Buying a home can be an incredibly stressful experience. Is this the right one for you? Can you afford it? Or maybe you’re in that frustrating situation of looking for some time but keep getting pipped at the post by other buyers? In this article, we discuss everything you need to know before you make an offer on a property.
Do your homework
Before you even think about making an offer, you need to do your research. Are you buying your first home? Upsizing or downsizing? Maybe this is an investment purchase? Figure out everything you want in your new acquisition and then start researching the areas you’re interested in. What have recent sales prices been in that suburb? Is the market in that area flowing with choice, or do properties get snapped up quickly? How competitive is it to secure a property in your price range? All of this is important information to get your head around.
Get your finances in order
After you’ve researched prices in the areas you’re interested in, it’s time to visit your bank manager. Find out how much they’ll lend to you and organise conditional pre-approval. Knowing how much you can spend, and having the bank’s ok to do so, means you can act quickly when you spot the perfect place.
Get out there
Once you’ve done your research and got your pre-approval sorted, it’s now time to get out there in the market. Start pounding that proverbial pavement and get ready to spend your Saturdays attending open houses.
At open inspections, make friends with the real estate agents you meet and tell them what you’re looking for in a property – they’re your new best friend and can let you know when they have something new on the market.
Get a contract
Once you’ve found something you like, the real work begins. Now is when you ask for a contract and have your solicitor or conveyancer to look it over. You don’t want to make an offer without their advice. Remember, every offer you make has the potential to be legally binding, especially if you make it in writing and on a signed contract.
Good legal representation can mean saving yourself from potential disaster. Your solicitor or conveyancer will explain the terms of the contract to you, and also help to re-negotiate terms to be more favourable to you.
This is also a good time to organise a property & building inspection, strata report or pest inspection – often your solicitor/conveyancer can help organise these for you.
All offers aren’t created equal
Once you’re ready to make an offer, it’s good to know what kind of offer you’re making. Generally, there are two kinds of offers you can make:
- Conditional, and
A conditional offer is one that includes conditions for the sale to go ahead. This could include the sale being subject to a pest or strata report, or maybe even subject to finance or council approval.
An unconditional offer is the opposite of a conditional offer – it’s an offer where there are no requirements.
An accepted offer isn’t the end of the story
As frustrating as it might sound, even if your offer is accepted the seller is still able to negotiate with other potential buyers if a contract hasn’t been exchanged. But even if this happens, most agents will let you know if a higher offer has been made, which gives you the chance to make another offer.
This is when the contract is signed and both parties get a copy of a signed contract. In most states there is a cooling off period, which is when you can cancel the contract, but will likely lose some of your deposit.
Special tips for auction
Unlike conditional offers, an offer made as a bid at an auction is final. There is no cooling off period and you must have organised your inspections and reports prior to the auction.
Auctions can be stressful experiences. They can move quickly and you should be prepared for a possibly competitive bidding process. One way to help you prepare is to attend a few auctions of properties you don’t intend to bid on – that way you can get familiar and comfortable with the process.
Ensure that before the auction your solicitor or conveyancer goes over the contract with you, that he or she has requested any changes if necessary, and that any inspections and reports are completed. And don’t forget to bring your chequebook with you to the auction – if your offer is the winning bid, you’ll need to pay your deposit straight away.
Over to you
How do you approach making an offer on a property? Do you have any tips to first homebuyers you’d like to share? What about any disaster stories? We’d love to hear about your thoughts and experiences.
Disclaimer: The information here is provided on a general basis. You’re encouraged to consult with an expert who can consider your individual situation.