Purchasing a new home or property is an exciting milestone - but it can also feel overwhelming and complex, especially when it comes time to make an offer. We understand that this part of the process involves a lot of moving parts and decisions. That’s why having a clear understanding of what to expect can make all the difference. A well-informed approach not only simplifies the experience but also helps you negotiate with confidence and clarity.
To support you, we’ve broken down the key steps and must-know details to help you make a strong, informed offer on your next property.
Prepare before making an offer
Buying a property doesn’t just begin when you attend an open inspection. Getting organised early means you’ll be ready to act quickly when you find the right home, which can be a big advantage, especially in a competitive seller’s market.
Get finance pre-approval
Before you begin house hunting, it’s essential to have a clear understanding of your finances. This helps you focus your property viewings on homes within your allocated budget.
It’s important to be realistic about not only how much you’re approved to borrow, but also what you can comfortably afford to repay. Talking to a mortgage broker or multiple lenders will help you find the best rates and secure a pre-approved home loan. While it can be tempting to go beyond your means, even if a lender offers more, it might not be the best fit for your lifestyle.
Nonetheless, obtaining pre-approval puts you in a stronger position when you eventually do make an offer. It shows vendors you’re serious and financially ready, making you a more attractive buyer.
If you’re a first home buyer, don’t forget to explore the several Government incentives designed to help you get on the property ladder sooner - checking your eligibility could make a real difference.
Consult with a lawyer
Although not a completely necessary step, it may be wise to consult with a conveyancing lawyer with property purchasing expertise to help you navigate your rights and obligations.
Two main reasons consulting a lawyer is in your best interest:
- Having a lawyer in your corner from the outset can help mitigate any issues around the agreement.
- A conveyancer can help you figure out a deal that works for you from the beginning. For example, including specific clauses or conditions that need to be set.
Consider your offer conditions
An offer on a property is usually made either conditionally or unconditionally. So, what does that mean?
In an unconditional agreement, the property is purchased in its current state. It assumes that the buyer will proceed with the settlement regardless of finance and the state of the home. This is typical in an auction sale.
A conditional sale utilises the ‘cooling-off’ period and is reliant on the buyer’s finances, completion of the relevant inspections and if any maintenance needs to be completed prior to settlement.
Pay a deposit
Paying a deposit typically amounts to 10% of the purchase price, though this can vary depending on your agreement with the vendor. The deposit shows your genuine commitment to purchasing the property and is usually held securely in the real estate agent’s trust account, helping to formalise your offer.
It’s important to keep in mind that paying the deposit doesn’t mean you legally own the property just yet.
Understand the cooling-off period
The cooling-off period begins once contracts are exchanged. This short window allows you to carry out additional inspections and reconsider your decision. If you decide not to proceed, you can cancel the contract during this time, although your deposit may not be refundable.
Be sure to review your contract beforehand, as the cooling-off period may not apply to all properties or agreements.
Get the necessary inspections completed
There are various inspections required as part of the sale of a property. This generally includes pest and building inspections to ensure the property is up to code and that there are no issues.
The inspections also help to foresee whether there may be any building issues in the future. When buying an apartment, it is important to review the strata report as this may also highlight any problems, such as building defects and upcoming special levies. Depending on your state or territory, a strata report can be purchased from the agent or directly through a strata inspection company.
Review the contract of sale
Before making an offer, it’s important to carefully review the contract of sale. This document may include conditions that could influence your negotiations, or may not fully align with your needs and requirements. In some cases, specific clauses might even discourage you from proceeding altogether.
The contract outlines important details like the deposit amount and deadline, settlement date, and any included property items. Having a clear understanding of these terms upfront allows you to make a more informed decision and helps prevent unexpected issues later in the process.
Questions to consider when making an offer on a house
There are several questions any potential purchaser should be asking, and vendors must know these will be coming.
- What is the asking price and why? Understanding why vendors came up with the asking price can be an important part of the negotiation process for purchasers. For example, if it was led by the agent, then it is likely to be a good indicator of the market. However, if the asking price is unrealistically high because the vendor needs to buy their next home, this may impact bargaining power.
- What other offers have been made, if any? Knowing what other offers have been made can give a good indication of the competition.
- How long has the home been on the market? The length of time can indicate how much negotiation may occur - for properties that are on the market longer, buyers may try to negotiate a price decrease.
- Why is the vendor selling? The answer to this can indicate how much negotiation may occur. A motivated vendor who wants to sell quickly may be pressured into selling for a lower price.
- Has the asking price changed through the campaign? This may reflect what the market is performing and the level of interest from other buyers.
Making an offer
Once you have completed all the necessary research and established a target price, you’re ready to begin the negotiation process.
The first step is to determine the maximum amount you can afford and the maximum amount you’re actually willing to pay. Remember, these may not be the same number.
Your upper limit should take into account additional expenses like moving costs, legal fees, potential renovations, and any other associated costs.
Your minimum offer should also be realistic. If you offer below market value, then this may insult the vendor and put them off the negotiation process. Your real estate agent or your lawyer will know how best to approach the situation.
Keep in mind, it’s rare for a first offer to be accepted outright. Be prepared for some negotiation and remain flexible throughout the process.
While negotiation can be intricate and potentially daunting for those unfamiliar with the process, several strategies can enhance your position:
Research
Conduct comprehensive research. It is important to note that the asking price is generally a bit lower than what the vendor is seeking. Monitor how the market is performing. Be sure to look at recent, comparable sales to gauge realistic vendor expectations.
Sticking to your budget
Don’t be swayed by your emotions and over-stretch yourself financially. If the property doesn’t align with your budget, another listing could be right for you.
The ability to withdraw from negotiations is also an important part of negotiating.
Making an early offer
Consider strategies that may put you ahead of the competition, such as a pre-auction offer.
Some people believe it is best to wait until closer to the auction date. This means the vendor and real estate agent may have a better idea of interest in the property and may be more willing to negotiate or sell before the auction.
On the other hand, if a purchaser presents an offer early in the campaign, it may deter competing parties who cannot match the price or organise their due diligence fast enough.
It’s important to remember that all offers should be submitted in writing with clear communication. Always ensure to include any conditions you have when you put forward the price – this shows you are genuine in your offer.
How to make an offer on a property: A step-by-step checklist
Feeling ready to make an offer? The following checklist brings together the key steps outlined above to help guide you through the offer process with greater clarity and confidence.
- Organise your finances: Secure pre-approval for a home loan so you are ready to act quickly when the right property arises.
- Consult with lawyers: Consider hiring a conveyancer or property lawyer to review contracts and advise you on conditions or clauses.
- Understand and define your conditions: Determine whether your offer will be conditional (e.g. subject to finance or inspections) or unconditional.
- Review the contract of sale: Review all key details such as deposit terms, settlement dates, and any inclusions before making your offer.
- Organise inspections: Arrange pest, building, or strata inspections to identify any potential issues or risks.
- Ask the right questions: Identify why the property is being sold, how long it’s been on the market, and whether there are any competing offers.
- Research and setting budget limits: Base your offer on comparable sales and market trends, while adhering to your financial comfort zone.
- Make a strong and clear offer: Submit your offer in writing, clearly stating your price and any conditions to demonstrate your commitment to the vendor.
- Be prepared to negotiate: Do not assume your first offer will be accepted. Stay firm, calm, and realistic during back-and-forth discussions.
- Pay the deposit: Once your offer is accepted, you’ll typically pay a deposit (often 10%) to formalise the agreement.
- Use the cooling-off period wisely: If a cooling-off period applies, use this time to complete final checks or withdraw from the contract if needed (note that your deposit may not be fully refundable).
Looking to buy a property? Connect with us today.
Buying or selling a property doesn’t have to be overwhelming. With the right preparation, a clear understanding of the process, and expert guidance, negotiating your next move can be both straightforward and rewarding.
When in doubt, consult the experts. Our team at LJ Hooker is waiting to assist you. We offer you experience alongside excellent market knowledge that helps make the buying or selling process as smooth as possible. As Australia’s number one real estate brand, a little help from the team at LJ Hooker can prove invaluable when it comes to buying your home. Speak to an agent today.
DISCLAIMER - The information provided is for guidance and informational purposes only and does not replace independent business, legal and financial advice which we strongly recommend. Whilst the information is considered true and correct at the date of publication, changes in circumstances after the time of publication may impact the accuracy of the information provided. LJ Hooker will not accept responsibility or liability for any reliance on the blog information, including but not limited to, the accuracy, currency or completeness of any information or links.
