Real Estate Investor Magazine South Africa November 2019 | Page 10

Direct your property investment question to [email protected] or go to our Facebook page or participate in our regular Facebook LIVE interviews to ask your questions Writing an offer to purchase Q CARLO MARIANI Founder of The Property Coach What do I need to include when writing an offer to purchase? How do I ensure I protect my own rights first? A W hen signing an Offer to Purchase (OTP) we must be extremely cautious, as an OTP is a legally binding document in South Africa. It’s sad for me to see how many purchasers end up being sued by sellers and/or agents for being in breach of an OTP and having to pay a significant amount of money, especially when the purchaser signed the OTP with- out understanding the full implications of its clauses. It is critical that you appreciate that there isn’t such a thing as “just a standard” OTP. Secondly, it is important to understand that an OTP is a contract between the seller and the purchaser and that the two parties can agree to whatever they feel appropriate, as long as it is within the laws of the Republic of South Africa. As a property investor there are 27 clauses that you should either include, amend or delete from the so called “standard” Offer to Purchase, which most agents will expect you to sign. I am going to share my Top 4: 1 Offer subject to acceptable physical inspection Do not place your reliance on the seller disclosure form that is supposed to tell you any defects on the property. Get a professional property inspector to do a thorough inspection of the property after you have a signed OTP. Often sellers are genuinely not aware of defects and sometimes they are trying to disguise them or hide them. A small investment will remove big headaches 8 NOVEMBER/DECEMBER 2019 SA Real Estate Investor Magazine 2 after you become the proud owner of the property. Offer subject to acceptable financial due diligence of the Body Corporate When you buy a sectional title you effectively become a “shareholder” of a business called the Body Corporate. Surely you don’t want to buy into a bankrupt Body Corporate or one which operates with a serious loss of profit. Acceptable financial due-diligence is the important aspect of this clause. An acceptable level of due diligence means that you do not trust what you are being told verbally. Similarly, simply looking at a set of audited accounts which are 12-18 months old is not enough. This is your investment and as a future shareholder you have the right to request detailed accounts or reports. 3 4 Use your own electrician to issue a certificate of compliance (CoC) Defects with electrical installations can be very expensive to sort out. Also, illegal electrical connections and tempering with meters have become way too common. Insist on your own electrician to issue a CoC and ensure your own piece of mind. Make your offer valid for 24 hours only Agents are almost always in direct rapid contact with the seller. Create sense of urgency and scarcity on your offer by making it valid for only 24 hours. You can always extend the validity of the offer, but you cannot cut it shorter. Do this and you will get more properties below market value.