Submitting an offer on a property
How to submit an offer on a property in Australia
Once you have researched and found the property you are after. Now is the time to submit an official offer on the property.
In this article, we will discuss the following:
What is an offer?
An official offer is a written statement that expresses a willingness to buy a property for a certain price. The offer must be made in writing, (usually email) and must include the following information:
- The name of the buyer(s)
- The name of the seller (if known)
- The address of the property
- The purchase price offered
- The date of the offer
- The terms and conditions of the offer
- Date till this offer expires (typically a few days to a week from offer submission date)
How to make an offer on a property?
There are two ways to make an offer on a property:
- Through a real estate agent
- Directly to the seller
If you are working with a real estate agent, they will help you prepare the offer and submit it to the seller. If you are making an offer directly to the seller, you will need to contact them directly and send them the offer. For paper trail purposes, make sure you submit your offer in writing via an email.
Although other forms of written communication such as text message is acceptable, it is better to keep to emails to have a consistent paper trail in the event you may have lose your phone and lose all your conversation history.
What are the different types of offers?
There are two main types of offers:
- Firm offer: A firm offer is an offer that cannot be withdrawn. Once a firm offer is made, the buyer is legally obligated to purchase the property if the seller accepts the offer.
- Conditional offer: A conditional offer is an offer that is subject to certain conditions. For example, a conditional offer may be subject to the buyer obtaining finance or a building inspection. If the condition is not met, the buyer is not legally obligated to purchase the property.
What are the terms and conditions of an offer?
The terms and conditions of an offer are the rules that govern the sale of the property. The terms and conditions may include the following:
- The purchase price
- The deposit amount
- The settlement date
- The inclusions and exclusions
- The warranty period
How to negotiate an offer?
Once an offer has been made, the seller may choose to accept, reject, or negotiate the offer. If the seller chooses to negotiate the offer, the buyer and seller will need to discuss the terms and conditions of the offer until they reach an agreement.
Here is what you can do to make your negotiations more effective
- Do your research: Understand the local market by researching recently sold properties with a similar profile to the property you are looking to buy.
Know the average selling prices and any unique factors that can add or detract the value of the property you’re interested in. This information will be crucial in making a reasonable offer and in negotiations. - Initial Offer: Your first offer should be competitive but leave room for negotiation. It shouldn’t be so low as to offend the seller, but it shouldn’t be so high that you have little room to maneuver.
- Understand the seller’s motivation: Try to learn what’s driving the seller to sell their property. Are they looking for a quick sale, or are they willing to wait for the best price for them.
- Be prepared to compromise: Identify your priorities (e.g., price, closing date, contingencies) and areas where you’re willing to be flexible. This will help you make counter-offers that still meet your key requirements.
- Use contingencies wisely: Contingencies such as inspections, mortgage approval, or not committing to an official purchase until you sell your current home can protect you, but can also make an offer less attractive. Use them with care based on the property and market conditions.
- Communication is key: Be clear, professional, and courteous in your communications. This helps maintain a positive relationship with the seller and can make negotiations smoother. The common saying is that you can more bees with honey.
- React strategically to counter-offers: If the seller makes a counter-offer, don’t respond immediately. Take the time to consider it fully and consult with your friends and family that you can trust. Your response should be based on market research and your priorities.
- Know when to walk away: Set your maximum price beforehand and be prepared to walk away if it can’t be met. Getting too emotionally invested can lead to poor decisions and post-purchase regret.
- Use an experienced buyer’s agent: They can provide valuable advice, market insights, and negotiation skills to help you navigate the process.
- Closing the deal: Once you reach an agreement, move quickly to finalise the paperwork. Delays can introduce new variables that might affect the deal.
What happens if an offer is accepted?
If an offer is accepted, the buyer and seller will sign a contract of sale. The contract of sale is a legally binding document that outlines the terms and conditions of the sale.
What happens if an offer is rejected?
If an offer is rejected, the buyer can either make a new offer or walk away from the sale.
Making an offer on a property is a big decision, but it doesn’t have to be overwhelming. By understanding the process and what to expect, you can make the best decision for yourself.
Here are some additional tips for making a successful offer on a property:
- Do your research. Before you make an offer, it’s important to do your research and understand the value of the property. You can use online tools to research surrounding property values. You can also consult a property buyer’s agent if you need specialised expertise to negotiate an offer.
- Get pre-approved for a loan. Getting pre-approved for a loan shows the seller that you are serious about buying the property and that you have the financial means to do so.
- Be prepared to negotiate. The seller may not accept your initial offer. Be prepared to negotiate with the seller to reach an agreement that works for both parties.
- Have a backup plan. In case your offer is rejected, it’s a good idea to have a backup plan. This could include looking at other properties or waiting until the market conditions are more favourable.
By following these tips, you can increase your chances of making a successful offer on a property.