Offer to purchase question

[RonSwanson]

Yes, that's what an unconditional offer is.

If you still need a bond then that's a condition.

That's not what you stated or what I said.
You suggested that it's standard and basically don't p1ss off the "big lawyers"

Fsck the "big lawyers", I don't care. Nothing is "standard", that's bollocks.

it's an agreement which both parties (purchaser and seller) need to agree to, the "big lawyers" can go and fsck themselves and do slippery seconds on the estate agents, but not the purchaser and seller.
As for the estate agent/s who are clearly playing god, fsck them too, they have a job to do and it's not drawing up POS "standard" agreements that favour only themselves and screw the purchaser and seller, but to market the property and to present the offer to the purchaser. Anything more than that and they are overstepping the boundaries of their mandate.

I have no time for these little estate agent "gods" who run around with so-called "standard" OTPs and mandates and then try to intimidate both buyers and sellers. When I market a property, I never, ever give an exclusive mandate, because it screws both buyer and seller at the outset. The estate agent that I give business to competes with their counterparts on the open market, that way I get the best performance from them and the least bullschitt.

 

[Gozado]

So legally there is no way out of that clause, they are just making you aware of this fact.
Once an unconditional offer is accepted they will stop marketing the property and will lose any other buyers that

Just confirm with the agent what you can and can't change - remember its a negotiation so its fine to make demands they must just be valid.
Don't muck around though its just going to p1ss people off and when there is big money involved there are big lawyers invovled.

I don't think this is the way it works. Some agents tend to promote the notion that the three parties are all immutably linked together, whereas they need not be, not at all.

Contract A (first, chronologically)
The seller has a contract with the agent (or several agents). Contract A is set up long before the buyer is even on the scene, and the buyer has nothing whatsoever to do with that contract, is not party to it and has no responsibility within it, cannot influence its conditions, nor should the buyer - as an outsider meeting the parties to Contract A later on - ever be called upon to mitigate any consequences for the outworkings of that contract. The buyer does not owe any fee to the agent.

Contract B
The buyer makes the offer OTP to the seller. The seller decides whether or not to accept. If the seller accepts, then the OTP becomes the contract. Here, the agent is the non-party.

The so-called "standard" OTPs are built by the agent's lawyers and not, in fact, standard, which explains why there are so many different versions of them. The agents will demand of their lawyers to formulate clauses to protect the agent's commission. This is because of the fear (not unfounded) that the seller and buyer may try to collude to save money by cutting out the agent. It is, however, not correct of the seller to go behind the agent's back if the agent has genuinely put in the effort of marketing the property, and when the buyer really did meet the seller through the efforts of the agent. If the agent has delivered what was contracted in Contract A, i.e. brought about a match of buyer and seller, then the seller owes the agent the commission as agreed upon in Contract A. Even so: whatever the agent gets or does not get is not an issue for the buyer to deal with. The buyer has no legal connection whatsoever to the agent and, consequently, no duties with regard to how the seller fulfils or fails to fulfil Contract A, towards the agent.

Muddied waters
At least: the buyer has no connection to the agent until they are foolish enough to bind themselves, voluntarily, to the seller and the agent, in unholy matrimony, by agreeing to a clause in Contract B that muddles the contractual roles. The agent's commission is governed by Contact A, and the agent has no business trying to get the buyer to sign any clause in Contract B to guarantee some or all of the agent's commission, and the buyer has no business stepping into the shoes of the seller in Contract A.

 

[Gozado]

I have done the same with a clause that stated buyer and seller and jointly liable for agents commission should the sale not go ahead for any reason, paraphrased of course.

I deleted it and informed the agent that I'm not a party to the agreement on commission and therefore cannot be liable. The agent checked this among other amendments and did not have an issue.

Exactly.

I'd like to see someone test this in court though.

Be sure that with these big agencies they will take you to court over a failed sale - certainly if you just withdraw the offer at a late stage.

There is nothing to take to court about an OTP. The buyer can offer whatever they want, under whatsoever terms and conditions that please them, and the seller can choose whether or not to accept the offer and to sell under those proposed conditions.

You are right, though, that if - and that's the point, it is only an "if" and does not have to work that way -
a buyer signs away their rights and gets involved in clauses that mix and muddle the roles of seller, buyer and agent, then, yes, so doing will render a buyer potentially vulnerable to the lawyers of the agent.

The aim, instead, should be to avoid manoeuvering oneself into a spot where one ever wants/needs to try to "withdraw an offer". For that reason, do not swallow the so-called "standard" clauses that favour the agent or even the seller. Get the OTP into shape, from the start, as @droidx and @RonSwanson have said, here, and others have said elsewhere. Put in the offer only on conditions one understands, likes and accepts, with a relatively short time frame within which the seller can accept. Have a short list of possible small compromises ready, in case you really like the property and are asked to improve your offer. Be ready to walk away if it doesn't work the way one feels comfortable.

 

[droidx]

Besides the fact that I'm not party to contract A, the only reason there is a chance of commission is because I signed an offer, I didn't strike out the continued marketing clause.
The agent does spend a bit of time taking me for viewings, etc but this does not always result in a sale.

At the end of the day, the house is still there. What happens if I agreed to this clause, the agent successfully sued me for their commission an subsequently go on to sell the same house?

 

[rietrot]

So it looks like its now a condition of the sale to have valid plans.

I don't know when this happened but when I bought my current house it wasn't the case and the owner at the time didn't build internal walls according to the pans ha lodged.
Now that I'm selling its a problem for me. I think in CT is a problem with all the old houses and servitudes etc... but the agent basically told me that I must have valid plans to sell the property.

It's doesn't have to be a condition. Banks and insurers don't care. (Especially if the house is older than 5 years.)

The buyer can insist on it and make it a thing .

Maybe it's capetown specific. (Then I wouldn't know.) A municipal bylaw and them checking it.

 

[Speedster]

SPLUMA may have changed this. Not sure when it becomes fully effective though.

 

[Neuk_]

It's doesn't have to be a condition. Banks and insurers don't care. (Especially if the house is older than 5 years.)

The buyer can insist on it and make it a thing .

Maybe it's capetown specific. (Then I wouldn't know.) A municipal bylaw and them checking it.

Our experience is very different, most banks we have dealt with wanted up to date, approved plans that reflect reality and bonds could not be approved without them. In our area it is even more restrictive as most houses are older than the stipulated 60 year cut off potentially making them heritage buildings. We not only had to get CoJ approval for the renovation we wanted to do, since our house was originally built in 1949, we had to get PHRAG approval as well before plans were submitted to the CoJ. The architect that drew up our official plans and took us through PHRAG and CoJ approval was busy with 20 odd houses who hadn't bothered with either and were being investigated with talk of fines ranging from around R500k upwards to being force to remove alterations or tear buildings down. My future inlaws are selling their house and busy getting their building plans approved with the bulk of the work carried out 15+ years ago so that the sale goes as smoothly as possible.

 

[ToxicBunny]

It's doesn't have to be a condition. Banks and insurers don't care. (Especially if the house is older than 5 years.)

The buyer can insist on it and make it a thing .

Maybe it's capetown specific. (Then I wouldn't know.) A municipal bylaw and them checking it.

Its been changing recently.

Banks are wanting approved house plans these days when you apply for bonds.

 

[shooter69]

We are in the process of buying again. Put in an offer on the 14th of Feb, got a bond approval and now just waiting and doing admin.

Spent almost 2 days reading this thread. Saw some really interesting stuff here.

 

[Mierzen]

Hi. I'm also in the process of buying my first place. I accepted a bond through Standard Bank.
Dates:
20 Feb: OTP accepted
24 Feb: Transferring attorney requested documents
2 Mar: Bond accepted by me
3 Mar: Bond attorney assigned & emailed me to request documents
11 Mar: Transfer attorney has transfer documents ready to sign

---

Transferring attorney also sent my the pro-forma today... They've listed "fee for submitting transfer duty". I'm going to ask them to remove it? The place I'm buying is only R890k so no transfer duty is applicable.
Purchase price= R890k; Bond amount = R720k.
Anything else that looks out of place?


The levy estimate is a bit high, but at least on the safe side.
Any costs I can/should have reduced/removed?

 

[zerocool2009]

Hi. I'm also in the process of buying my first place. I accepted a bond through Standard Bank.
Dates:
20 Feb: OTP accepted
24 Feb: Transferring attorney requested documents
2 Mar: Bond accepted by me
3 Mar: Bond attorney assigned & emailed me to request documents
11 Mar: Transfer attorney has transfer documents ready to sign

---

Transferring attorney also sent my the pro-forma today... They've listed "fee for submitting transfer duty". I'm going to ask them to remove it? The place I'm buying is only R890k so no transfer duty is applicable.
Purchase price= R890k; Bond amount = R720k.
Anything else that looks out of place?
View attachment 1034894

The levy estimate is a bit high, but at least on the safe side.
Any costs I can/should have reduced/removed?

Ask your transferring attorneys to remove the clearance certificate fee charges as it have zero to do with the buyer, and its the sellers responsibility, as their name are on it!

Ffs, and if they come that they needed to get a “runner”, reply with you are in ZERO rush!

 

[123Eish]

Hi. I'm also in the process of buying my first place. I accepted a bond through Standard Bank.
Dates:
20 Feb: OTP accepted
24 Feb: Transferring attorney requested documents
2 Mar: Bond accepted by me
3 Mar: Bond attorney assigned & emailed me to request documents
11 Mar: Transfer attorney has transfer documents ready to sign

---

Transferring attorney also sent my the pro-forma today... They've listed "fee for submitting transfer duty". I'm going to ask them to remove it? The place I'm buying is only R890k so no transfer duty is applicable.
Purchase price= R890k; Bond amount = R720k.
Anything else that looks out of place?
View attachment 1034894

The levy estimate is a bit high, but at least on the safe side.
Any costs I can/should have reduced/removed?

Hi,

I am also in the process of buying my first place as well.

It is not unreasonable to ask for a discount on transfer fees. I asked and they gave me 15% off. My purchase price is just over a million.

The bond registration fees for me is 25k in total so very close to yours. Edit: I work for a financial institution so I got a discount on bond registration fees as part of my staff benefits. However, I have seen that some institutions offer discounts when applying for a bond on these fees.

 

[Ziadhorat]

Ask your transferring attorneys to remove the clearance certificate fee charges as it have zero to do with the buyer, and its the sellers responsibility, as their name are on it!

Ffs, and if they come that they needed to get a “runner”, reply with you are in ZERO rush!

We just got a runner, but the seller is paying for it. Im no expert but they didnt even ask me, would that not be the sellers responsibility regardless? or is it jist whoever requested it?

 

[zerocool2009]

We just got a runner, but the seller is paying for it. Im no expert but they didnt even ask me, would that not be the sellers responsibility regardless? or is it jist whoever requested it?

So far I havent seen it alot, but my last transaction I was “forced”, and I just said no thanks. If the attorney can show me my name currently on any owners documentation, I would gladly pay it.

 

[Koorsblaar]

Hi all

I’ve been reading this thread for the last few months since we started looking at houses and now we found a house we like. It’s been standing empty for close to two years and the water and electricity has been cut off. After due consideration we want to put an offer in, with a price reflective of the cost to repair and risk involved, and I thought I would post the issues and considerations here as there has been a lot of good advice in this thread, with the hope of giving me more confidence in putting in an OTP and that I have covered the risks sufficiently.

The good:

• The house has been standing empty for 2 years so leaks and other issues should show themselves after this period with no maintenance. It mostly looks very good, and a proper cleaning of tiles inside will make it look good, with painting the walls over time.
• There is very little damp damage. Mostly at driveway walls and back door at garage. The garage issue looks to be due to blocked gutters, causing water to penetrate the wall. The driveway wall has more damage, but looks like minor cracks and paint peeling at places.
• No vandalism, so looks like it is quite a safe / secure position.

The bad:

• Electricity and water are cut off, so we don’t know what electrical items work and which don’t. Also not sure of the state of the water pipes / leaks and whether this is a possible issue.
• The pool is in a state. I’ll budget to get it recoated, probably fibreglass from what I’ve read online. It seems to hold the green rain water quite well. No idea about pump and heat pump.

Do you have any advice for me on the following, and possible other issues.
Building:

• We plan on getting a building inspector to do an inspection, but we aren’t sure whether we should do this before the OTP, or simply specify it as a condition. If it is a condition, what wording should we use to protect ourselves?
• Electrical.
• The house is wired for three phase, but supply is disconnected. I want to specify that the owner needs to reconnect with a prepaid meter. The reason it is currently disconnected is that COJ kept on estimating usage at 5 000 units per month when the place was empty and owner refused to pay. I don’t want post-paid issues and also don’t want to pay for the monthly service and network charges associated. From what I can see the prepaid cost for 1 and 3 phase are the same. Is this true?
• Uncertainty on which electrical items still work. Gate and garage motor, oven, aircons, pool pump and heat pump. Owner does not want to make any commitments as he hasn’t lived there in years, so price will need to consider that.
• Should I get an electrician to inspect beforehand, or will COC before transfer cover me sufficiently?
• Plumbing:
• This is where I am concerned, and I don’t know much about plumbing. Is there a heightened risk of pipe leaks and issues, and geyser issues because the water has been cut? Is there a way to mitigate or test for it?

As a summary, what OTP conditions should I specify? My list currently:

• Water and electricity to be reconnected. Electricity to be put on pre-paid.
• Subject to a favourable building inspection report (not sure of the exact wording to protect me here. We don’t want to be stuck with a medium or large structural cost.)
• Building plans and that everything is in order.
• Others are subject to bond, and sale of our house. I am concerned about the timing of the sale of house. I don’t want to sell my house and then be homeless because the seller is taking long to sort out the electricity and water.

Apologies about the length of the post, but thanks in advance.

 

[Toxxyc]

First Q - why is the water and electricity cut off? Behind on rates? If so, budget for that as well.
Second Q - Why only selling now after 2 years?
Third Q - Why did it stand empty?


PS: On properties like these, DO NOT trust an agent. They lie a lot more when there's a lot more to hide.

EDIT: Oh yes, plumbing. I wouldn't worry too much, unless it's really old piping. Plumbing, for the most part, is pretty robust and not too expensive to fix up when something does go. The catch here is older houses with those old galvanised steel pipes all built into walls. They often have to be cut out and replaced.

 

[Ziadhorat]

First Q - why is the water and electricity cut off? Behind on rates? If so, budget for that as well.
Second Q - Why only selling now after 2 years?
Third Q - Why did it stand empty?


PS: On properties like these, DO NOT trust an agent. They lie a lot more when there's a lot more to hide.

EDIT: Oh yes, plumbing. I wouldn't worry too much, unless it's really old piping. Plumbing, for the most part, is pretty robust and not too expensive to fix up when something does go. The catch here is older houses with those old galvanised steel pipes all built into walls. They often have to be cut out and replaced.

I just want to jump in here to ask, wouldn't being behind on rates be the sellers responsibility to pay off in order to obtain the rates clearance cert?

 

[Koorsblaar]

First Q - why is the water and electricity cut off? Behind on rates? If so, budget for that as well.
Second Q - Why only selling now after 2 years?
Third Q - Why did it stand empty?


PS: On properties like these, DO NOT trust an agent. They lie a lot more when there's a lot more to hide.

EDIT: Oh yes, plumbing. I wouldn't worry too much, unless it's really old piping. Plumbing, for the most part, is pretty robust and not too expensive to fix up when something does go. The catch here is older houses with those old galvanised steel pipes all built into walls. They often have to be cut out and replaced.

Thanks.

Q1: Yes, owner stopped paying as they were estimating electricity far in excess of usage. Agent says seller did previously sort it out, but estimating resumed again. He is now only willing to reconnect and sort it out once he has an offer he is happy with. He will pay someone to "sort it out". All for his account. I'm happy with that, I just dont know how long it will take, and hope the issues dont move to my account, which is why I think prepaid is a better and less risky option.

Q2: House has been in the market for more than a year with price coming down over time. It was also part of a divorce.

Q3: Previous tenant didn't pay properly. Owner can afford to let it stand empty.

I forgot to mention that the house was built 2001 - 2003.

Thanks.

 

[RonSwanson]

As a summary, what OTP conditions should I specify?

Add rates being up to date, as you have suggested, and:

• That you (the buyer) will pay for an inspection from a house inspection professional; (this will cost 4-5000 ZAR)
• That all items identified by the professional inspector's report are taken care of by the seller using appropriately qualified people and to the satisfaction of a building professional;
• That water is reconnected before inspection -- very important, the pipes have not had any water through them for two years and the professional inspector needs to do a pressure test.
• Electrical CoC is provided at the cost of the seller; you will need to budget for your own one afterwards as well just to make sure that he didn't just buy it.

 

[RonSwanson]

• Others are subject to bond, and sale of our house. I am concerned about the timing of the sale of house. I don’t want to sell my house and then be homeless because the seller is taking long to sort out the electricity and water.

That's unfortunately a risk that you are going to have to take. Then again, look at it this way: It's easy to buy a house, not so easy to sell. So the odds are in your favour, get your own property on the market ASAP if not already.