are about buying the home.
Is it a cash deal or financed?
Ideally, the fewer complications involved in the financing of the purchase, the better, as it means that less can go wrong further down the line. Cash is king, but only a small percentage of transactions are completely cash deals. Most buyers will require a bond, but banks are far more willing to approve a bond if the buyer requires less than 80% of the purchase price of the home. Although generally not an issue, it is advisable to be cautious of buyers that require third parties to sign a surety on their behalf.
The date of occupation
In the perfect scenario, the occupational date and the transfer date would coincide. To a large degree, this will mitigate the amount of stress and complications if the deal does not materialise. If the offer contains any suspensive conditions, you should not allow occupation of the home until the conditions are met, and all documentation has been signed at the conveyancing attorney.
Once you have perused all aspects of each offer and are satisfied, then consider the price that the buyer is offering. There are instances where a lower offer could be the right one, depending on your needs and the conditions of the offer.
Before accepting an offer on your home, the following should be in place:
- Copies of any council-approved plans on the property, as well as checking all other documentation is up-to-date and correct. Doing this will expedite the time it takes for the property to be transferred, ensuring the process goes more smoothly.
- Ensure that the contract is easy to understand and covers all aspects that are agreed upon by both parties. Include factors such as which items are regarded as fixtures and fittings. Having these aspects in a written document will reduce any chance of a misunderstanding or disagreement in the future.