Making an offer on a house is the first step to getting the ball rolling in the home buying process, and doing it right can help you succeed in doing so. If you’ve found your dream home and are ready to buy, here’s a few tips on putting an offer down.
Making a formal offer on a house needs to be done in writing so that it can be presented to the owner. When writing your offer, you will lay out conditions such as how much you’re wanting to pay for the home, how you will be paying for it (cash or home loan), when you want it to settle, and so on.
While you can make a verbal offer to a real estate agent, for the contract to be drawn up, everything needs to be written down. Sometimes, you may need to show a form of ID (e.g. your drivers licence) for your offer to be accepted.
If the seller decides to accept your offer, the next step from here is signing the contract and officially purchasing your new home.
With the highly-competitive real estate market in mind, putting in a good offer can be the difference between getting the house you want and being lost among the other offers. There are a few steps involved, let’s discuss those below.
To have the best chance of standing out from the other offers on the table, you should have a few things sorted before putting pen to paper and submitting your official offer.
Having home loan pre-approval could be the best way to show the owner you’re a serious buyer. Though pre-approval isn’t guaranteed approval, it’s the closest thing you can get.
Getting home loan pre-approval can take up to a few weeks depending on which lender you are looking to buy through, so if you’re serious about buying a home soon, it’s best to get this out of the way first.
Typically, pre-approval will be available for up to three months, but this can be extended if you need it to be. Hopefully in this time you’ve found your dream home.
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Before you go in guns blazing and offer more than the property’s worth, be sure to do some market research.
Look at similar properties in the area (as in, properties with the same amount of bedrooms/bathrooms/features you’re looking for) that have recently sold.
See how much they sold for, how long they were on the market for, and so on. Having this research front-of-mind can be helpful when considering putting in an offer as you can identify how much you should realistically be prepared to spend.
Free online property reports can also be helpful to get a snapshot of key details of the property you’re looking to buy.
Time is of the essence in a seller's market (which it is right now), so be sure to get in quickly with the owner. Attend the first inspection before setting your sights on one particular property as it will always look different in person. Then, if you’re sure it’s the right home for you, be sure to put in your offer quickly to get ahead of the competition.
When writing your offer, make sure you’ve decided how much you’re going to offer and if you want or need any conditions added to the contract. Having a price limit is important to stop yourself going over budget. Having pre-approval can help with this, as you know how much you’re likely able to borrow.
The terms and conditions of the contract will include finance terms, building and pest terms, settlement dates, and any other special conditions you need. For example, if you’re selling your current home to buy another one, you may need a subject to sale clause added. Be sure to add these conditions to the offer and know what they all mean before you sign anything.
If you’ve put in your offer and had it accepted, before you sign any contracts, make sure to seek legal advice from a solicitor.
The offer isn’t what’s legally binding; the contract is. Be sure to understand exactly what you’re agreeing to, and that you’re happy with the contract before you sign it. Once both parties have signed the contract, making any changes will become more difficult if possible at all.
There is always the possibility of negotiating your offer with the agent, so you may be wondering whether you should offer your best price on the first go. In a seller’s market, most experts advise that you offer your best price from the get-go to stand out from other potentially lower offers. This saves your offer being discarded due to being too low, and it can help your offer stand out.
While you can definitely offer less than the asking price, if you really have your heart set on one particular home, it may not be wise. Many properties will sell with multiple offers on the table for the vendor to choose from. This means that the best offer will likely end up with the home.
With this in mind, it’s still helpful to keep your budget in mind. If the vendor simply wants more than you’re able or willing to pay, you should know when to walk away.
Before you sign any contracts or pay any deposits, you should be able to withdraw your offer on the home without any complications. Once you signed your contract, you may still have the cooling off period (if your contract is conditional) when you can decide to rescind your offer on the property, though it may come at a cost. But once the contract is signed, the cooling off period has passed and your conditions have been met, it’s difficult to withdraw your offer without being penalised.
If you’re thinking about backing out of your contract, be sure to speak to your legal expert and/or real estate agent quickly to know what your options are.
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