Conditional vs Clean Offers and What You Need To Know When Buying A Home
Category Property Advice
Although the property market remains favourable for buyers, not all buyers are equal. There is nothing more disappointing than finding your dream home but being pipped at the post by another purchaser with an offer better than yours. But better and higher offers are not always synonymous, and it can be the T's & C's in the small print of an offer that swings a sale one way or another.
As a buyer there are several steps you can take before putting in your offer, to ensure it is as 'clean' and therefore as attractive as possible to the seller. Andrea Tucker, Director of MortgageMe explains, "One of the easiest and most effective ways to make your offer stand out is for it to have as few pre-conditions as possible. One of the most obvious is 'subject to finance'. Sellers want to know that you are good for your offer price and that no one needs to waste time whilst you put in your application for a bond after the fact."
Tucker says that offers subject to finance aren't a bad thing, but it does mean buyers should prepare their application and be ready with all necessary supporting documents when making an offer. "Be certain you've done your homework and you know your affordability, your credit score and know that there are no surprises that a bank-initiated credit check will reveal, like returned debit orders.
Before you write up your offer, you will hopefully have a rapport with the estate agent representing the seller. But they are also your proxy and are tasked with putting your offer on the seller's table in the hope that a satisfactory agreement for both parties can be reached. The key to keeping your offer 'clean' is to try and find common ground on all matters, including first and foremost the price, but it might also mean conceding on some points, and compromising on both sides.
The estate agent should be able to give you some background to the particular sale that will help you put your offer together (over and above the price). Perhaps the sellers are in a hurry to move or to conclude a sale before they lose an offer they have in turn put in elsewhere. Accepting any deadline dates will make you look like an amenable buyer and hopefully make the seller look more favourably at your offer to purchase.
Tucker advises buyers ask estate agents questions about seller and their circumstances including how quickly they want to close the sale and whether the seller has their sale as a condition on a property they're buying. "Ask the agent to explain the pros and cons of conditions for all parties if you're unsure of the implications. Its worth bearing in mind that you and the estate agent have the common goal of effecting the sale as soon as possible."
"A clean offer also means not imposing conditions on the sale for the sake of saving a few thousand rands. Structural repairs or major issues notwithstanding, asking the seller to make good the marks where pictures have been hanging or paint scuffed skirting boards can be deal breakers and something that you can easily resolve yourself once you have moved in," notes Tucker.
The seller may also wish to impose conditions on the contract, including the time frame, and this is where pre-approval of your bond can speed matters up considerably.
"Given that the average time properties are on the market in South Africa is only eight weeks (dropping to six in the Western Cape) a swift conclusion to negotiations is in everybody's interest. Generally during negotiations, the property remains actively on the market, and you risk having the proverbial welcome mat pulled out from under your feet if you are sweating the small (and unimportant) stuff and cluttering your offer with unnecessary 'subject to' clauses." Tucker adds.
It's worth noting that sellers in the 'greenbelt' outside our major cities are currently in a strong selling position as buying habits reveal that with the advent of more work-from-home arrangements, families are looking at less densely populated, semi-rural areas in which to live.
"So whether you're looking for a new, more spacious home for your family and to get away from the city or if you're a first-time buyer looking in the 'burbs, get all your ducks in a row as early on in the negotiations as possible, and aim to put in the cleanest offer with the fewest conditions on the table and hopefully the buyer will take the bait," says Tucker.
Author: SA Property Insider
