As a boutique property law and conveyancing law firm we deal with a lot of buyers, some who are experienced investors, whilst many are new to the property market and very unsure about the process. Our job is to make the buying process as easy as possible for you, so we thought we’d put together a few tips on making an offer on a property.
The first thing to do, of course, is find that perfect property, but what next? You might want to jump in and put in an offer as soon as possible and the real estate agent would be happy to oblige, but there are a few things to consider before you sign a contract of sale.
1. Decide On Your Conditions:
Once you’ve decided to make an offer on a property the first thing you need to do is decide about what your offer will consist of. There’s more than just the price to consider. Of course a seller is always looking for a good price for their property, however some sellers may be swayed by a lower offer that has a shorter settlement period, a larger deposit, or less conditions attached.
When making an offer to a seller one of the contract conditions you need to consider is your deposit. In Queensland a normal deposit is up to 10% of the contract price. This deposit can be broken up into an initial deposit, followed by a balance deposit. A common breakdown of a deposit is to make a small initial deposit, followed by the balance becoming due upon the contract becoming unconditional, which usually occurs when your finance is approved.
The next thing to consider is the settlement period. A standard settlement period is usually 30 days, however this can be shortened or lengthened depending upon your needs. Some sellers will like a short settlement period, whilst others may like a longer settlement period, as they will need to find a new property once they receive your offer.
In most cases when purchasing a property you will need to take out a mortgage, so it’s important to ensure that the contract is subject to finance. The usual finance period on a contract is 14 days, however this can easily be extended to 21 days or more. If you are intending to take out a mortgage it is essential you ensure the contract is subject to finance, otherwise you’ll be liable for purchasing the property even if your finance application is rejected.
You’ll also want to ensure that the property is in good condition, so it’s important to ensure that the contract is made conditional upon a pest a building inspection. After you sign the contract this is one of the first things you’ll need to organise. A pest and building inspection will look at the structural condition of the property and any pest or termite infestations and highlight repairs that may be required.
A standard contract of sale can also include any special conditions that you may require, such as the contract being subject to the sale of your current property.
Once you’ve decided upon what conditions your offer is to include, the next step is to communicate these to the real estate agent and have them put in writing.
2. The Contract of Sale:
Queensland has two different standard contracts of sale that are used by real estate agents. These are the REIQ contract and the ADL contract, both of which include all of the standard conditions detailed above. Which one you use will depends upon the real estate agent selling the property, but the contracts are similar in most respects.
It’s important that you clearly communicate to the real estate agent the conditions you want detailed on the contract of sale and read the prepared contract carefully before signing to ensure that these have been included.
It’s at this point that it’s a good idea to get in touch with a conveyancing solicitor and have them review your contract before you submit it to the seller, as once submitted and accepted by the seller it will become binding, even if some of your conditions have not been included on it. A conveyancing solicitor can also ensure that the contract has been completed correctly so your legal rights are protected.
At Dylan & Inns Gold Coast our conveyancing solicitors will review a Contract of Sale free of charge for you.
Once you have done this it’s just a matter of signing the contract and formalising your offer to the seller.
3. Considering Counter Offers:
It is unlikely that a seller will accept the first offer you make to them, as they will often want to negotiate a contract of sale, in most cases to negotiate the price.
They can do this by making a counter offer to you, which is done by the seller crossing out your original price offered and writing in a counter offer. The real estate agent will then come back to you with the counter offer the seller has proposed. You don’t have to accept this offer though, as you can also make a counter offer back by crossing out their offer and making your own. Once a price is agreed upon, all parties must initial this price and once this is done and the contract signed by the seller it becomes binding upon all parties.
This process of counter offers is a usual part of the buying and selling process in Queensland. It is important that you make counter offers in a timely fashion though, as the contract is not binding until signed by all parties and the seller may receive another offer from a different party in the meantime.
4. Offer Accepted:
Once your offer is accepted by the seller and the contract of sale finalised, it becomes binding upon all parties and the various dates in the contract begin to tick over. It’s at this point that you ensure you have a solicitor engaged to manage your conveyancing and to ensure that you meet your legal obligations under the contract of sale.
Making the decision to purchase a property is extremely exciting and it’s perfectly normal to be nervous and a little unsure of the process. Don’t be afraid to ask your conveyancing solicitor questions. Their job is to help you and make the process as stress free as possible for you!