Putting In An Offer
Congratulations, the driving around weekend after weekend, rushing from property to property, researching online, arrange legal representation, getting approval for a bank loan and all the craziness of preparing to buy a property has finally paid off and you have found a home that you love and want to make your own! The problem now is, how do I submit an offer and how much do I offer?
Making an offer on a property can be a nerve wrenching experience. In today’s market prices are high and so is demand. A lot of buyers are feeling the panic of needing to act and offer quickly. This is true, to a degree. It is important, however to have done your homework first. Before you even turn up to inspect a property, do some research! This is probably the biggest purchase of your life, don’t go into it not knowing what you are getting into. If you have already seen the property, grab the agents number, go to a café and do some research straight away.
Knowledge is Power:
Technology means that the buyer is able to be just as well informed as an agent when it comes to knowing roughly how much a property is worth. Chances are you have first seen this property on the internet. Get back onto your phone, I-pad or computer and have a look at other properties in the area both sold and on the market. This will give you a better idea of what price you should be thinking of offering. Looking at the recent sold properties in the area is the best way to see what prices are doing. The listing price is one thing, what the property sold for reveals what the property is worth.
Another piece of information that you can find online is how long the property has been marketed for. In today’s market, the average property in the Campbelltown / Wollondilly region will be on the market for about 3 weeks. If a property is still available after about a month it is time to ask the question, why? Often the issue will be that the property is overpriced, needs some work / renovations or is simply poorly presented.
Ask the Agent:
When you are inspecting the property make sure you are asking the agent relevant questions which he/she can actually answer. In my experience buyers tend to ask the wrong questions, opting for irrelevant information or information that cannot be disclosed. So what questions should I be asking?
- Offers: Asking an agent if an offer has been made is important as it will reveal if there is interest in the property and how quickly you probably should be acting. Most agents, however will not disclose the price of those other offers. This is normal, do not be frustrated or stressed. You do not need to know other people’s offers, you just need to know what you are prepared to offer.
- Pest & Building Reports: Ask your agent if there has been a pest & building report done to the property and if it is available. This could save you both time & money.
- Previous owners: Do not bother asking about the previous owners. Their reasons for moving are irrelevant to you. Put yourself in their shoes. If you were selling would you want complete strangers to know why you need to sell your home? If it is a structural issue this will be revealed in the pest & building report.
Know the Neighbourhood:
If you are not already local, have a wander around the neighbourhood. Get to know what is close to you; shops, schools, public transport, parks, etc. If you’re going to move into the area make sure you like it and there are no hidden surprises close to your home such as septic tanks or gas, etc.
Contract for Sale
If you like the property even before you inspect it and are seriously considering purchasing, request a copy of the contract for sale from the agency. They have no reason not to send it to you. Have a look through it yourself and send it to you conveyancer / solicitor to go over as well. They will inform you of anything strange or out of place. The contract will also show you any inclusions or exclusions to the property.
Deciding on the price:
There are a few things to take in to consideration when deciding on a price to offer:
- Approval: How much has the bank approved you to loan? Making sure you do not exceed your financial abilities!
- Your opinion: You have now done the research and seen the property. Ask yourself what you are prepared to pay for the property. Know your maximum price for this specific place. If it gets to you offering this amount and you get declined you can walk away satisfied that you have put your best foot forward.
- The asking price: There are some differences in the way the asking price is presented. The agency may put a price range or a straight price. If it is on a range, make sure you offer within the range from the beginning! Please do not begin by offering outside of the range. If the property is on for a straight price and you think it is worth this, then offer the full price or very close to it. Otherwise, offer what you believe the property is worth.
How to Make an Offer:
If you are all prepared on the day, at the inspection, to put forward an offer then all you need to do is speak to the agent. Be confident when you decide on a price to offer. It is always best to put your offer in writing, either by letter or e-mail. This shows that you are serious about your offer and means that there can be no mistakes. It also makes sure that there are records of the negotiations and there is no confusion between you and the agent.
If there are any conditions that you need to include make it known to the agent straight away so they can inform the owner. Conditions could include: changes to the cooling off period, changes to the settlement date, subject to finance approval, etc. These conditions should be included with your offer, in writing.
Negotiating:
Once you have made your first offer the agent will have to discuss with the owner of the home and come back to you with a decision. Sometimes the owner will come back with a counter offer. Make sure you stick to your guns and only come back with offers that don’t exceed what you believe the property is worth. This is a huge investment and you do not want to come away from this experience not feeling good. That said, if negations continue over a long period of time, put your best foot forward, offer your best price (what you would pay for the property/believe it is worth) and be happy with the outcome accepted or not, knowing that you offered all you could and are satisfied with yourself.
Making an offer can be complex and scary but I hope that this has helped to simplify the process. Remember to know exactly what you are getting into! If you are not well informed you could end up making big mistakes. My hope is that you get to enjoy this exciting process and I wish you all the best luck when purchasing a home.
If you have any questions please leave a comment below and I will try my best to get back to you.