You've been searching for the perfect home for what feels like ages, and then—boom! Just like that, your RE/MAX agent shows you a place that ticks all the boxes, and you're ready to make a written offer the seller can’t refuse.
The technical term for this document is an offer to purchase which you sign, and which the estate agent then presents to the seller to accept (or reject). As exciting as it is, an offer to purchase can be overwhelming — especially if you really don’t want your offer to be rejected. To understand how to make an offer the seller can’t refuse, you first need to fully understand what an OTP is…
What Does an Offer to Purchase Actually Cover?
The offer to purchase (OTP) is a standard document that forms the foundation of the agreement between the buyer and seller. In addition to the purchase price, the OTP sets out the terms and conditions of the property transaction. When both parties have signed, it becomes an agreement of sale that is legally binding.
Management by no surprises is always the best course of action, so to avoid any potential future conflict, as well as any other eventualities, it is essential that all the terms and conditions are included in writing, i.e. in the contract, and agreed to. The OTP also includes:
Suspensive Conditions
Most sales are subject to the buyer meeting certain conditions, for example, paying a deposit and getting bond approval. Typically, these conditions must be met within a specific time limit – often 14 to 21 days – and if they are not, the entire transaction could fall through.
Word to the wise: Ensure that the OTP includes the commission percentage payable and what happens if either party withdraws from the offer, as this ensures clarity and prevents potential disputes between the buyer, seller, and/or the agent.
Deposit and Trust Account
As part of the sale negotiation, a seller will often ask the buyer to pay a deposit. This amount and the date by which it must be paid are also written into the OTP. This money is placed into an interest-bearing trust account until the property is registered in the new owner’s name, usually placed in the transfer attorney’s trust account, with the interest accruing to the buyer.
Fixtures and Fittings
It is crucial for both parties to agree on the items in and/or on the property that might be excluded from the sale. As a general rule, any fixtures or fittings such as lights, built-in cupboards and anything that is nailed, bolted, glued or screwed down are included in the sale and must stay. If, however, the seller wishes to take a fixture or special light with them, it’s important that this is declared in the agreement.
Date of Occupation and Occupational Rent
The date of occupation and the occupational rent are also included in the OTP. This is the date on, or by which, the seller moves out and hands over the keys to the buyer, who then “takes possession” of the property. Depending on the estimated date of transfer, the occupation date will also determine whether either party needs to pay occupational rent.
If the buyer moves into the property before it is registered in their name, they will have to pay occupational rent. On the other hand, if the seller has not moved out by the time the property is transferred into the buyer’s name, they will then need to pay occupational rent to the buyer.
Where can I get an offer to purchase form?
Although you can find OTP templates online, it's recommended that you get an OTP drafted by a qualified professional, like an estate agent or attorney. They know exactly how to put it together and will walk you through the details and make sure that the entire transaction is legal and runs smoothly.
How to make sure my offer isn’t rejected?
There are many things that can make an offer more appealing to a seller. The first is price — sellers obviously want the best possible price for their home. Your real estate agent can guide you here and let you know how flexible the seller might be regarding the asking price. Apart from price, the offers with the least amount of suspensive conditions will be the most appealing, as it leaves less chance for the sale to fall through. Last, but not least, cash offers are by far the most appealing to sellers, as it shows that you can immediately afford the purchase.
Keeping things clear and above board
As eager as you might be to make an offer before anybody else does, it is important not to rush through the process. An OTP protects all parties involved in a property transaction by ensuring that nothing is open to interpretation. Ambiguity can lead to conflicts and is best avoided by making sure that everyone understands and agrees to all the terms and conditions. If you don’t understand a particular clause and/or need anything clarified, ask your RE/MAX agent to explain it or speak to an attorney who has experience with property and conveyancing.
What happens after finalising an offer to purchase?
Once the OTP has been signed and the conditions have been met and fulfilled, this transforms the OTP into an unconditional agreement of sale. Then, with the help of their agent, the seller will need to get the necessary compliance certificates and both you and the seller will need to submit all the relevant documents to finance institutions and the transferring attorneys.
If you are applying for a home loan, this typically happens right after signing the OTP. Once your bond is approved, the bond registration process begins, which is a legal process that links your home loan to the property.
In total, this whole process can take up to three months before everything is done and dusted and you can take ownership of the property.
A last word
An offer to purchase is pivotal to any property transaction. Understanding how it works will help to keep the process both smooth and transparent. Always seek professional advice if you have any doubts or questions. Remember that clarity and attention to detail are key to avoiding misunderstandings.
If you want to understand the full buying journey, go through our Property Buying Guide. It covers all the steps, from affordability to getting the keys and moving into your new home.
