Have you found your dream home or are you just starting your property search? Wherever you are on your home buying journey, it’s important to know the ins and outs of making an offer. Buying a home is one of the biggest purchases in your life and while it’s an exciting experience, it can also be nerve-wracking, especially if it’s your first time. There are some important steps to take before you make an offer as the process is different for properties for sale by private treaty versus those up for auction.
Here’s our step-by-step guide:
Finance
One of the first things you need to do is make sure your finances are organised. It’s best to have your finance pre-approved before you start house hunting, so you are able to act immediately when you find the right property. You need to be clear on how much you can borrow and spend, taking into consideration your deposit, stamp duty and legal costs. If you haven’t yet obtained a pre-approval from a bank, you may be able to make your offer subject to finance. If you’re planning to attend an auction, you will need to be confident that your finances are in place and your deposit ready for auction day.
Keep in mind that sellers will usually not entertain offers subject to circumstances beyond your control, such as the sale of another property.
Inspect the property
It’s important to inspect the property thoroughly before making any offers. Look at room configurations, take measurements where necessary, make notes and write down any questions you might have for the selling agent. The more information you gather early on, the quicker the process will be when you make an offer. A thorough inspection will also help to give you an idea of value as you compare properties.
Contracts and reports
Ensure you obtain a copy of the contract, and if you are unsure about this document or have any queries, have it examined by your conveyancer or solicitor before making an offer. If purchasing a property in the ACT, the contract contains copies of the building, pest and energy reports. It is advisable to go over these thoroughly, as it is important to be aware of any restrictions or issues associated with the property. This will then give you the opportunity to present your offer subject to certain terms and conditions to cater for any foreseeable costs or repairs in the future.
How much to offer
Before making an offer, you must decide the maximum limit you are willing to spend on the property. Your first offer may be less than what the bank has approved you for.
It’s important to understand the market and the value of properties in the neighbourhood, the popularity of the suburb you are looking at buying into, as well as looking at what is currently on the market and what has recently sold.
If you intend to make an offer it is advisable to tell the selling agent of your interest. Perhaps ask the agent questions about whether you have competition with other buyers, if there have been any other offers on the property (and why they were rejected), and how long the property has been on the market.
Settlement terms
Before making an offer, you need to be clear on your preferred settlement period. Be sure to discuss these with the selling agent to ensure your needs can be met, or to see if there is room to negotiate. Terms can include how long you would like settlement to be (e.g. 30, 60, 90 days) as it may be different from what the seller is looking for. Also, will your offer be subject to any inclusions (e.g. furniture, dishwasher), or changes to the property (e.g. repairs or additions)?
Making an offer
Once you have done the necessary research and your questions are answered, the process of making an offer is actually very simple.
For properties for sale by private treaty, offers can be made verbally or in writing. Simply contact the selling agent and tell them what you’re willing to pay. The agent will then liaise with the seller and get back to you. You should usually receive a response within 24 hours.
Don’t fret if your first offer isn’t accepted. This is not uncommon. If you can increase your offer, continue to negotiate further with the selling agent.
Some agencies may require a small holding deposit when the offer is made which can help establish goodwill.
For properties for sale by auction, there are some cases where the seller may consider taking offers prior to the auction date. It is worth asking the agent about this to be prepared if another party makes a pre-auction offer and you need to respond quickly.
After inspecting the property, it is advisable to tell the agent of your interest. This ensures you will be advised of any pre-auction day offers made by other prospective buyers.
Given the timeframe for an auction and the necessity for pre-auction buyers to be thoroughly qualified, most agents will request that pre-auction offers are submitted in the form of a completed purchase contract with attached deposit. This will also present your offer to the seller in the most attractive light. Be sure if you do this that you put a time limit on the acceptance of your offer, say 48 hours.
If such an offer is accepted, the exchange of contract is immediate and it’s time to celebrate!
Most importantly, be prepared to pay a fair price for the right property.
