Purchase Agreement For A House – Things to know

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Avoid Regrets Later!

Finding the property you have always dreamed about is a great thrill for many people.  After you have found it, it is time to make your offer to purchase.  There are different factors that have to be considered when you are selecting the price level so as to enter into a purchase agreement or purchase agreement that is suitable for you. It is important to take one step back to look at things with a more logical perspective. Always weigh all the things that really matter before you decide to enter into a purchase agreement or offer to purchase.

The buyer

Buyers that don’t have mortgages that are pre-arranged, buyers who don’t have bad credit, and first time buyers always have a head start on the competition. It is important to make the seller and the agent aware of this if you fall in these categories. This can allow you to have a great negotiating position.

The position of the seller

Before you enter into a purchase agreement, It is always important to check whether the seller is in a hurry or is willing to take some time.  Sometimes the seller could be willing to settle for a lower price just to be able to sell quickly. If a seller isn’t in any hurry to move, he may hold out on the property so as to get a much higher price.

The Purchase Agreement - Gazumping and Gazundering

  • Gazumping: this is the term that signifies a situation whereby the seller has already accepted an offer to purchase but then accepts another one from someone with a higher offer to purchase. This is actually legal and the only way to reduce the risk is to take the property off the market. This usually happens in the sellers’ market.
  • Gazundering: this is where the buyer makes a reduction on the offer to purchase just before the purchase agreement so as to try to force the seller to take much less for the property. It is legal.

The Budget

The other thing you should know is the budget ceiling with which you can enter into a purchase agreement. This allows you to make up your mind about the maximum limit and stand by it. If the seller doesn’t want to settle, you should try to find out whether the property deserves the extra money. Anyways it is your duty to find out the worth of the property first before entering into a purchase agreement.  Check the current competition and if there aren’t many other such properties, the seller may be at an advantage. Check for faults and any repairs that are needed as you may be able to get the property at a lower price.

After the offer to purchase

When you make the offer, it is very important that you make it very clear to the seller and the agent that the offer is subject to a satisfactory survey and to a contract.  You should also ensure that there are up-to-date building plans for all the structures in the property.  From here the estate agent will have to prepare all the necessary document which will be handed over to the transferring attorneys.  The transferring attorneys, also known as conveyancers, will now prepare a purchase agreement which will be signed by both you and the seller.