Offer to purchase versus option to purchase

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Property Buying FAQ - Option to purchase
versus Offer to purchase

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What is an option to purchase

• An option to purchase is a contract whereby the owner
of a property (seller) grants the option to the buyer to
buy his/her property at an agreed price within an agreed
time period for an agreed fraction of the price (usually
1%).

• During this time period while the option is in effect, the
seller cannot sell his/her property to another party.


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What is an Offer to Purchase

• Offer to purchase is also abbreviated to OTP, but this
must not be confused with Option to purchase.
• Offer to purchase is offered by the Property Buyer to the
owner (Seller).
• In layman’s term, it’s the buyer making an offer and
signing an Offer to purchase to present it to the seller for
consideration.


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A Non typical property buying process –
Involving Buyer and Seller agents

Agent must show Buyer the Option to purchase document
together with an Offer to purchase. (But this is normally not
practiced)


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A typical property buying process –
Why it won’t work at this moment?

•Currently, Seller agents are not sharing the commission instead
favouring a direct customer walk in where they get full commission.
•Buyer agent also have a hard time to convince the buyer that they
should pay the buyer agent 1% or whatever agreed amount for buying a
place.
•In the case where seller agent is willing to share the commission (zero
commission from buyer), buyer agent is hurried into making the
property buyer commit into a deal.


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In short, the Buyer agent cannot fully protect and look after
the interest of the buyers.

The buyer agent typically do not show you the Option to
purchase contract format and make you make an offer
without ever seeing an option to purchase. In case you do
not agree to the terms of the option to purchase, you will
most likely lose your 1% deposit for an offer to purchase.


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involving only the Seller agent

No Buyer agent present. Seller agent prepares Offer to
purchase for buyer to sign and pay 1% deposit. However,
seller agent does not normally show buyer the option to
purchase document. (But they should)

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Involving only Seller agents
This is not in your best interests.
•The seller agent will perhaps present you with an offer to purchase for
you to commit a 1% deposit and sign it.
•Seller agent use you to make an offer which may be below the owner’s
asking price, but which they think can still close the deal.
•If owner accepts deal, but adds additional terms and conditions onto
the Option to purchase? Does the property buyer have a right to back
out? If Property Buyer backs out, will he/she lose the 1% deposit?
(It is better a regulatory body specify what can be written into these
OTP contracts and widely circulate it for public knowledge)


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Property Buying guidance

•In short, many things can go wrong with property buying. With our
help, you can reduce the errors and make property buying a safer
activity.

•Property Buyer Mortgage Consultants are: -

Home loans and Commercial Loans experts that can help you in
buying a new property as well as refinance a property.


SMS: +65 9782 8606


About Property Buyer Mortgage Consultants
• We are NOT property agents. We can be independent.
• (If you wish, we may refer you to agents which we find honest.)

• Guide and help buyers with valuations and processes.
• Help buyers find the best match bank loans.
• Our services are free to you as we act a bit like
“Outsourced bankers” where we are paid a commission.
(Banks save on payroll, while we are driven to help
buyers. Win-win situation.)


SMS: +65 9782 8606


Contact Property Buyer Mortgage Consultants
(Business registration 200618162C)

Home loans and commercial loans for buying or refinancing.

Tel : + 65 6100 0608
Sms: + 65 9782 8606

Email: loans@propertybuyer.com.sg
URL:
http://www.SingaporeHomeLoan.net
http://www.PropertyBuyer.com.sg/mortgage
http://www.iCompareLoan.com


Offer to purchase versus option to purchase

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