Buying a new house is an incredibly 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 of that uncertainty. “The deadline date for the seller to accept the offer is stipulated in the OTP agreement. But, once this date has come and gone, 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 that the OTP will be valid for what is termed a ‘reasonable period’. “It is best to try and avoid this situation by stipulating a due date otherwise it can become a very 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 which basically 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.”
Other ways 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 absolutely sure of a home before signing the agreement. “This is a legally binding document, so buyers cannot simply change their mind and get out of the deal without incurring any repercussions,” he warns.
It is also very 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 to come up with 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 the transfer registration, bond registrations and more. Sometimes some of these expenses could be covered by the bond after it is 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.
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