There are many methods used to sell a home, but the two most predominant ways include private treaty, where offers are made directly to the real estate agent, and via auction.
It’s important to brush up on your knowledge of offers, both for private sales and auctions, if you’re in the market to buy.
Placing offers on a private sale
Conditional vs unconditional
There are two types of offers, an unconditional offer and a conditional offer.
An unconditional offer is a binding contract that occurs if the purchaser has confirmed finance and are sure about the property.
When an unconditional offer is accepted, the purchaser is bound to complete the purchase and cannot cancel the agreement for any reason.
A conditional offer becomes a binding contract, at some stage in the future, if certain conditions are met. For example, valuation of the property, finance approval, property and building inspections such as pest and termite inspection.
An offer can be revoked at any time prior to acceptance, however, once the offer is accepted, the seller and the buyer are legally bound by the terms of the offer.
Making an offer
If you’re interested in making an offer on a property, you should contact the real estate agent to express your interest and what you’re willing to pay.
Research is key in this process. While you want some room to negotiate, submitting an offer way below the market value isn’t likely to be taken seriously and may even make the seller reluctant to work with you.
Don’t be scared to put your best offer in as it may mean the difference between walking away with the property or not.
Bidding at auction
At an auction, the property is offered to the highest bid that exceeds the reserve price.
When you bid, you accept the terms of the contract on display before the auction, and will not be able to negotiate terms, such as a longer settlement period. There is also no cooling off period.
It is recommended that prior to bidding at an auction, you research the market, get pre-approval and set your bidding limit.
When you sign the contract of sale after an auction, you will need to pay a deposit. There are no laws about the amount of deposit, but it is usually 10 percent of the purchase price.
If the seller permits, you may be able to make an offer prior to the auction.
Your offer will usually be in the form of a signed contract with a similar process to buying by private sale.
If your offer is accepted less than three clear business days before the auction date, you do not get a cooling-off period.