To be a successful homebuyer, there’s nothing more important than making an attractive offer to a seller. This is the make-or-break of every property sale and it’s wise for buyers to be clear on the process and be confident about how to make an offer that’s likely to be accepted.
Do your research upfront
If you want success, you need to be willing to put in the time and effort to research a home thoroughly.
Have your research completed by the time you make an offer, particularly if you are making an unconditional offer. Of course, you can make an offer subject to conditions, such as a valuation or building and pest inspection, but this can be less attractive to a seller.
You should also research your own circumstances. Estimate your own maximum price you’re willing to pay on the home, and what your initial offer might be. This involves both researching the market and your own borrowing capacity. A broker can be invaluable as a resource to determining how much you can afford to borrow, but ultimately a bank will not lend more than their valuation on a home.
Attend the open homes, have your pre-approval at the ready and let your solicitor look over the contract when you’re ready.
Know your strategy
It is crucial for homebuyers to be prepared to make an offer that suits the market and the property itself. While there are many ways to make an offer – from the ‘low-ball’ offer to making multiple offers, with variations, at once on a home – there are two main strategies.
The first is to show your full hand straight away and make your top-dollar offer. This is a favourite of buyers in particularly hot markets, or for those who are smitten with a home. This leaves you hoping the seller doesn’t want more, but may mean you beat others to the punch.
The second is to start low and allow the seller to counter-offer. This negotiation strategy may allow you to get an unexpected discount, but if there’s a lot of interest you may also miss out.
You should consider more than just the price offered, but remember that the dollar value is usually the main consideration at the end of the day.
To get an understanding of what strategy to use, ask the agent:
- Have any offers been made already? If so, how much were those offers for and why were they refused?
- What is the price guide?
- Can I see some comparable sales?
- How motivated is the seller? Is there any room for negotiation?
- How many contracts have been given out for the home?
- Can you tell me if any other offers are made? (This way you will be prepared to make a counter offer.)
Formalise your offer
Verbal offers can be made through the agent and are a useful negotiation tactic, but conversations are not binding until both parties sign the contract of sale. Ensure you ask the agent about how they would like to receive offers and be in regular contact with them.
At some point, you need to consider a written offer, usually with a time limit attached that has any additional clauses amended or added by your conveyancer.
A signed contract with a deposit can be very attractive for a seller looking for certainty, while others will be willing to hold out for higher offers. Be patient and prepared for an answer from the seller that will dictate your next step.
Your cooling off period
Some buyers will choose to waive their cooling-off period to make their offer more attractive to a vendor. But this time period, of three business days from the date the buyer signs the contract, allows you to consider the offer.
If you choose to withdraw from the sale, or ‘cool off’, you will be refunded your deposit but will be required to pay 0.2% of the price. Consumer Affairs Victoria indicates the rules require you to provide notice in writing to the agent that you intend to cool off. Speak to your solicitor or conveyance through this process to ensure you cool off within the timeframes indicated.