With interest rates at an all-time low and with buyer interest increasing, some sellers might find themselves in the fortunate position of receiving multiple offers on their home.
While buying and selling a property can be an emotional experience, making an offer to purchase and accepting it can be risky without doing the necessary checks and balances.
“People think of it as just an agreement, but it’s actually a binding contract. So make sure that before you sign, you’re really sure and you’re not just getting caught up in the excitement,” says Rhys Dyer, CEO of ooba home loans.
It is also important to recognize that there is so much market information available online now, says Berry Everitt, CEO of the Chas Everitt International property group that serious buyers will have a very good grasp of current trends, of what constitutes good value for money, and of selling prices rather than asking prices in the areas they prefer.
“In addition, the real estate sector is constantly becoming more efficient, with technology enabling prospective buyers to quickly sift out both unsuitable and overpriced properties during their preliminary home searches.
And while it might be tempting to accept the offer with the highest monetary value, it is essential to assess each of the offers based on its own merits, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
“At first glance, it would seem that the offer with the highest rand figure would be a natural choice. However, it is best to read through each of the offers carefully, paying specific attention to the clauses in each. This is where working with a trusted real estate agent will be beneficial, as the agent will be able to guide the seller through the process of selecting the right offer to purchase,” he advises.
While the highest value offer is the ultimate goal, other elements will have an impact on the transaction and should be considered before making a final decision. When considering each of the offers, Goslett recommends considering three aspects that will help in the decision-making process.
These include the suspensive conditions of the offer, the financing of the deal, as well as the date of occupation.
“The majority of offers that a seller will receive will be subject to certain conditions transpiring first, such as the sale of the buyer’s previous home. While it is not very common to find an offer that is entirely void of conditions, sellers should keep in mind that their home will be off the market while the terms and conditions of the offer are waiting to be met. The offer with fewer conditions presents less risk of the sale falling through and is likely to reduce the time a seller’s home is off the market without the sale having been finalised,” Goslett cautions.
Financing of the Deal - check for pre-approval
When it comes to financing the home, Goslett explains that unless the buyers present a cash offer, sellers should ask whether they have a deposit saved and whether they are prequalified for home finance. “A deposit is an excellent indication that the buyer is in a financial position to purchase a home and are serious about the offer. This deposit will also greatly increase a buyer’s chances of bond approval. Beyond asking whether the buyer has a deposit saved, sellers should check if the buyer has pre-approval for a home loan, as this is the most reliable way to prove that the buyer will be able to access the funds when it comes time to purchase the home,” he says.
Because a cash buyer will not be reliant on the bank for bond approval before they can go ahead with the purchase, Goslett adds that a cash offer makes the transaction far less complicated. Banks are also far more willing to grant finance to a buyer that requires less than 80% of the purchase price of the property.
“When checking the financial credentials of the offer, ask whether the buyer needs a third party to sign surety on their behalf. Although it is normally not an issue, it does increase the chances of problems arising. You should also look at whether the buyer can provide proof from the bank that the funds are available to back up the offer,” Goslett advises.
Date of occupation
The last point of issue that sellers should consider is the date of occupation on each of the offers. “If the best offer on the table doesn’t quite meet your timeline, you can counter the occupation date. Ideally, the occupational date should coincide with the transfer date if possible, as this will avoid situations where the buyer takes occupation of the property before the transfer goes through. If the offer contains any suspensive conditions, do not allow occupation of the home until these conditions are met, and all documentation is signed by both you and the buyer at the conveyance attorney. Otherwise, you might have to go through a costly and time-consuming process of evicting the buyer if the sale falls through,” Goslett warns.
Once sellers have considered all these factors and are content to move forward, they can then consider the value of the offer. In some cases, Goslett says that a lower offer might be the right offer depending on the conditions presented.
“This is why working with a trusted real estate advisor is so helpful. Real estate agents can be a great sounding board for advice and can help sellers make informed choices when making the various decisions involved in selling their home,” he says.
*Article sourced from Property 24*
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