Tips to making an offer
When you’ve found a property you’d love to call home, offering the right amount and negotiating well will give you a great chance of success.
To determine how much to offer, use your understanding of the local market as a guide. Research how much similar homes nearby have sold for recently and consider how their features compare.
The way you place an offer depends on whether the property is for sale at auction or privately.
At auction, the bid is the offer. Prospective buyers bid competitively during the auction and, as long as the reserve price is met, the highest bidder buys the property.
In a private sale, you make an offer either verbally or in writing to the seller’s agent. This should include the offer amount; a proposed settlement timeframe; and any conditions you have for the sale to proceed.
Your offer may be subject to receiving finance approval or obtaining satisfactory inspection reports. These reports might include a building inspection report, which gives a general overview of the property’s condition; a pest inspection report, which identifies damage by termites or vermin; or a special-purpose report, which provides estimates of costs to repair major problems and recommends repairs and maintenance that should be completed.
The agent will put your offer to the seller and they may accept or decline, or come back with a counter offer. Offers and counter offers may go back and forth several times before you reach an agreement.
NEGOTIATION TIPS
* Try to appear positive and confident but not overly keen or the agent may think they can get more out of you.
* Unless the market is hot and the owner is already considering other good offers, it’s usually best not to offer your top price upfront. Offering slightly less will give you room to negotiate.
* Don’t let the agent know how much you can afford to pay or they may try to push you for more. You may be able to get a lower price for the property if you keep your upper price limit to yourself.
* Try to learn as much as you can about the vendor’s situation as this may give you bargaining power. They may accept a lower price for a shorter settlement period if they’re in a rush to sell, for instance.
After you’ve agreed the price and details, you’ll exchange contracts and pay a deposit to the vendor which is held on trust until settlement day. The deposit is often 10% of the property’s value. Some states have a cooling-off period after the exchange during which you can change your mind but you’ll forfeit your deposit. There is no cooling off period at an auction.
Quick tip: Before making an offer, review the contract for sale and ideally have a lawyer check over it. The contract includes details about the property and documents such as a zoning certificate, the property title, and any mortgages held over the property. After the contract has been reviewed any changes to the contract can be requested before exchanging.
TO FIND OUT HOW RAMS CAN HELP EASE YOU THROUGH THE PROCESS, GET IN TOUCH WITH YOUR LOCAL RAMS HOME LOAN EXPERT OR DROP IN FOR YOUR FREE FIRST HOME BUYERS’ GUIDE.
For more great property advice and tips on buying your first home from RAMS subscribe to The Great Australian Dream property series.
For your free Property Observer eBook from RAMS, 12 tips for first-time buyers, covering everything you need to know when it comes to purchasing property, click here.
Disclaimer: Information in this material is general and does not take into account your objectives, financial situation or needs and you should consider whether it is appropriate for you. You should also obtain independent professional advice relevant to your financial circumstances.
