Making an offer on a House Below Asking Price [2021 update]
9. Think about your counter offer
Devise and follow the right negotiation strategy.
(Don’t worry, you don’t need to read Donald Trump’s The Art of the Deal to get this right)
If possible instead of making the offer first, let the seller come up with the price.
This will give you a clear idea of what the seller is expecting and how much you can negotiate.
For example, if you make an offer to purchase the house at $600,000 when the advertised price of a house is $650,000 and the seller was willing to sell it for $550,000, you will end up losing $50,000 that could have been saved had you not initiated the offer.
Keep the Counter Offer into Consideration
It is quite likely that after you present the offer through your conveyancer or real estate agent, the seller might give a counter offer.
In that case, take their offer into consideration.
Figure out if you want to accept the offer or want to make another offer to the seller. Be very careful with the timing of this though.
Try not to delay your decision-making process, as the seller might sell the property to someone else.
10. Ask about the cooling-off period
In most cases across Australia, you get a cooling off period after you have signed the contract.
In other words, you get a few days to cancel the contract if you change your mind.
The big BUT to this is if you buy a property at auction…
There is NO cooling off period when you buy at auction.
As the Real Estate Agent or your Conveyancer if you receive a cooling off period, because in some situations if you pull out from the sale you can lose your deposit – unless you have subject to finance clauses in the contract.
- Victoria Contact of Sale
The Instrument’s Act 1958 states that unless you honour a contract of sales in full, a verbal agreement is not binding.
Before signing a contract of sale, the seller is bound to provide the potential purchase with the seller’s statement. Both parties sign each contract’s copy and exchange it through a real estate agent. The cooling off period in Victoria is 3 days.
- New South Wales Contact of Sale
In New South Wales and Sydney, you cannot sell a residential property without signing a contract of sale. Many changes have occurred in these states. For example, a seller of strata scheme or a single freehold is also required to provide a valid non-compliance certificate, an occupation certificate, and a valid compliance certificate.
Moreover, the vendor and purchase are under no obligation to honour the contract until they exchange signed copies. These copies can be exchanged in a face to face meeting or via mail. The cooling off period in New South Wales is 5 days.
- Queensland Property Contact of Sale
In Queensland, the cooling off period is 5 days and the following information should be included in the contract for it to be valid: If the contract is terminated by the purchaser during a statutory cooling-off phase, they will be bound to pay a penalty of 0.25% of the purchase price. Therefore, it is advised that a purchaser should do a property valuation independently and seek legal advice regarding cooling-off rights and the contract before signing a contract.
In these states, the contract is signed by the buyer first, and the seller only signs it if he accepts the offer. It becomes binding only after the buyer receives an acceptance notification. It is important to note that in Queensland, only lawyers can act as conveyancers.
- South Australia Contact of Sale
In South Australia, a seller is bound to provide the buyer with a Form 1 Disclosure statement before signing the contract. After the contract is signed by both parties, they are bound by its terms and conditions. The cooling off period in South Australia is 2 days.
11. What to do when your offer has been accepted
You got the phone call from the Real Estate agent to let you know your offer has been accepted!
…But what now?
From here you just need to follow the simple 3 steps in the home buying process:
In Queensland when you are buying a house you are liable for insurance from 5 pm of signing the contract of sale.
So you need to take out home insurance to get protected.
It’s also at this point you need to get in touch with your Mortgage Broker to get the home loan approval rolling.
They can help you manage the process now, and make sure you secure that shiny new home!
12. Requesting a finance extension
As much as it might seem like a MASSIVE deal for your finance to take longer than expected to get approved.
Tom Astill, from Astills Lawyers, believes it is a very common occurrence for buyers in Brisbane.
“We are seeing finance extensions being requested in over 50% of our purchases at the moment”, Tom said.
“The banks are taking longer, which the vendors are happy to accommodate and generally are fine with providing an extension to finance.”
In other words:
It’s very common to request an extension on your finance clause so don’t worry!
All you need to do is send an email to your conveyancer asking for an extension which they will request from the property seller.
Are there any penalties for requesting a finance extension?
No there is no penalty interest or other issues when requesting a finance extension.
Worst case scenario if the seller rejects your finance extension request, under standard REIQ contract terms as long as the termination is lawful your deposit will be fully refunded.
Either way, speaking with your solicitor and they can negotiate an extension for your finance due date.