Making an offer on a property is similar to playing a game of chess – each party waiting to see what move the other party is going to make.
What is the process?
The process of making an offer on a property can vary from state to state. For some areas, the first offer can be verbal, for others it is written. Make sure you’re across the rules and how the process works before you start.
It’s often best to make the offer in writing – this eliminates any confusion concerning what the offer and conditions were.
The negotiation process begins when you first meet an agent. They will likely ask a number of questions to understand your situation and formulate an idea of what your needs and your budget are.
Before getting to the offer, this relationship with the agent might consist of a number of phone calls, second and third visits to the property and possibly some inspections.
During this process and before you make an offer remember the following:
Should I get a valuation?
It can be a good idea to get a registered valuation on the property. Although this is generally done as part of the loan process, your negotiations would have already taken place.
If you want to get your offer on the table, you can always add a condition that it is subject to a valuation. However, the vendor might not accept this condition and you might miss out on the property.
If you are thinking about getting a valuation as part of the offer process, check with your lender to enquire which valuers they use to make sure it can be accepted as part of the loan application – you don’t want to pay twice.
Do your research
One of the biggest mistakes buyers often make is not researching the property fully before making an offer.
Speak to the agent to get an idea of the vendor’s asking price. Study other comparable properties that have sold in the area recently, which will help you determine how much you think the property is worth and make an informed offer.
If you’re interested in a property that is going to auction, ask the agent if the vendor is considering pre-auction offers.
Be upfront if you’re interested in the property. You don’t have to give an agent your life’s history but enough information for them to know to contact you and keep you in the loop if there is movement on the property.
How to offer at auction
Making an offer on a private treaty can be done in your own time, but an auction is different.
Auctions can be emotional so you need to keep cool under pressure. To get an idea of how these play out, it’s a good idea to attend numerous auctions before ‘the big one’. This way you can check out strategies used by other buyers.
Before the day, have all your inspections, terms and conditions, etc, completed and checked out by your solicitor.
On the day, know what you want to pay for the property and don’t deviate. Remember, deposits are generally 10% of the purchase price so ensure you have funds available.
Have a support network. If you’re not comfortable bidding at an auction, use someone that is – a friend, relative or buyer’s agent.
16 MAY 2016