If you are a first-time home buyer, placing an offer on your dream home can be both an exciting and confusing process.
A successful offer for a property involves understanding the value of the property and then negotiating to achieve the best outcome for all parties. In some ways, making an offer on a property is like playing chess – each party awaits the next move of the other.
Thus, knowing more about the buying process and making an offer gives you a greater sense of confidence and helps you negotiate more effectively.
Check out our expert tips from our agents before you make an offer on your property, whether it’s your dream home or investment property:
Consult a Professional
For first-time homebuyers it is advisable to hire a conveyancing lawyer who can outline your rights and obligations, as the process of making an offer can vary from state to state. If your offer is accepted, it becomes a legally binding contract, so hiring a lawyer in the early stages can mitigate the risk of any miscommunications.
You can also consider hiring a buyer’s agent who can help you at the negotiation table and give you a comprehensive market overview.
Check out Ouwens Casserly’s agents for expert advice on your purchasing journey.
Do Your Own Research
Along with professional help, you should do your own research. Buyers often make the big mistake of not researching the property thoroughly before making an offer.
To estimate the value of a property, look at comparable properties sold in the area and speak to your agent to get an idea of the vendor’s asking price. For investment properties, you can go a step further and evaluate how the property will perform in the future.
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Always be upfront if you’re interested in a property. For instance, check to see if the vendor is willing to consider pre-auction offers on a property going to auction.
Understand the vendor’s motivations for selling the property, if you’re looking to purchase under fair market value to create instant equity, you’ll often find that a motivated vendor is your best bet.
Get Pre-Approval
Prepare and work with your mortgage broker to understand and get your finances in check. Mortgage brokers can help you find out if a bank will give you a loan to cover what you need, in order to be able to buy the house through pre-approval.
Your pre-approval is not a binding contract until the bank checks and approves the particular property you’ve chosen, and you’ve met all their criteria. It might make the agent more receptive and more willing to work with you to get the right deal.
Always Be Home Inspection Ready
As part of the sale process, you have to do a variety of inspections. Generally, this includes pest and building inspections to make sure the property is up to code and pests aren’t a problem.
Home inspections can get overwhelming, but if you want a good offer, you’ve got to be on top of your game. Make sure you get (and retain) the information you need while scoping the competition. Have a list of questions handy while doing open homes, as it’s hard to budge if you make an early offer.
Work Out Your Terms and Conditions
Depending on your situation and the property you’re buying, you can choose whether to make a conditional or unconditional offer.
A conditional offer gives the buyer more flexibility. Conditions usually involve the buyer’s financing, the buyer’s inspections, or if maintenance needs to be done before settlement.
In an unconditional offer, the property is bought as-is. Vendors find this a desirable option because it makes the sales process more seamless. This can put you in a better-negotiating position but a conditional offer can provide you with that security and flexibility.
Submit Your Offer in Writing
Once you’re happy with the sale conditions and have decided to put in an initial offer, it’s time to put your offer in writing. A written offer eliminates any confusion regarding what your offer and conditions are. Consult your lawyer or conveyancer before making an offer so you can include any conditions and figure out the right wording to use.
Review the Contract for Sale
Whenever a vendor offers a property for sale, they have a contract of sale ready. Review this contract with your lawyer or conveyancer before you make an offer.
It could be that there are conditions included that become part of your negotiation or that do not suit your requirements. In addition, there might be conditions in there that completely push you out of the sale. Contracts of sale also details things like deposit amounts, due dates, settlement dates, and inclusions.
If the vendor accepts your offer – in South Australia, you have a two-day cooling-off period (unless it’s an auction) starting after you get the vendor’s statement or sign the contract. The contract can be cancelled during this time. Just fill out a cooling-off notice and deliver it to the vendor or their agent.
Once the cooling period has elapsed, you’ll need to pay the full deposit to finalise the sale. This is usually 10% of the purchase price, but you can negotiate a lower one. Usually, settlement takes 4-12 weeks after the contract’s signed.
On the settlement day, all the legal documents are deposited, the title is legally transferred to you, and you pay the rest of the purchase price. If you’re using a solicitor or conveyancer, they might meet with the vendor’s solicitor to make sure everything is in order. Upon settlement, you can pick up your keys (congratulations!) and move in.
If you have any questions, OC experts can help you navigate your buying process.
Disclaimer: Ouwens Casserly has relied upon information from external sources in compiling this publication. Ouwens Casserly does not warrant its accuracy or completeness and does not accept any loss or damage sustained by readers, or by any other person or body corporate arising from or in connection with the supply or use of the whole or any part of the information in this publication through any cause whatsoever.
