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Making an Offer

Making an Offer

When you are ready to write up a contract, the next step is to decide on the price you wish to offer the seller and under what conditions you wish to make the offer.

Common conditions of sale are: subject to finance, a builder’s report, sale of another property, solicitor’s approval of the contract or specialist inspection or approval.

The offer will be prepared on a standard approved contract and you will be asked to sign the required number of copies. Once this process has been completed I will check whether any other interested parties are putting in an offer.

The seller can accept your offer, reject it or counter sign it. Counter signing usually occurs when the seller is not satisfied with the price offered and/or conditions included and subsequently alters them. The contract will be brought back to you for your consideration. If you accept, you initial the seller’s alteration and the property is under offer to you subject to any conditions that the contract may contain. Alternatively you also have the right to counter sign. I will continue negotiations between you and the seller until you are both in agreement.

Common conditions of sale

Along with the standard terms of the contract both buyers and sellers are able to insert further terms and conditions of sale.

When writing in any special condition the key parts are who is going to do it; what are they going to do; when are they going to do it by; what standards will apply; what happens if it is not satisfied and who can waive it.

Once an inserted condition has been satisfied notice will be provided to the other party usually by the solicitors involved.

A condition can be either satisfied or waived. If you have inserted a condition but it has not been met by the required date you can choose to waive that condition. If the condition is neither satisfied nor waived then the agreement will be terminated and any deposit paid by you shall be immediately refunded.

Some common conditions of sale are:

  • Conditional on sale of purchaser’s property.
  • Conditional on sale of purchaser’s property becoming unconditional.

Inserting these clauses allows you to sell your property before purchasing. Use the appropriate clause to allow you time to sell your property or for an existing contract of sale to become unconditional in all respects.

Expiry of Prior Agreement / Back up Clause

Insert this clause in your contract when the property you are making an offer on is already under contract for sale subject to a conditional agreement. By securing a signed back up offer this means that if the first conditional contract on the property does not go ahead the seller cannot grant any extensions to the first buyer and your contract will take immediate effect.

If you have a back up offer on a property it is important that you take that into consideration when looking at other properties so that you don’t enter into two different contracts.

  • Conditional upon Finance.
  • Conditional upon obtaining Solicitor’s Approval of the Contract.
  • Conditional upon obtaining a Builder’s Report.

Each of these conditions should be clearly worded and the dates for confirmation made clear.

Multiple offers

A multiple offer situation is when more than one party is interested in making an offer on a property. Harcourts has formulated a system to handle multiple offers that is fair to all parties concerned.

Common conditions of sale are: subject to finance, a builder’s report, sale of another property, solicitor’s approval of the contract or specialist inspection or approval.

The offer will be prepared on a standard approved contract and you will be asked to sign the required number of copies. Once this process has been completed I will check whether any other interested parties are putting in an offer. If this is the case then you will be kept fully informed.

The seller can accept your offer, reject it or counter sign it. Counter signing usually occurs when the seller is not satisfied with the price offered and/or conditions included and subsequently alters them. The contract will be brought back to you for your consideration. If you accept, you initial the seller’s alteration and the property is under offer to you subject to any conditions that the contract may contain. Alternatively you also have the right to counter sign. I will continue negotiations between you and the seller until you are both in agreement.

This process does not occur when buying at auction.

Buying at auction

Buying at auction avoids the often prolonged waiting of the traditional offer/counter-offer negotiation process and uncertainty of what another buyer may be offering.

During an auction bids for the property are called in an open arena on a given day and time. If your bid is accepted you’ll have the satisfaction of knowing you have purchased at true market value.

An auction is an exciting environment where everything is out in the open. You can see your competitors and have confidence that others place similar value on the property as you.

Let me know if you are interested in an auction property so that you will be kept informed if a pre-auction offer is made and given the opportunity of submitting an offer or bidding if the auction date is brought forward.

Frequently Asked Questions about Auctions

Q: Do I have to have cash to bid?

Yes. To bid at an auction you need to acquire pre-approved finance so that you can bid with no conditions of sale. A 10% deposit is required on the day of auction; the balance due on possession date.

However it is often possible to extend the possession date to allow you more time to organise your funds or sell an existing property. Talk to your consultant so they can arrange this with the sellers and auctioneer.

Q: How do I find out how much the property is worth?

The more property you inspect in the area the better you will become at determining approximate values. If you need help ask me for guidance - I'm happy to help. I can refer you to homes of similar type and price for comparison. You may also opt to pay for a registered valuation.

Remember pricing real estate is not an exact science as come auction day what the seller needs to move on and the emotional desire of other bidders will determine the end selling price. We recommend you arrange a little extra finance just in case.

Q: Can I make an offer before the auction day?

Some owners may consider selling before auction day, some may not. Usually the offer would need to be a very good one to convince a seller not to hold the auction. If an acceptable pre-auction bid is tabled all interested parties are contacted and given the opportunity to also submit an offer or bid if the auction date is brought forward.

Q: What is a seller or vendor bid?

The conditions of sale state the seller has the right to bid themself. This can be compared to a counter offer during private negotiations. This bid may be used by the auctioneer to start the auction or bid during the auction to build bidding momentum. The auctioneer will disclose all vendor bids and will not bid on behalf of the seller once the property’s reserve price has been reached, that is a price sellers are prepared to sell for.

Paying the deposit

Once all parties have signed the contract you will be asked to pay a deposit. This usually equates to 10% of the purchase price.

Once paid, this deposit is held in a Trust Account until the contract is confirmed i.e. becomes unconditional in all respects. It is then paid to the seller. If the contract does not become unconditional the deposit will be repaid to you.