MAKING AN OFFER TO BUY A PROPERTY
When you are interested in purchasing a property you may not know where to start when it comes to the negotiations. There are certain steps to be followed and some important information to be discussed with the real estate agent. If you need guidance at this time you are welcome to contact us.
Below is a step by step guide which may assist you when you find a property you like. This is our suggested approach but your negotiations may follow a slightly different format.
Please be aware that if you buy at an auction you cannot generally negotiate additional terms such as Subject to Finance or Building/Pest Inspection and you have no cooling off period. If you sign a contract on an auctioned property more than 3 business days before or after the publicly listed auction date, you may still have the benefit of a cooling off period and may be able to negotiate contract terms with the agent.
Buying a property at auction may not suit purchasers whose funds are very limited (because they won't be able to make the purchase subject to finance).
Cooling Off
When you make an offer on a property in Victoria, you then have the right to withdraw from the contract for any reason within 3 business days of you signing the contract/offer.
This is called the Cooling off period and it is available on most Victorian private sale contracts and it means you are entitled to withdraw from a contract within 3 business days after making an offer (which starts the day after you sign a contract/offer). For example if you sign a contract/offer on Monday you can withdraw by close of business on Thursday. You will forfeit 0.2% of the purchase price if you cool off (ie price is $700,000, you will lose $1,400). The agent will refund you the deposit you paid minus 0.2% of the price if you cool off.
MAKING AN OFFER –
You should generally follow these steps:
Firstly, it is best practice and much safer for Purchasers to make a formal offer only after:
- They have finance approval (if applicable). This means pre-approval and the price being offered should accord with the lender/broker's estimated property value (ask the bank to complete an auto-valuation), and
- They have had the building checked by a registered builder, and
- They have had the Contract and section 32 statement checked by a lawyer/conveyancer, and
-Also inspected carefully and checked other important information about the property such as building works and environmental concerns (called due diligence checks).
We understand this may not always be possible and you may not want to delay making an offer, though you need to be prepared to take on risks if you proceed without completing the checks above.
You can make your offer subject to certain conditions, such as subject to finance and subject to building/pest inspection. These conditions must be marked in the contract. We can check the filled-in contract/offer to make sure the conditions you need have been added. You will need to ask us for a Contract Review.
Step 1 – Call the agent and discuss general terms of your offer –
- Price
- Settlement in 30/45/60/90/120 days
(if you are using a bank loan, you should not settle in under 45 days)
- subject to building/pest inspection (or not),
- subject to finance approval (or not),
- Subject to contract review by a lawyer (or not),
- Mention any other additional special conditions to the agent (for example, subject to certain repairs being completed by the Vendor).
- Ask the agent to email you a copy of the Contract/Section 32 Statement and forward it to us for the review.
The step above does not result in a formal/binding offer.
Step 2 - If the agent thinks your offer it might be accepted, you should also put the offer in writing in an email.
If the price is likely to be accepted, you can then proceed to arrange your contract review and building inspection before signing the contract.
Finance:
Make sure you also discuss the offer and property with your lender/broker. Tell them you are proceeding with an offer.
Contract review:
You can contact us at this time to request a Contract Review and get assistance with wording your offer as well. A Contract Review is advisable (but it is optional). If you sign a contract without a review you may not understand the conditions in the contract and you may miss important details about the property in the Section 32 Vendor Statement.
As part of a Contract Review we will check the property information in the Section 32 and advise you of any 'red flags'. We will also check the contract and advise of you any concerning conditions and suggest amendments or deletions (but note that auction contracts cannot be changed). We need 2 clear business days to complete the review report after receiving the contract documents from you IE your request is on Monday, review report will be provided by Thursday (Review fee is $190 per contract. Fee is reduced to $160 for a first home buyer applying for stamp duty concessions. If you need the review report urgently, a surcharge of $88 will be applied for a 24 hour turnaround). Review advice will be given to you in a review report. We are happy to provide an explanation of comments in our report after the review (included in the review fee).
Building/Pest Inspection:
This is advisable (but it is optional). If you haven’t signed the contract yet and you have the building inspected and defects are found during a building inspection, you have the benefit of being able to walk away OR you can negotiate repairs or a price reduction with the agent (on private sale property). Not all owners will be amenable to repairs or a price reduction, but it is worth getting the inspection so you can have a good idea of the condition of the property before you buy it.
Building inspections can be arranged directly with inspectors on 2-3 days notice and will cost around $550.
We recommend the following companies:
Jim’s Building Inspections
APBI Building Inspections
(We do not receive referral fees or commissions from any other company).
If the agent asks you to sign the contract with the template building/pest condition being ticked in the contract (before you complete your inspection), you may not be fully protected if there are defects in the property. This is because template building conditions in Victorian contracts only allow Purchasers to exit the contract if a major structural defect is found during their formal building inspection. This is obviously very restrictive. If you have signed a contract with the template building condition it doesn't allow you to exit if there are many concerning minor building defects and it does not allow you to negotiate repairs or ask for a reduction in the price. We recommend that you negotiate a wider building condition with the agent (we can provide a advice on a better building condition) or complete the building inspection before you sign the contract. You must also make sure that any owner-builder works have been inspected. The owner must provide you with a defect report. We can provide further advice in a Contract Review.
Alternatively you can complete the building inspection during the Cooling Off period (for private sale properties) and cool off if you are not happy with the results of the report. You will forfeit 0.2% of the purchase price if you cool off.
Step 3 - If you are happy with the building inspection and our Contract Review report and the Vendor is interested in your offer you can proceed to sign the contract. The agent will arrange to forward a pre-filled contract to you, completed in your offer terms. They will ask you to sign the contract/offer and the acknowledgement page of the Section 32 Statement. You should sign and pay part of the deposit on signing the contract/offer eg. $1,000 into the agent’s trust account is the normal procedure. . This will be your formal contract-offer.
If you have previously asked us for a Contract Review, we are happy to check over the pre-filled contract before you sign it (included in the Contract Review fee).
Step 4 - If the Vendor is interested in your offer, they will sign and return the contract to the agent and the agent will give you the fully signed contract. This means the contract is completed and binding on you and the Vendor.
If the Vendor is not interested in the offer, the agent will inform you and will refund your $1,000.
Step 5 - Once you have a fully signed contract please contact us. The agent will email the signed contract to me. You should also provide the fully signed contract to your lender/broker and apply for your loan immediately. You should make sure that you may the deposit to the agent by the date in the contract.
You can ask us for a Contract Review and we will be happy to guide you through these steps.
You are also welcome to contact us for a free 15 minute initial discussion.
When you are interested in purchasing a property you may not know where to start when it comes to the negotiations. There are certain steps to be followed and some important information to be discussed with the real estate agent. If you need guidance at this time you are welcome to contact us.
Below is a step by step guide which may assist you when you find a property you like. This is our suggested approach but your negotiations may follow a slightly different format.
Please be aware that if you buy at an auction you cannot generally negotiate additional terms such as Subject to Finance or Building/Pest Inspection and you have no cooling off period. If you sign a contract on an auctioned property more than 3 business days before or after the publicly listed auction date, you may still have the benefit of a cooling off period and may be able to negotiate contract terms with the agent.
Buying a property at auction may not suit purchasers whose funds are very limited (because they won't be able to make the purchase subject to finance).
Cooling Off
When you make an offer on a property in Victoria, you then have the right to withdraw from the contract for any reason within 3 business days of you signing the contract/offer.
This is called the Cooling off period and it is available on most Victorian private sale contracts and it means you are entitled to withdraw from a contract within 3 business days after making an offer (which starts the day after you sign a contract/offer). For example if you sign a contract/offer on Monday you can withdraw by close of business on Thursday. You will forfeit 0.2% of the purchase price if you cool off (ie price is $700,000, you will lose $1,400). The agent will refund you the deposit you paid minus 0.2% of the price if you cool off.
MAKING AN OFFER –
You should generally follow these steps:
Firstly, it is best practice and much safer for Purchasers to make a formal offer only after:
- They have finance approval (if applicable). This means pre-approval and the price being offered should accord with the lender/broker's estimated property value (ask the bank to complete an auto-valuation), and
- They have had the building checked by a registered builder, and
- They have had the Contract and section 32 statement checked by a lawyer/conveyancer, and
-Also inspected carefully and checked other important information about the property such as building works and environmental concerns (called due diligence checks).
We understand this may not always be possible and you may not want to delay making an offer, though you need to be prepared to take on risks if you proceed without completing the checks above.
You can make your offer subject to certain conditions, such as subject to finance and subject to building/pest inspection. These conditions must be marked in the contract. We can check the filled-in contract/offer to make sure the conditions you need have been added. You will need to ask us for a Contract Review.
Step 1 – Call the agent and discuss general terms of your offer –
- Price
- Settlement in 30/45/60/90/120 days
(if you are using a bank loan, you should not settle in under 45 days)
- subject to building/pest inspection (or not),
- subject to finance approval (or not),
- Subject to contract review by a lawyer (or not),
- Mention any other additional special conditions to the agent (for example, subject to certain repairs being completed by the Vendor).
- Ask the agent to email you a copy of the Contract/Section 32 Statement and forward it to us for the review.
The step above does not result in a formal/binding offer.
Step 2 - If the agent thinks your offer it might be accepted, you should also put the offer in writing in an email.
If the price is likely to be accepted, you can then proceed to arrange your contract review and building inspection before signing the contract.
Finance:
Make sure you also discuss the offer and property with your lender/broker. Tell them you are proceeding with an offer.
Contract review:
You can contact us at this time to request a Contract Review and get assistance with wording your offer as well. A Contract Review is advisable (but it is optional). If you sign a contract without a review you may not understand the conditions in the contract and you may miss important details about the property in the Section 32 Vendor Statement.
As part of a Contract Review we will check the property information in the Section 32 and advise you of any 'red flags'. We will also check the contract and advise of you any concerning conditions and suggest amendments or deletions (but note that auction contracts cannot be changed). We need 2 clear business days to complete the review report after receiving the contract documents from you IE your request is on Monday, review report will be provided by Thursday (Review fee is $190 per contract. Fee is reduced to $160 for a first home buyer applying for stamp duty concessions. If you need the review report urgently, a surcharge of $88 will be applied for a 24 hour turnaround). Review advice will be given to you in a review report. We are happy to provide an explanation of comments in our report after the review (included in the review fee).
Building/Pest Inspection:
This is advisable (but it is optional). If you haven’t signed the contract yet and you have the building inspected and defects are found during a building inspection, you have the benefit of being able to walk away OR you can negotiate repairs or a price reduction with the agent (on private sale property). Not all owners will be amenable to repairs or a price reduction, but it is worth getting the inspection so you can have a good idea of the condition of the property before you buy it.
Building inspections can be arranged directly with inspectors on 2-3 days notice and will cost around $550.
We recommend the following companies:
Jim’s Building Inspections
APBI Building Inspections
(We do not receive referral fees or commissions from any other company).
If the agent asks you to sign the contract with the template building/pest condition being ticked in the contract (before you complete your inspection), you may not be fully protected if there are defects in the property. This is because template building conditions in Victorian contracts only allow Purchasers to exit the contract if a major structural defect is found during their formal building inspection. This is obviously very restrictive. If you have signed a contract with the template building condition it doesn't allow you to exit if there are many concerning minor building defects and it does not allow you to negotiate repairs or ask for a reduction in the price. We recommend that you negotiate a wider building condition with the agent (we can provide a advice on a better building condition) or complete the building inspection before you sign the contract. You must also make sure that any owner-builder works have been inspected. The owner must provide you with a defect report. We can provide further advice in a Contract Review.
Alternatively you can complete the building inspection during the Cooling Off period (for private sale properties) and cool off if you are not happy with the results of the report. You will forfeit 0.2% of the purchase price if you cool off.
Step 3 - If you are happy with the building inspection and our Contract Review report and the Vendor is interested in your offer you can proceed to sign the contract. The agent will arrange to forward a pre-filled contract to you, completed in your offer terms. They will ask you to sign the contract/offer and the acknowledgement page of the Section 32 Statement. You should sign and pay part of the deposit on signing the contract/offer eg. $1,000 into the agent’s trust account is the normal procedure. . This will be your formal contract-offer.
If you have previously asked us for a Contract Review, we are happy to check over the pre-filled contract before you sign it (included in the Contract Review fee).
Step 4 - If the Vendor is interested in your offer, they will sign and return the contract to the agent and the agent will give you the fully signed contract. This means the contract is completed and binding on you and the Vendor.
If the Vendor is not interested in the offer, the agent will inform you and will refund your $1,000.
Step 5 - Once you have a fully signed contract please contact us. The agent will email the signed contract to me. You should also provide the fully signed contract to your lender/broker and apply for your loan immediately. You should make sure that you may the deposit to the agent by the date in the contract.
You can ask us for a Contract Review and we will be happy to guide you through these steps.
You are also welcome to contact us for a free 15 minute initial discussion.
