Found your dream home within a decent price range? When you’re thinking about how to make an offer on a property, it can be hard to know where you start.
Know this: making on offer on a property is a game of negotiations, and each party wants what’s best for them. Know how to work this system, and you’ll increase your chances of getting the price and terms that you want.
- Do your home loan homework
There’s a huge amount of information available to first homebuyers, including this post on the top 5 things the banks won’t tell you about home loans. Read as much as you can, or get a mortgage broker to offer you their honest advice.
- First impressions count
Negotiations start from your first contact with the real estate agent. I don’t mean that you’ll engage in a bit of sparring the moment you get on a call or inspect the property – but they’ll be able to pick up on a lot of nonverbal cues about how you’ll behave in the future…and then use these to get the best outcome for their client, the seller. Act friendly and confident, and make eye contact. Firm handshakes make great first impressions too. And it’s the ones who make great first impressions who stay on a real estate agent’s radar….in the best possible way.
- Get pre-approved for a home loan
Find the right home loan for you, and make sure you have a home loan pre-approval on a piece of paper or in an email.
Like with most important transactions and contracts, a face-to-face conversation or a chat on the phone won’t hold up in the eyes of the law. It’ll also eliminate any confusion around what the terms and conditions of the sale are.
Before you start wanting to race to step #2, you absolutely need this pre-approval – or conditional approval – in order to make an offer on the home. Why? Just like if you got to supermarket without your credit card, if you can’t demonstrate how you intend to pay for your home, no one will sell to you. Do your groundwork for the home loan application, and get it in writing.
- Find a great conveyancer
Want the home buying process to be as smooth a fresh latte on a Saturday morning? Engage with a conveyancer before you start throwing prices in the ring. A conveyancer is a professional who does all that boring but necessary paperwork for transferring ownership of the property.
Believe you me: trying to get through all that legal jargon is like reading a book on semiotics in French. Get a professional to decipher it all for you, and they’ll act in your best interests when preparing, clarifying and lodging all forms, amongst a whole list of other duties.
And most important, find pro-active and competent conveyancer to avoid a lot of heartache and nail biting. I recommend finding one that’s part of a solicitor’s firm, so that if anything goes wrong, you don’t have to run around finding a solicitor to help you.
And remember – you get what you pay for. There are conveyancers out there that are cheap, but that comes along with a cheap service. They’ll be reactive, rather than proactive, which makes for extra stress in the house hunting process.
- Ask for the contract
If you’re starting wistfully at your Pinterest boards, dreaming of where to put the family pool or drinks bar, I say quit dreaming and start doing. Ask the real estate agent for a copy of the contract, and review it with your conveyancer to ensure the terms are in your best interests. The seller needs to have a contract prepared and ready to go for inspection before it goes on the market.
- Review the property with your mortgage broker and conveyancer
At your own expense, you’ll need to hire someone to check all of the fittings and fixtures, and check for unwanted tenants – that’s rodents, termites, bed bugs, and any other winged or four-footed pest.
If bad luck strikes and there is something wrong with the property, you have two options: abandon ship, or ask the seller to take care of the problem and provide evidence prior to the sale.
- Make an offer, or get someone else to do it for you
It’s finally time to get down to business! Make an offer in writing, or if you’re not game, get a buyer’s agent to do the legwork for you. Buyer’s agents can be incredibly savvy, and if you’re a first homebuyer, you might not yet know the ins and outs of house price negotiating. Make sure all parties are clear on any conditions, such as the recommended 10-day cooling off period. I recommend a 10-day period, because more time allows extra room for things to go wrong, as they sometimes, yet unfortunately, will.
- Sign the contracts
Once the price negotiation is over (phew!) and you’ve all agreed on a decent price, you’ll both sign the contracts and you’ll pay a 0.25% deposit.
- Cooling off period
Think of this time as a ‘get out of jail free’ card, giving you the chance to cancel the contract without committing to the sale. You’ll need to get a few things checked off your list, and 10-days is usually a decent amount of time for any concerning issues to rear their heads.
During the cooling off period, your mortgage broker will get the property valued. You’ll also need to get unconditional approval from your lender, which is a process your mortgage broker can make a whole lot less painful. With unconditional approval, you’ve an unofficial green light to go ahead with the sale, without any restrictive terms and conditions.
When they’re nose down in your paperwork, your conveyancer will be ordering the appropriate checks, like building reports and strata reports for apartments.
Once everyone is feeling comfortable with all of the inspections, terms, conditions and valuations, you can end the cooling off period. At this point, you pay the 10% deposit you’ve been hard at saving for, and you’re committed. Congratulations!
Beware: Sometimes agents these days won’t do a cooling off period and want you to exchange unconditionally (i.e. 10% deposit straight away) when you’re ready. This involves agreeing on a price, and then getting everything ready before signing the contract. This means that the agent can sell to someone else if they’re ready before you.
The settlement period outlined in your contract is generally around six weeks. You’ll pay the balance of your property with your home loan, including stamp duty.
- Move in and enjoy life!
Congratulations – you’re finally home. Invite the friends over and celebrate!
Making an offer on a property can be an exciting, emotional and stressful process. Make sure you have a professional support network around you to act in your interests. That way, you’ll have a team of people helping you to get your dream home a whole lot sooner, and at a fairer price.