3 things you MUST check for before signing away your home.
There is nothing quite as exhilarating as selling a property, particularly in the current, difficult property market. But before you pop the Champagne, you need to make sure that there are certain elements included in your offer to purchase document.
With the current housing market being a volatile environment, with buyers struggling to get bonds, and having such a wide range of properties to choose from, it pays to be astute as a seller.
To this end we recommend that you have a look at including these three critical elements to any offer of purchase, as they will protect your interests, and ensure that your property isn’t caught in a washing machine of red tape
1. Escape Clause
As much as we all like the idea of fair trade, the reality of the current market is that buyers may struggle to sell their own properties and/or struggle to get a loan from the bank to finance the purchase of your property.
Without a well worded escape clause your property could be stuck indefinitely in an endless waiting game as your buyer tries to sell their current property, or as your buyer negotiates with the bank.
This could see other potential buyers purchasing a different property while you play the waiting game, and should the buyer not be able to sell their property or you may end up not getting the bank loan, you will have waited for months and have the sale fall through anyway.
Including an escape clause in your offer to purchase contract will ensure that you have some options should a sale take too long.
An escape clause gives you the right, as the seller, to accept a back up offer on your property should a different cash buyer be interested in it.
The original buyer then has some time (usually 2 working days) to either match the existing sale or release the seller to sell the property to the cash buyer.
In the current property market we strongly advise our clients to include an escape clause into their offer to purchase contracts, as it provides sellers with options, particularly in such a highly competitive market.
2. Breach of contract
Another clause we strongly suggest our property clients include in the offer to purchase contract is a set of terms and conditions that would constitute a breach of the purchasing contract.
The reason we recommend this to clients, again, comes back to the current property market where buyers have a plethora of property choices available to them, all with eager sellers.
Remember though, that an offer to purchase is only worth the paper it’s written on until the money for the property is in your bank account, and buyers in the current market can be a little lackadaisical about following up on their end of the contract. (We think this has to do with a wide range of choice available to buyers and some difficulty in obtaining finance from banks.)
Most breach of contracts revolve around time, which as mentioned in the escape clause, is of the essence, as you don’t want to miss out on other potential buyers, if the buyer you are contracted with is messing you around.
As a result elements in your breach of contract clause may include paying the deposit to your attorney on time, obtaining the required guarantees from the bank in time, if little or no effort is being made by the buyer to obtain finance for the property within an agreed upon time frame, and if the buyer doesn’t sign the documentation within an agreed upon time.
By including these types of elements in a breach of contract clause in your offer to purchase contract, you’ll quickly weed out the serious buyers from the buyers who will tie up your property and waste your time.
3. Choose your conveyancing attorneys with care
In most circumstances the seller of a property is able to choose which conveyancing attorney attends to the sale. Many sellers simply go with the attorney the estate agent recommends, and while this strategy can work well, it is advisable to do some homework on that attorney before appointing them.
Ask questions about that legal firms experience, qualification and track record when it comes to bank relationships, registration processing and contract experience, as these elements are important in ensuring a trouble free sales process.
In conclusion, proactive property sale management will reduce your frustration and increase your chances of completing the transaction as quickly as possible.
Then, once the money is in the bank, pop that Champagne!