A Comprehensive Guide to Making an Offer on a Property
When you’re ready to make an offer on a property, it’s crucial to approach the process with a clear understanding of the steps involved. This guide will walk you through the essential elements of making an offer, ensuring you’re well-prepared to navigate the real estate market confidently.
Download your Letter of Offer template if you’re ready to make an offer on your new home.
Please note: This article and documentation is to be used as a GUIDE ONLY.
You may wish to seek your own independent legal and financial advice before making an offer to purchase.
Understanding the Offer Process
Making an offer on a property involves several key components, each of which plays a vital role in the transaction. Here’s a breakdown of what you need to know:
1. Deposit Amount
The standard deposit when making an offer is typically up to 10% of the purchase price. This amount is usually paid via bank transfer and can be negotiated. Even with conditions, a small deposit is often required when signing contracts as a token of your intention to purchase. This deposit is refundable if financing falls through. For unconditional offers, the full deposit is generally payable upon signing.
Speak to your finance advisor to discuss options, such as Deposit Bonds or BEFORE making an unconditional offer.
2. Settlement Date
Settlement dates are usually set at 30, 60, or 90 days, but they can be adjusted to suit both parties. For longer settlements beyond 90 days, consult your legal representative as additional terms may apply. You can also include “or earlier by mutual agreement” to allow flexibility if both buyer and seller agree to an earlier settlement.
Speak to your finance advisor if you need less than 30 days or more than 90 days settlement.
3. Unconditional Offers
An unconditional offer means committing to the purchase without any conditions. Once signed, you must proceed with the purchase or risk losing your deposit and facing legal action for vendor losses. It’s crucial to consult with your finance advisor before making an unconditional offer.
4. Including Conditions
You can include various conditions in your offer. Common examples are:
5. Providing Your Details
When making an offer, provide your full legal name, including any middle names and hyphens, as per your identification documents (eg. Passport, Driver’s Licence). If the exact purchaser is not yet determined, you can use one name followed by “and/or nominee,” allowing for changes up to four weeks before settlement. For purchases within a Self-Managed Super Fund (SMSF), please ensure this is setup PRIOR to making an offer.
6. Role of a Legal Representative
Your legal representative, either a conveyancer or solicitor, will review the contract of sale and Section 32, guide you through the legal processes, and ensure your interests are protected. It’s advisable to have your legal representative review the contracts before making an offer, which may allow you to remove the condition related to contract perusal.
7. Offer Expiry Date
Including an expiry date in your offer creates a timeframe for the vendor to respond, preventing delays and allowing you to move on to other opportunities if necessary.
Seeking Further Advice
This guide offers general advice only. It’s essential to seek independent legal and financial advice before making an offer. Consulting with a qualified financial advisor and legal representative is highly recommended for personalised guidance and a smooth property buying journey.
Making an offer on a property is a significant step in the home-buying process. By understanding the components of an offer and seeking professional advice, you can navigate this process with confidence and clarity.
What is the standard deposit amount when making an offer on a property?
The standard deposit is usually a maximum of 10% of the purchase price, paid via bank transfer. However, this amount can be negotiated. At the time of signing the contracts, even with conditions, a small deposit is typically required as a token of your intention to purchase. This is refundable if financing falls through. For unconditional offers, the full deposit is generally payable upon signing.
What are typical settlement date timeframes and can they be adjusted?
Typical settlement dates are 30, 60, or 90 days, but any date is possible. For longer settlements (beyond 90 days), consult your legal representative as additional terms may apply. You can add “or earlier by mutual agreement” to the settlement date, allowing for flexibility if both buyer and seller agree to an earlier settlement.
What does it mean to make an unconditional offer on a property?
An unconditional offer means you are committing to the purchase without any conditions. Once signed, you must proceed with the purchase or risk losing your deposit and facing legal action for vendor losses. It is crucial to consult with your advisor before making an unconditional offer.
Can I include conditions in my offer and what are some common examples?
Yes, you can add as many or as few conditions as you wish. Common conditions include:
– Subject to finance: Allows a set timeframe to secure financing.
– Subject to Building + Pest Inspection: Allows for a professional inspection of the property.
– Subject to satisfactory Perusal of the Section 32 + Contracts: Provides time for your legal representative to review the contract and associated documents.
What information should I provide about myself when making an offer?
You should provide your full legal name, including any middle names and hyphens, as per your identification documents. If the exact purchaser is not yet determined, you can use one name followed by “and/or nominee”, allowing for changes up to 4 weeks before settlement.
What is the role of a legal representative in the property buying process?
Your legal representative, either a conveyancer or solicitor, will review the contract of sale and Section 32, guide you through the legal processes, and ensure your interests are protected. It is advisable to have your legal representative review the contracts before making an offer, which may allow you to remove the condition related to contract perusal.
Why is it important to include an offer expiry date?
An expiry date creates a timeframe for the vendor to respond to your offer, preventing delays and allowing you to move on to other opportunities if necessary.
Where can I get further advice and support during the property buying process?
This guide offers general advice only. Seek independent legal and financial advice before making an offer. Consulting with a qualified financial advisor and legal representative is highly recommended for personalised guidance and a smooth property buying journey.
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