How to make an offer on a house

How to make an offer on a house

After scouring the housing market for some time, you’ve fallen in love with a home that ticks all your boxes. Now you’re wondering how you make an offer on the house without paying more than you need to. 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. 


What do you need to put an offer on a house?

Before taking a serious look at the property market, seek pre-approval from your lender first. By doing this you will know the limits of your budget and won’t set your sights on something outside what you can afford.

Seeking pre-approval, sometimes called conditional approval, also puts you in a stronger position when making an offer, as it gives a seller more certainty that you can pay up.

Although you can make verbal offers on a house, for clarity on details and terms it is best made in writing. 

In your letter of offer the following should be included:

  • The names and addresses of both seller and buyer
  • The offered purchases price and address of the property
  • The settlement date when the buyer intends to pay and obtain title
  • Details of how you wish to pay the deposit, whether it be cash or by transfer
  • Included chattels: any fixtures on the house you intend to buy with the house e.g. dishwasher, inbuilt barbecue.
  • Conditions or contingencies of sale e.g. pest control or building inspections 
  • Any additional contract clauses. Use specific clauses to ensure features of the home are fully functioning upon purchase e.g. the swimming pool, the electrical and gas network. 

How do I make an offer on a house?

  • Your first step should be to get a copy of the contract of sale and have it looked at by a conveyancer or solicitor.
  • You should have your finance pre-approved.
  • You can then make an offer verbally or in writing, but it would be wiser to opt for writing so as to stay on top of negotiations and conditions (also known as contingencies.) 
  • Negotiation usually begins when you meet with the agent and they will pose a number of questions about your needs and budget.
  • Before you give an offer, there are usually multiple calls, follow-up visits to the property and maybe some inspections.
  • If the contract looks okay to you, then you put your offer in writing and hand it over to the seller or the real estate agent.
  • Generally, your offer will include how much you are willing to pay, any conditions to the sale and details about the property. Conditions can concern repairs, a deposit amount or a day for settlement. A letter of offer should be prepared with a solicitor or conveyancer to ensure you cover important aspects.

What happens when you make an offer on a house?

There are three typical outcomes once you make an offer on a house.

  1. The offer is rejected: This usually means that the gap between your offer and what the seller is asking is too great. Perhaps the house is out of your range.
  2. The seller gives you a counteroffer: Often the seller comes back with an amount higher than yours. This can be good news because you’re still in the game and can continue negotiating a price. As the buyer you can accept, decline or counteroffer as well.
  3. The offer is accepted: The buyer and the seller have agreed on a price and once this price is accepted, it becomes a legally binding contract. 

Can you withdraw an offer on a house before it is accepted?

For a number of reasons, buyers change their mind about property, even after making a formal offer. Until your offer is accepted by the seller you will not have a legally binding contract under law. To revoke your offer, put this in writing and hand it over to the agent. Confirm that your offer has been revoked before making an offer on another house.

What is considered a lowball offer?

A lowball offer is one believed to be less than what the property is actually worth, but sometimes used as a good place to start negotiations. You might want to skip out on this technique, however, if the market is hot, the home is highly sought after, higher offers have already been made or if the home is particularly unique.

Can a seller back out of an accepted offer on a house?

Under limited circumstances, a seller can back out of their contract. For example, if there is a term in the contract for a cooling off period or a requirement from the buyer which is not fulfilled.

You should consult your solicitor for a better understanding of what breaking a legally binding contract would mean for you.

How much is a deposit on a house offer?

The amount of money you put down as a deposit is subject to your lender and their criteria. Some let you borrow up to 95% of your property’s value so you may only need to put down 5% to have your loan approved.

But, it’s a good idea to aim for more – you won’t have to borrow as much, will have lower repayments and you lower the amount of interest paid over the lifetime of your loan. 

You’re also in a better position to negotiate lower interest rates with lenders because you pose less of a risk with less to repay.

When you put down 20% of the sale price or more, you also avoid paying Lender’s Mortgage Insurance. This is a way to protect the lender when you borrow a large fraction of your purchase price. This cost can either be upfront or made in addition to your repayments.

Is making an offer on a house legally binding?

Every offer that you make has the potential to be legally binding, especially if it is made in the form of a signed contract of sale. If the seller agrees to the contract that you have proposed, and signs, then the property has been sold.

Should you accept the first offer on your house?

If you’re unsure if you should accept the first offer on your property here are some things to think about:

  • Recent sales: Look at what recent sales suggest. Although you may have a target number in mind, you must compare this to how similar houses in your suburb are performing. Then assess if the offer seems high or low.
    • Look within a 1km radius
    • Houses sold within the last six months
    • Same block size, same number of bedrooms and bathrooms
  • Is it a cash offer? Sometimes a cash offer means one less contingency to worry about and can make for smoother sailing.
  • Have you got a limited buying pool? If you haven’t received a lot of interest and are eager to sell, perhaps accepting is best for you.
  • Are you pressed for time? Sometimes sellers are relocating for a new job or to a new country and need to sell.
  • Have you already found your next home? Often a seller’s inability to pay two mortgages leaves them selling faster than they like.

Do sellers have to respond to an offer?

According to Lisa Suryawan, Sales Manager of Xynergy Realty, she says that sellers can either reject, accept or give a counter offer:

“Either way, best practise is you must respond to all offers.”

Can you bid lower on a house?

You can bid lower on a house, but most buyers will not reduce their number more than 5%-10%. Even then this comes after the following considerations:

  • Research: This comes up a lot, but it really pays off to know what recent sales say about the asking price. It may be too high, and a lower price may be more deserving. 
  • Long listing: If the property has been listed for a while this can be a sign that the seller may be asking too much.
  • Inspections: Complete an inspection and if you are given a reason to decrease the value of the home use this as a point of justification in your letter of offer. Sometimes this needs the eyes of a professional who can identify problems outside your expertise.
  • What does the seller want? Sometimes the seller would rather a longer settlement time instead of the highest offer. Find out what motivates their need to sell and cater to them.
  • Approved finances: Sometimes having your finances approved and ready to go can make you appear more competitive. 
property jargon decoded

How do I write an offer letter for a house?

In your letter of offer at least the following should be included:

  • The names and addresses of both seller and buyer
  • The offered purchase price and address of the property
  • The settlement date when the buyer intends to pay and obtain title
  • Details of how you wish to pay the deposit, whether it be cash or by transfer
  • Included chattels: any fixtures on the house you intend to buy with the house e.g. dishwasher, inbuilt barbecue.
  • Conditions or contingencies of sale e.g. pest control or building inspections 
  • Any additional contract clauses. Use specific clauses to ensure features of the home are fully functioning upon purchase e.g. the swimming pool, the electrical and gas network. 

Do I need a lawyer to make an offer on a house?

No, you can also use a licensed conveyancer who specialises in ‘real property’ law to look after your transaction. But essentially, you should talk to either a conveyancer or solicitor to guide you through negotiations and offers.

financial advisor

When should you lower the price of your house?

In a slow market or a buyer’s market, it may be best to consider lowering the price of your home. Before it comes to this, here are some considerations to think over before you agree to lower your sale price:

  • Are you marketing your house well? Have you really promoted its benefits and features? Does it include a virtual tour?
  • How many open houses have you had?
  • How many hits have you received on your listing?
  • What feedback have you had from agents? 
  • Can improvements make a significant difference to the demand of the house? Are they achievable? 

Are you trying to sell in a buyer’s market?

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A buyer’s market is one with lots of houses, meaning lots of competition that drives house prices down. If you are trying to sell in this climate, ask yourself how motivated you are to sell, then assess if your house is overpriced. If it is, consider reducing your price.

Picking the right price

Compare your sale price to active listings and assess how long their house was on the market before they decided to lower the price. Gradually, reduce your price until your listing receives a surge in hits.

Can you put an offer on a house that already has an accepted offer?

When a property is “under offer” but the sold sticker has not gone up, this means that it is still subject to a few conditions. This can include cooling off periods or pest and building inspections. At this point you can phone the agent and find out which conditions are still being determined so you can keep track of whether it will return to the market. You can still inspect the property to make sure it ticks all your boxes, and then if need be, sit tight and wait.

Cooling off periods statebystate

Often contracts for the sale of residential property come with a cooling off period, though, it is rare buyers to pull out of a sale. Under a contract of sale, terms can be changed to waive, reduce or even extend a cooling-off period. These terms are discussed and settled in pre-sale negotiations.

Each Australian state and territory have their own legislation regulating coolingoff periods and typically a penalty for withdrawing from a contract.
  • Queensland: You have five business days from the exchange of the contract until 5pm on the fifth day. Weekends and public holidays are not included. If the buyer opts out of the sale, the seller may deduct a financial penalty of 0.25% of the sale price from your deposit.
  • New South Wales: You have five business days until 5pm on the final day to back out of the sale. The buyer will lose 0.25% of the sale price to cancel the contract.
  • Tasmania: There is no cooling off period on private treaty real estate.
  • Victoria: You have three business days from the contract of sale to opt out. The buyer will be required to pay 0.2% of the purchase price as a penalty.
  • South Australia: You have two business days to back out of the contract and notice must be given by 5pm. If the buyer pulls out, they forfeit a holding deposit if one is given, but any purchase deposit over $100 will be returned. 
  • Australian Capital Territory: You have five business days until 5pm on the final day to back out of the sale. The buyer will lose 0.25% of the sale price to cancel the contract.
  • Northern Territory: You have four business days to opt out of the contract of sale. The Northern Territory is the only state where the buyer will not suffer a penalty. Both purchase and holding deposits will be refunded.
  • Western Australia: There are no compulsory cooling off periods unless negotiated into the contract of sale.

Extra conditions may be added to your contract of sale such as your ability to obtain finance or the sale of your current property.

If you buy a house at an auction, say goodbye to a cooling off period. Cancelling after securing the property at auction will become an expensive exercise, so be confident in your choice and your finances before this.

Can I pull out of a contract after my offer is accepted? 

Contract cancellations need to be made in writing and usually within a period of time and at a cost. Look above to find the cooling off laws in your state, and if you fall within that time.

You can also pull out if the seller fails to fulfil a condition under the contract. But if you want to withdraw after this period of time you should speak to a lawyer about the consequences of breaching a contract.

Can a realtor disclose other offers?

Legally there is nothing stopping a real estate agent from disclosing if other offers have been made and what the magic number was. But, according to Lisa Suryawan, Sales Manager of Xynergy Realty, she says:

“It’s best not to share what the offer amount is however we could give an indication of a range where the offer might fall.”

How do you negotiate buying a house?

Ask the seller why they wish to sell.

The best offers aren’t always the highest price. You also need to understand what is motivating them to sell and try to use this to your advantage.

For example, a family selling their property might want a long settlement period in order to secure another property and move in. In this case the second highest offer with a longer settlement period might seem more advantageous to them.

This is why it is important to ask:

  • Why are they selling?
  • How long have they been trying to sell?
  • Have there been any offers made already?
  • How long have they owned the property?

Look at what recent sales suggest, then assess if the offer seems high or low.

  • Look within a 1km radius
  • Houses sold within six months
  • Same block size, same number of bedrooms and bathrooms

What to know before making an offer on a house?

  • Research the area: know that the price is competitive and that the neighbourhood is one that you want to live in.
  • Research the house: Is this suitable for your needs? 
  • Have you done the relevant inspections or have contingencies to do so?
  • Ask the seller to give you an estimate of the utility bills
  • Secure your finances and know if the house is within your budget
  • Make your intentions clear, but don’t reveal your highest bid.
  • Find a good real estate agent, not just one that has been suggested to you. 

How do I make my offer stand out?

  • Do your research. Know if you can negotiate and give justifications as to why you lowered your price.
  • Find a great real estate agent who will be proactive and communicate between both you and the seller well.
  • Come with preapproved finances.
  • Make your offer personal. Sometimes the seller might want to know the house is being given into good hands and will be kept much the same. Highlight what you most like about the home and how it is unique.
  • Get the seller to like you. Share something about yourself and why this home is particularly striking to you.

Are you setting out on your propertybuying journey and thinking of making an offer on your dream home? eChoice can help you get that allimportant preapproval sorted so you can submit your offer with confidence. We have access to hundreds of products, so we’ll find you a competitive rate. Just remember this is a guide only, and before making a decision we suggest you seek legal advice.

Words by Michelle Elias

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