Buying a property is often the biggest financial decision that a person will make, and making an offer is a significant step in that process.
Be prepared before submitting an offer to the agent or vendor (seller) by understanding the sales process and what follows.
Obtain a copy of the sale contract as soon as possible and have it examined by either a licensed conveyancer or solicitor. Doing this before making an offer will save time if you need to make a decision quickly about whether to buy a property. Also, having your finance pre-approved before making an offer will help speed things up.
Offers can be made verbally or in in writing. Putting offers forward in writing (eg. email) may help you keep track of negotiations and confirm why an offer wasn’t accepted.
Once you make an offer, if you and the vendor agree on the price, you are one step closer to owning the property but it doesn’t mean that you have finalised the sale!
Before exchanging contracts, the seller may negotiate with other buyers for a higher offer, even if you have made an expression of interest payment. If the seller accepts another offer and exchanges contracts with that party, any prospective buyer who misses out on the property (despite a verbal agreement) is gazumped.
When you buy a residential property in NSW, there is a 5 business-day cooling-off period after you exchange contracts. During this period, you may get out of the contract as long as you give a written notice. The cooling-off period starts as soon as you exchange and ends at 5pm on the fifth business day after exchange.
A cooling-off period does not apply if you buy a property at auction or exchange contracts on the same day as the auction after it is passed in.
You can waive the cooling-off period by giving the vendor a ‘66W certificate’. This is a certificate that meets the requirements of section 66W of the Conveyancing Act 1919. The certificate needs to be signed by your solicitor or conveyancer. It is also possible to reduce or extend the cooling-off period by written agreement with the vendor.
If you use your cooling-off rights and withdraw from the contract during the 5 business-day period, you will have to pay the vendor 0.25% of the purchase price. This works out to be $250 for every $100,000.
Sometimes, there are more buyers looking for homes than there are properties on the market. This is called a sellers’ market. In this case, you may want to organise a quick contract exchange. This way you can reduce the possibility of someone beating your offer and get your building and pest inspections done during the cooling-off period. You will still be able to back out if there is a problem. However, it is important to have the contract checked by your solicitor or conveyancer before you sign it.
If your solicitor or conveyancer has examined certificates from the appropriate authorities, a pest and building inspection has been done and your finance has been approved, then deciding to waive the cooling-off period could make your offer more attractive to the vendor.
An auction is a gathering of potential buyers who publicly bid for a property. It is usually conducted by an estate agent, acting as an auctioneer and governed by strict rules. Buying property at auction is very different to other property purchases. The bidding process is public and if the hammer falls and you are the highest bidder, you have to sign the contract right there and then. This means you must be sure you are bidding on a property that you can buy.
Become informed on key things to know before you start bidding.
AUCTION LANGUAGE
Understand the following auctions terminology:
To participate or bid at an auction, potential buyers must register with the vendor’s agent and be given a bidder’s number. The auctioneer oversees the bidding process. They take bids from potential buyers and keep track of the current bid price. Before auctioning a property, the seller will nominate a reserve price, which is usually not advertised. If the bidding continues beyond the reserve price, the property is sold at the fall of the hammer. If you are the successful bidder, you must sign the contract of sale and pay the deposit on the spot (usually around 10 per cent of the purchase price).
Auctions differ from private sales as there is no cooling-off period:
If you are bidding at an auction, you must be ready to exchange contracts and complete the sale. Otherwise, you will lose your deposit and may be liable for any damages suffered by the vendor.
On the day of the auction, the property may be open for inspection, usually half an hour before the auction starts. Use this opportunity to take a final look at the property, the contract and auction rules.
Agents must give all potential bidders a copy of the Bidder's guide before the auction. The Bidder's guide contains important information you need to know, such as how you register to bid and what kind of identification you must provide to register. It is important to know how to register as you cannot bid if you are not registered. Agents are also required by law to have a list of the following auction conditions clearly visible for all potential bidders:
Attend a few auctions as a spectator to become familiar with the auction process. If the price is getting too high, you need to be able to walk away. This may be one of your biggest decisions, so it is worth making the right one, and being as well prepared and informed as possible about buying property.
Sometimes the vendor agrees to consider pre-auction offers, which you can make through an agent before the auction. The negotiation process is the same as buying by private sale.
Before you bid at an auction, consider the following:
First National Connect a declare that all information contained herein is gathered from sources we deem to be reliable. However, we cannot guarantee its accuracy and interested persons should rely on their own inquiries.
All images in this e-book are the property of First National Connect. Photographs of the home are taken at the specified sales address and are presented with minimal retouching. No elements within the images have been added or removed.
Plans provided are a guide only and those interested should undertake their own inquiry.