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  • Writer's pictureMichael Smith

How to Make an Offer For a Property

It’s always a daunting prospect when you find a property you like, and you either want to make an offer before it goes to auction, after it has been passed in at auction, or by private treaty. However, the most important thing to ensure you come out on top during negotiations is to maintain your composure.

Knowing that one small misjudgement could cost you dearly, it pays to make sure that you have an effective approach to put your best offer forward, without risking or compromising everything.

We’ve put together the following step-by-step guide to help you make an offer for your dream property, and importantly, without overcommitting to it.


1. Keep Your Emotions in Check

Before you even begin searching for a property, make sure you have a checklist of all the key features you’re looking for in your next home or investment property.

Once you find a property that meets the brief, it’s time to start talking turkey with the real estate agent. Perhaps the most critical thing at this early stage is to make sure you keep your cards close to your chest in terms of how much you like the place. In other words, keep your enthusiasm in check.

Any time you are negotiating to buy a large asset, let alone a property, you don’t want to appear too keen otherwise the seller knows they have the upper hand in negotiations.


2. Ask for a Copy of the Contract of Sale

It’s not uncommon for real estate agents to provide a copy of the contract of sale at open for inspections.

This is one of the most fundamental contracts you will sign in your lifetime, so it’s important you bring in an expert to guide you through it. If you don’t already have a lawyer or conveyancer, it’s time to engage one so that they can review the contract and explain it to you.

Remember, once you sign a contract of sale, you create a legal obligation to buy the property. From that point, there are limited circumstances where you might have recourse to pull out of the sale, at least without forfeiting a large deposit.


3. Organise a Building and Pest Inspection

If you are already planning to spend hundreds of thousands of dollars on a property, what’s another few hundred dollars?

The last thing you want to discover is a property with structural issues, or problems with pests, after you move in. To reduce this risk, make sure you request a building and pest inspection.

The earlier you undertake this, the more options you have. For example, you could either walk away from the property, negotiate for repairs to be carried out, or even reduce your offer. It’s not always practical at this stage, in which case you will need to make it a condition to an offer to purchase the property.

Keep in mind, you never really know how much a problem might cost to fix, so it often makes the most sense to have the current owner rectify any problems as a condition of the sale.


4. Making an Offer

As with any negotiation process, never start at the top of your range when making an offer to buy a property. You should submit a bid that is below your maximum offer, as this provides you with scope to either pay less than you otherwise might, or negotiate higher if required.

When you make an offer, you should do so in writing. As well as the offer price, you must include other key conditions associated with the sale, including the terms of settlement, timeline for moving in, rectification of any defects, and so forth.

Most of the time, this will start a negotiating process where you and the real estate agent, on behalf of the vendor, will come to an agreement.

Bear in mind, the vendor could be dealing with multiple interested parties, so you need to be pragmatic. The real estate agent might ask you to pay a (refundable) holding deposit, and potentially sign the contract of sale, but you haven’t secured the property until the vendor signs it.


5. Buying the Property

If the vendor accepts your offer, you are now required to pay a full deposit. This is typically valued at up to 10% of the purchase price of the property.

If you haven’t already done so, you are now required to sign the contract of sale. There may be a short ‘cooling off’ period in effect, but this will depend on the state or territory, the type of property, and whether the property was bought via private sale or at auction.

If you haven’t already organised a building and pest inspection, now is your last chance. Based on the terms of the contract, you might forfeit a portion, or the entirety of a deposit, if you pull out of the offer at this late stage.


6. Arrange Financing for Settlement

Once both parties have exchanged contracts, and any ‘cooling off’ period ceases, you must now arrange financing for settlement of the property.

Again, this is where the experts play their role, whether it be your lawyer, financial adviser, or a mortgage broker from the team at Growthfront. We’re here to guide you through things, and we can help you complete all the necessary paperwork to establish your home loan.

From there, it’s just a matter of waiting for the lender to approve everything, and come settlement day, you’re in the clear.


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