Buying residential property is likely to be one of the biggest investments you ever make, but most people are not familiar with how to start the process by making an offer. As a result, making an offer on a property can be daunting, especially for first time home buyers.
It is normal for prospective Buyers to spend many weekends and evenings at open homes before they find their dream home. If this is you and you are ready to make an offer, but are unsure about how the process works then read on to find out how to take the exciting first step in your home buying process!
Talk To Your Lender or Mortgage Broker
If you require finance to make your purchase and you have not done so already, it is recommended that you to talk to your financial institution ahead of time to find out about the loan application process and how much you can borrow.
It is a good idea to have your home loan pre-approved prior to making to making an offer if you can. Having pre-approval might make your offer stand out from the other prospective buyers as it may signal to the Seller that if they enter into a contract with you, it will be more likely to proceed to settlement.
Research The Value Of The Property
Before you put an offer on a property, it is important to research what it might be worth. Not all properties are listed with an asking price, so it is worth comparing similar properties and past comparable sales.
It can be difficult to glean the value of a given property against the property market as a whole, so make sure the properties you look at are in a nearby area and have similar attributes.
One important thing that can influence the value of a property is its condition. Make sure you conduct a thorough inspection to minimise any surprises down the road. See below for more information on contract conditions, but making your offer subject to satisfactory building and/or pest inspections will give you an added layer of protection.
Remember to consider your financial situation as well as what you are willing to pay for the property. It is normal for Buyers and Sellers to negotiate before they arrive at an agreed purchase price for the property.
Decide On The Deposit Amount You Want To Offer
A contract deposit is usually paid at the time you enter the contract of sale, and is held on trust by either the real estate agent or the Seller’s solicitor until settlement.
In general, a Seller may prefer a higher deposit amount as this signals a serious buyer, however the general conditions and conventions around contract deposits vary from state to state.
Please note that it is unusual for a contract deposit amount to be over 10% of the purchase price, and in some states there can be negative repercussions for deposits over this amount. Talk to your conveyancing solicitor if you have any questions.
Decide On The Conditions You Want Included In The Contract Of Sale
Contracts of sale are usually subject to a number of conditions, which, if they are not met, allow one or both of the parties to cancel the contract of sale. Common examples are finance conditions, which allow the Buyer to cancel if they are unable to obtain finance by a set date, or making the contract subject to a satisfactory building and pest inspection.
Purchase contracts may also be subject to the sale of another property. You should also be aware of whether a cooling off period will apply to the contract of sale.
This is not an exhaustive list, and aside from the general or standard conditions of a contract, special conditions can also be drafted by a conveyancing solicitor to suit your particular circumstances.
It is important to seek legal advice before signing a contract. Our experienced team will be happy to review your contract at no charge, and answer any questions you might have. Reach out to us by calling 1300 539 529 or via our contact form.
Decide On A Settlement Period
A contract period is the period of time between when a binding contract is made and the settlement date (when ownership of the property changes hands).
It is normal for there to be a period of around thirty days between the contract date and the settlement date, although the Buyer and Seller may agree to a shorter or longer period.
It is often worth finding out whether the Seller would prefer a longer or shorter settlement period, and tailoring your offer to their needs if possible, as this may make your offer more attractive than other potential buyers.
Find Out How The Real Estate Agent Would Like to Receive The Offer
Real estate agents usually have preferred methods for receiving offers. While the offer usually has to be in writing, some will have an expression of interest form they will want you to fill out, and others will be happy for you to send them an email with the details of your offer. Ask the agent how they would like to receive your offer.
It is important to note that your offer will not be binding on the Seller until the Seller accepts and a contract is entered into.
Prepare A Counter Offer
It is normal for Buyers and Sellers to go back and forth several times in the negotiation process before arriving at a purchase price and terms that are agreeable to both parties.
The Seller may be looking to achieve the highest price for their property, whereas Buyer will usually attempt to offer a lower price.
Other details of the contract, such as the contract period, how much deposit will be payable by the Buyer, whether a pre-settlement inspection will be conducted, and which conditions should be inserted are also often part of the negotiation process.
When To Engage A Conveyancer
As we’ve mentioned above, it is recommended that you have a solicitor or conveyancer review the contract for you before you sign, but conveyancers can be a great source of information at any stage of the buying process.
Conveyancing solicitors can also provide advice on the insertion or amendment of any special conditions you may require in your contract of sale. Please ask your solicitor if you require special conditions to be drafted.
From putting an offer on a property all the way to settlement date, Keylaw is here to help you navigate the exciting process of buying property. We offer free contract reviews when you engage our services, and our experienced, friendly conveyancing solicitors are available to answer any questions you might have.
Whether you are buying or selling, our dedicated team will work with you to ensure your property settlement is a stress free and exciting process. We want you to feel that you are in control of the conveyancing process, not that the process is in control of you. Let us show you how easy it can be.