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How to make an offer on a house

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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.


How to make an offer on a house sold by private treaty

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:

  • Visit the property and inspect it – Some properties will have an allocated time for an open inspection, while others will be by appointment only. You may want to visit the property several times to make sure you’re 100% certain of your decision to buy.
  • Have finance pre-approved – Always get home loan pre-approval before you look to buy a home. This strategy gives you an inkling of what you and can afford to buy, so you aren’t looking for houses outside your budget.
  • Research the market – Always review at least six months of sales data in the area you’re looking to buy in. This method prevents you from overpaying.
  • Conduct a detailed inspection – During your visits to the property, make notes of what needs repairing and then get quotes for repairs so you can factor these into negotiations.
  • Chat with the agent or vendor – Know why the vendor is selling, their preferred settlement timeframe and any other factors that may influence your the price of your offer. You should ask questions to establish these details: have there been any offers made? How long has the home been on the market? How did the vendor settle on the asking price?

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.

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How to make an offer on a house at auction

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:

  • Going to a few auctions – Make sure you attend at least four auctions before you go to one where you’re seriously bidding. By attending other auctions you’ll familiarise yourself with the emotional atmosphere that an auction can generate and acclimatise to the way auctioneers operate. This strategy will help you to avoid the auction hype and then overbidding.
  • Checking the contract – Before you attend the auction, ask to see the contract – the auctioneer should be able to send you a copy. Also, have your solicitor check the contract and any other documentation such as strata reports. If you want any contract changes made to the terms and conditions, then make a request to the agent.
  • Contacting your lender – Discuss your intentions to buy at auction with your lender. Present them with the documentation they need and get home loan pre-approval. Have this pre-approval confirmed in writing.
  • Carrying out any needed inspections – If you want a building and pest inspection done, then organise these with the agent before the auction day.
  • Setting your price – Set your maximum home purchase price the day before the auction. Just remember that often winning bids are not a round figure, so be prepared to throw in the odd dollar here or there.

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.


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