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Once signed by both the buyer and seller, an Offer to Purchase (OTP) for a property becomes a legally binding contract. A statutory "cooling-off period" applies only to certain property purchases below R250,000. In most cases, a buyer cannot simply walk away from an accepted offer without potential legal or financial consequences unless specific suspensive conditions have not been met, according to agents from the Seeff Property Group.
While an accepted offer is a major milestone, it does not always guarantee a successful transfer. Most Offers to Purchase include suspensive conditions that must be fulfilled before the sale becomes unconditional. Although deals can occasionally fall through because of buyer's remorse or a seller changing their mind, transactions are more commonly derailed when these conditions are not met or unforeseen issues arise during the conveyancing process.
Seeff highlights six of the most common reasons why property transactions fall through:
- The buyer cannot secure a home loan. This remains one of the most common reasons property sales fall through, as most buyers rely on bank finance. If a home loan application is declined because of affordability or credit concerns, or the buyer cannot cover the deposit or funding shortfall, the sale will generally lapse. This is one of the most common suspensive conditions included in an OTP.
To reduce the risk of this happening, RE/MAX of Southern Africa recommends understanding what you can realistically afford before making an offer. Start by calculating your debt-to-income ratio to determine how much of your monthly income is already committed to debt repayments. The remaining disposable income provides a useful starting point when estimating what you can comfortably afford on a home loan.
Top tip: Are there any debts you could pay off quickly to free up more disposable income before applying for a home loan?
Use the following as a checklist before committing to starting the buying process:
- Work out how much you typically spend on lifestyle expenses, including entertainment, gifts, travel, dining out, and personal care. These costs often vary from month to month, making them easy to underestimate.
- Consider your financial priorities. If travelling is important to you, for example, you may prefer buying a smaller home that still allows room in your budget for holidays.
- As a general guideline, monthly housing costs should not exceed 28% of your gross monthly income, while total monthly debt repayments, including your bond, should remain below 36% of your gross monthly income.
Beyond home loan approval, Seeff highlights several other common reasons property sales can fall through.
If the sale is contingent on the buyer selling an existing property first, the transaction can proceed only once that sale has been successfully concluded. This often applies where the buyer needs to sell their current home or achieve a minimum selling price before purchasing another property. If these conditions are not met within the agreed timeframe, the Offer to Purchase (OTP) may become null and void.
The sale could also collapse if the seller fails to complete agreed-upon actions, such as repairs. A sale may also collapse if the seller fails to complete agreed repairs or other obligations contained in the OTP. Where these conditions are not met within the agreed timeframe or to the buyer's satisfaction, the buyer may be entitled to cancel the transaction.
The seller is legally required to provide the necessary Certificates of Compliance, including electrical, gas, plumbing and electric fence certificates where applicable. Failure to obtain these within the agreed timeframe may allow the buyer to withdraw from the sale or renegotiate the terms.
Property defects and disclosure disputes can also cause a sale to fall through. Seeff explains that while sellers are legally required to disclose known material defects, hidden issues can sometimes emerge during inspections or due diligence. If significant undisclosed defects are uncovered, buyers may negotiate a lower purchase price, request repairs or withdraw from the transaction altogether.
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