The ABCs of an OTP

The ABCs of an OTP

20 Oct 2021

You've found a property that ticks all your boxes and you're ready to submit your Offer to Purchase (OTP). You should read your OTP carefully and make sure you understand everything it says. Speak to an attorney or estate agent if you are unsure of anything - now is the time to ask! Once you and the seller have both signed, the OTP becomes legally binding and constitutes a Deed of Sale. At that point, changing your mind and backing out could lead to financial penalties.

What is an OTP?

The OTP is an agreement between buyer and seller. It sets out the terms and conditions of the sale and it forms the foundation of the transaction. It should be drawn up by an attorney or estate agent- and must include:

  • Buyer and seller's correct details
  • Same description of the property as on the Title Deed
  • Price being offered by the buyer
  • Occupation date and occupational rent
  • Special conditions
  • List of fixtures and fittings (what is staying and what is going)
  • Full list of defects

What is a fair offer?

More often than not, sellers don't get the full asking price for their properties. However, submitting an offer that is so low that it leaves the seller feeling insulted, could easily result in the deal falling through. An offer that is fair to both parties is more likely to open the door to a successful sale. Research the market to see how similar properties are priced, or you could ask an estate agent who knows the area.

Why are they selling?

Have a clear idea of how high you're prepared (and able) to go with your offer and where you can or cannot compromise. An Affordability Calculator is a great tool to help focus your thinking. Set these boundaries for yourself before you start negotiating and you will be far less likely to be pressured into an offer or negotiating position that you cannot afford.

Know your affordability

Have a clear idea of how high you're prepared (and able) to go with your offer and where you can or cannot compromise. An Affordability Calculator is a great tool to help focus your thinking. Set these boundaries for yourself before you start negotiating and you will be far less likely to be pressured into an offer or negotiating position that you cannot afford.

It doesn't hurt to ask

Buyers are sometimes unaware of what they can and cannot negotiate. If you are not sure - ask! For example, if there is a piece of furniture that has been custom-made to fit a specific space in the home, you could request that it be stipulated in the OTP, for the seller's consideration. It is not guaranteed that they will agree to part with it, but it could potentially save you from having to get a new one made.

Walking away

Buying a home can be an emotional business, but staying objective is key to negotiating successfully. Keeping emotion out of it as far as possible makes it easier not to take things personally, and keeps you from becoming attached to a property before it is yours. Then you can let it go and walk away if things do not work out in your favour and move onto something better, instead of agreeing to an unfavourable deal that lands you with years of regret.

There's never been a better Time to Bond

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