After scouring the housing market for some time, you’ve fallen in love with what might just be your forever home. How do you make an offer on the house without paying more than you can afford? We explain everything you need to know during this exciting time.
Australian homes typically sell by private treaty, where the vendor sets the price of the property, or via auction, which involves making a bid over the ‘reserve’ price to secure the property. Both buying processes are completely different and how you make a house offer will depend on the selling process of the property.
Most house offers made are below the asking price. Of course, how low your offer is depends on your budget and your reasons for buying. Typically, if you’re looking to buy a home to live in yourself, then usually you’re willing to pay more than if you’re purchasing an investment property.
How you make a house offer at a private treaty sale depends on the state or territory of purchase and whether an agent or a vendor is selling the home. Law indicates that a house offer must be verbal or written, but most agents prefer a written offer as this avoids any confusion. It’s also important to disclose any terms and conditions in the offer, such as ‘subject to finance’. Other conditions may include another property sale or a pest and building inspection.
Before you make a house offer, it’s always a clever idea to:
Once you’ve inspected the property and you’re happy with it, then it’s time to make an offer. To do this, you’ll either submit your offer to the real estate agent or directly to the vendor. Both may ask you several questions so they better understand your financial situation and needs.
Buying at auction is a simple – or as scary! – as bidding against other auction-goers on the day of the auction. The vendor of the property would have set a ‘reserve’, which is the lowest price they’re willing to accept. Then, during the auction, once the auctioneer reaches the reserve, they will state that the property in ‘on the market’, meaning any bid above this value will buy the property.
Auctions are typically fast, unlike a private treaty which can span over weeks and months. Prices at auctions can also go far higher than the reserve, especially if a property is popular. On the other hand, plenty of people have also bought bargains at auction because no one wanted to go over the property’s reserve.
Due to the spontaneity of an auction, it’s vital you remain calm and fixed on your budget. Don’t bid more than what you can afford and only bid if you have your finances in order, because you’ll need to pay a 10% deposit on the day and won’t be able to place any ‘subject to clauses’ in the contract.
Before you attend an auction to buy a property, consider:
On the day of the auction, make sure you have a chequebook or a banking app with you to pay the deposit. Also, be prepared to enter negotiations if the property gets passed-in. Why? Not all homes reach their reserve, and you may need to discuss finances with the seller’s agent.
And now, there’s nothing left to do but sit back and hope your offer is accepted – don’t forget to put the champagne on ice, just in case!
Are you setting out on your property-buying journey and thinking of making an offer on your dream home? eChoice can help you get that all-important pre-approval sorted so you can submit your offer with confidence. We have access to hundreds of products, so we’ll find you a competitive rate.
This information is a guide only and is an estimate only based on the past 12 months of aggregated online mortgage enquiries from eChoice and partner programs.
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