You’ve found a property you like. You’ve been through the inspection, run the numbers and now you’re ready to make an offer.
So, what happens next?
For many Australian buyers, making an offer can be one of the most stressful parts of buying a property. Things can move quickly, particularly in competitive markets, and there are often several moving parts to consider before signing a contract.
Your purchase price is only one part of the process. Finance, contract conditions, deposits, settlement dates and state-based property laws can all affect how your offer progresses.
Here’s what you need to know before making an offer on a property in Australia.
How does making an offer work?
In most cases, you'll make an offer through the real estate agent representing the seller.
Your offer may include:
- The amount you're offering to pay
- Your proposed deposit
- Your preferred settlement period
- Whether the purchase is subject to finance
- Whether you require a building and pest inspection
- Any other conditions relevant to your purchase
The seller can then accept your offer, reject it or negotiate with you.
In a private treaty sale, there may be several rounds of negotiation before both parties agree on a price and the terms of the contract.
It's also worth remembering that the highest offer isn't always the offer a seller accepts.
A seller may prefer an offer from a buyer who has their finance well organised, has fewer conditions attached or can settle within a timeframe that suits them.
What happens once your offer is accepted?
Having an offer accepted is an exciting step, but it doesn't necessarily mean the property is officially yours.
The legal process varies between Australian states and territories.
Depending on where you're buying, there may be contracts to sign and exchange, deposits to pay and cooling-off periods that apply.
Before signing a contract, it's important to have it reviewed by a conveyancer or solicitor. They can explain the conditions, deadlines and legal obligations that apply to your purchase.
Your mortgage broker can also work alongside your conveyancer or solicitor to make sure your finance is progressing in line with the dates in your contract.
Is an offer legally binding in Australia?
There isn't one answer that applies across the entire country.
Property contract laws vary between states and territories, including when a contract becomes legally binding and whether a cooling-off period applies.
This means the process of buying a property in NSW may differ from buying in Queensland, Victoria or another part of Australia.
Before making or accepting an offer, it's important to understand the rules that apply in the state or territory where the property is located.
A conveyancer or solicitor should always be involved before you commit to a contract.
Why getting your finance sorted before making an offer matters
In Australia's property market, opportunities can move quickly.
You might inspect a property on a Saturday morning and find yourself negotiating with the agent later that day.
If you're still trying to understand how much you can borrow, which lender is suitable or whether your deposit is enough, you may be under pressure to make important financial decisions quickly.
Getting organised before you start seriously looking can put you in a much stronger position.
Before making an offer, it's helpful to understand:
- How much you may be able to borrow
- What your repayments could look like
- How much you have available for your deposit
- Your estimated stamp duty and upfront costs
- Whether Lenders Mortgage Insurance may apply
- Whether you're eligible for any government schemes or concessions
- How much you are comfortable spending, not just how much you can borrow
A loan pre-approval can also give you a clearer idea of your borrowing position.
However, pre-approval is not a guarantee of final approval. Your lender will still need to assess the property and confirm your circumstances before providing unconditional approval.
Should your offer be subject to finance?
This will depend on your circumstances and the type of sale.
In some private treaty transactions, buyers may include a finance clause that gives them time to obtain formal approval for their loan.
However, this isn't always possible or appropriate, particularly when there is strong competition for a property.
Auction purchases are different. In most Australian states and territories, bidding successfully at an auction generally means you are entering into a binding contract without the ability to make the purchase subject to finance.
This is why it's particularly important to have your finance organised and understand the contract before bidding at auction.
If you're considering buying at auction, speak with your mortgage broker and conveyancer or solicitor before auction day.
What other conditions should you consider?
Depending on the property and your circumstances, there may be other conditions or checks you want to complete before committing.
These can include:
Building and pest inspections
A building and pest inspection can identify structural issues, damage or other potential problems that may not be obvious during an open inspection.
Reviewing the contract
Your conveyancer or solicitor should review the contract before you commit to the purchase.
They can identify important conditions, easements, restrictions, special clauses and other legal matters that may affect the property.
Checking your upfront costs
The purchase price isn't the only cost involved.
Depending on where you're buying and your circumstances, you may need to budget for:
- Stamp duty or transfer duty
- Conveyancing or legal fees
- Building and pest inspections
- Lender fees
- Lenders Mortgage Insurance, if applicable
- Valuation costs, where applicable
- Moving costs
Understanding these costs before making an offer can help you avoid unexpected surprises.
What makes a strong offer?
A strong offer is about more than just the price.
Sellers and agents often look for buyers who can demonstrate they are ready to move forward.
Having your finance well organised can help put you in a stronger position.
Other things that may help include:
Being clear about your price
Know your limit before negotiations begin.
It's easy to get caught up in competition, particularly when there are multiple buyers involved. Having a clear maximum purchase price can help you stay focused.
Having your deposit ready
Make sure you understand how much deposit is required and when it needs to be paid.
Your conveyancer, solicitor and mortgage broker can help you understand the timing and process involved.
Being realistic about conditions
Conditions can be important for protecting you as a buyer, but they can also affect how attractive your offer is to a seller.
The right conditions will depend on your individual situation.
Being flexible where possible
A settlement period that works for the seller may help strengthen your position.
For example, a seller may prefer a 60 or 90-day settlement rather than the standard timeframe you had initially planned.
Private treaty vs auction: What's the difference?
The way you buy a property can significantly affect the process.
Private treaty
With a private treaty sale, the property is listed for sale at an advertised price or price guide.
Buyers can negotiate with the agent and seller, including the price and, in some cases, the conditions of the contract.
There may also be a cooling-off period depending on the state or territory where the property is located.
Auction
At an auction, buyers compete by bidding against each other.
If you're the successful bidder, you will generally be required to sign the contract and pay the deposit shortly after the auction.
Auction contracts are usually unconditional, meaning you need to have your finance and property due diligence organised before bidding.
Because the rules differ between states and territories, always obtain advice specific to the location of the property before making an offer or bidding at auction.
Get organised before you find the right property
One of the best things you can do as a buyer is get your finance organised before you fall in love with a property.
At Harrow & Co, we help Australian buyers understand their borrowing position and explore lending options before they begin making offers.
Whether you're buying your first home, upgrading, purchasing an investment property or adding to your portfolio, having your finance strategy organised early can help you move with greater confidence when the right opportunity comes along.
Thinking about buying a property?
Before you start making offers or bidding at auction, make sure you understand your borrowing position and have a clear plan in place.
At Harrow & Co, we can help you understand what you may be able to borrow, how your repayments could look and what finance options may suit your circumstances.
Speak with the Harrow & Co team before you start your property search and get your finance organised early.
This article provides general information only and does not constitute financial or legal advice. Property purchasing laws, contract requirements, auction rules and cooling-off periods vary between Australian states and territories. Speak with a qualified mortgage broker, conveyancer or solicitor for advice specific to your circumstances and the location of the property.
