When you are ready to write up a contract, the next step is to decide on the price you wish to offer the seller and under what conditions you wish to make the offer. Common conditions of sale are: subject to finance, a builder's report, sale of another property, solicitor’s approval of the contract or specialist inspection or approval.
You will be provided with details of relevant sales in the area and advised of any price guidelines that are available for the property.
The offer will be prepared on a standard approved contract and you will be asked to sign the required number of copies. Once this process has been completed your sales consultant will check whether any other interested parties are putting in an offer. If this is the case then you will be kept fully informed (see information on ‘Multiple Offers’ in the next section).
The seller can accept your offer, reject it or counter sign it. Counter signing usually occurs when the seller is not satisfied with the price offered and/or conditions included and subsequently alters them. The contract will be brought back to you for your consideration. If you accept, you initial the seller’s alteration and the property is under offer to you subject to any conditions that the contract may contain. Alternatively you also have the right to counter sign. Your sales consultant will continue negotiations between you and the seller until you are both in agreement.
This process does not occur when buying at auction. (See information on “Buying at Auction” in the next section)
The dangers of offering too low
Once they find the property they wish to purchase many buyers are tempted to “start low” with their offer. We understand, but would not be giving you complete service if we did not warn you of what can happen.
1. The seller could feel insulted, and become difficult to negotiate with from then on.
2. The seller may think you are a bargain hunter “having a go” without serious intention to buy and dismiss your offer altogether.
If you are serious about purchasing the property it is wise to make a genuine offer that reflects your serious intentions and appreciation of the true value of the seller’s home.
Along with the standard terms of the contract both buyers and sellers are able to insert further terms and conditions of sale. When writing in any special condition the key parts are who is going to do it; what are they going to do; when are they going to do it by; what standards will apply; what happens if it is not satisfied and who can waive it.
Once an inserted condition has been satisfied notice will be provided to the other party usually by the solicitors involved.
A condition can be either satisfied or waived. If you have inserted a condition but it has not been met by the required date you can choose to waive that condition. If the condition is neither satisfied nor waived then the agreement will be terminated and any deposit paid by you shall be immediately refunded.
Some common conditions of sale are:-
1. Conditional on sale of purchaser’s property
2. Conditional on sale of purchaser’s property becoming unconditional
Inserting these clauses allows you to sell your property before purchasing. Use the appropriate clause to allow you time to sell your property or for an existing contract of sale to become unconditional in all respects.
Insert this clause in your contract when the property you are making an offer on is already under contract for sale subject to a conditional agreement. By securing a signed back up offer this means that if the first conditional contract on the property does not go ahead the seller cannot grant any extensions to the first buyer and your contract will take immediate effect. If you have a backup offer on a property it is important that you take that into consideration when looking at other properties so that you don’t enter into two different contracts.
1. Conditional upon Finance
2. Conditional upon obtaining Solicitor’s Approval of the Contract
3. Conditional upon obtaining a Builder’s Report
Each of these conditions should be clearly worded and the dates for confirmation made clear.
A multiple offer situation is when more than one party is interested in making an offer on a property. Harcourts has formulated a system to handle multiple offers that is fair to all parties concerned.
The seller is notified and a time is set so that all offers can be presented to the seller at the same time.
If you are a buyer and your agent has informed you that you are in a multiple offer situation you are advised to put forward your best price and as few conditions of sale as possible as the seller will accept or enter into negotiations with the most favorable offer.
The seller has the following options:
Accept any one offer
Negotiate with any one offer
Reject all offers
Paying the deposit
Once all parties have signed the contract you will be asked to pay a deposit. This usually equates to 10% of the purchase price.
We can refer you to Harcourts Financial Services who can assist you with this.
Once paid, this deposit is held in a Trust Account until the contract has settled.
You are responsible for the insurance cover of the property you are buying from the first business day after the contract has been signed.
Your Harcourts consultant can provide you with more information.