JULY 09, 2021
How to make an offer on a house
So you’ve stepped through the door at an open home and finally discovered that property that feels like yours. It is in the right neighbourhood, has character and charm and even seems to be right in your price bracket. So what next? Now is the time to make an offer. Getting this process right is integral in securing your new home ahead of other buyers and one of the most important steps in buying a home.
Like any deal you have to like what is on offer, have the finances to pay for it, and do the deal. The fun part of this process is often looking at homes for sale and many an hour can be spent trawling through property sites doing just that. To be truly in the market however, it’s time to get some indication of what you can afford, and there are a number of tools and calculators that can tell you just that.
While there are a number of ways that properties are sold in Australia, the option of making an offer at any time throughout the sales campaign is always there. Private treaty sales are one of the most popular ways to sell residential property. In such a situation a property is listed with an asking price and offers are made to the agent, who will then present them to the seller. Today auctions are growing in popularity, particularly in a hot market and the option of making an offer pre-auction day is becoming ever more common. At this time you will also want to educate yourself on the market into which you are buying, so you are well versed on what prices properties are selling for in the neighbourhood.
An offer needs to be put forward to the agent to take to the seller for consideration. But there is more to making an offer on a home than putting a figure you would like to pay to the real estate agent and this starts from your first visit to the home.
You may have spotted your ideal place as you scroll through the offerings on your favourite property platform. In any case it is important to inspect the home, and turning up for the very first Open for Inspection can pay off when it comes to making an offer. Along with being able to see if the home is just as good in real life, the first open also offers the opportunity to see exactly how much demand and competition there is for the property. Observing a crowded house and other house hunters asking for contracts at that first Open for Inspection and you can expect that there will be plenty of others ready to make an offer. If you are serious about making an offer, it is important to know that what you see beyond the surface of the property is sound. There are tell-tale signs that a home has not been well maintained, and it is good to be aware of these when you do a thorough inspection of the home. With such a big purchase it makes sense to also bring in the experts and call in a qualified building inspector to give you a full report on the home.
As with any deal, timing is all important, and that also goes to making the first move on buying a property. So should you wait and see if the seller will bring down their price the longer the home is on the market? Or make the first move and get in early? A realistic offer in the early days that the home is on the market is on that will make an impression. While this is true in any market, it is especially the case in a hot market when there are less homes on the market and more buyers – due to favourable buying conditions such as low interest rates – circling those that come up to buy.
There are two types of offers that can be made for a home – conditional and unconditional. A conditional offer comes with terms that the buyer outlines. This may include conditions such as a longer settlement period, certain fixtures of the home to be included, or that finance is approved. That last one is a signal that the buyer is not ready to go through with the sale immediately, and can be a red flag for a seller considering many offers. Therefore it is integral to get your finance pre-approved. A pre-approval means that a lender has agreed in principal to lend you the money towards your property but it hasn’t yet given final approval. It is enough however to show that you are seriously in the market for the home and not just someone simply looking around. As part of this process the lender will typically require a property valuation.
With pre-approval for a loan, a building inspection that has found your dream home is in good nick and eager to make it your own. But what happens next can play out in a number of different ways.
This is the dream scenario and you are ready to pop the champagne bottle to celebrate becoming a home owner. This is the time to sign and exchange contracts and be aware that you will need to pay the deposit at the end of the cooling off period.
Typically however, your first offer can be just part of the process of securing your home. All parties are wanting to get the best out of this significant deal and so it is not uncommon for a seller to come back with a counter offer. Remember the seller may have received multiple offers and by returning to you with a counter offer, they are not closing the door on the deal, but most often seeking a higher sale price than initially offered. It is now for you to decide if you wish to negotiate further, putting in a counter offer.
You may have put in an offer on the home that you thought was too good to be refused, however that is just what happened. This is the time to ask the real estate agent why it was rejected. Perhaps there was another offer than outdid your own. Or there may have been interest from a number of potential buyers and therefore in the case of an auction the seller has decided a best price may come on auction day. Having some feedback from the agent on this will give your guidance for further offers on this or other properties.
It might not just be the seller who has decided that they do not want to go ahead with the deal that has been set out in the offer. You may have discovered another house that is even more suited to you, for example, and so you are keen to withdraw the offer you have made. This is not a problem as an exchange on the property has not been made and are not legally bound to go through with the purchase.
While the idea of making an offer on a home can at first be daunting – the process is very manageable with a quick checklist. So do your research on what similar properties are going for; make sure the home is sound by bringing in a qualified property inspector, get your loan pre-approved and go in ealy and make your offer.
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