Newcastle Living Magazine
With such a strong market, buyers are plagued with the pressures of negotiating – especially if they are new to real estate. Common problems and concerns often arise in negotiations when it comes to making an offer. Here are a few of the most common questions we get and a few pointers to help you out.
Q / I want to make an offer on a property but I am nervous and don’t quite understand the process. Is there anything that I should be doing?
A / To buy a property, you need to make an offer. In the case of an auction, it is often just the bidding process, but regardless of the sale method, you can make an offer at any time. Firstly it’s good real estate to make your offer formally and we suggest via email. This is done so you have a record of the offer. Make the terms of the offer as simple as possible to understand by giving concrete numbers. Avoid things like ‘we are interested in x price’. The offer should state your price and any conditions you might have (e.g. subject to finance, delayed settlement, reduced deposit, etc). It’s a good idea to request a reply so you can get the ball rolling towards the next stage if it’s accepted, increase your offer if desired, or move on to another property
Q / How do I know the owner has received my offer?
A / It’s the law that the agent must pass on an offer to the vendor as soon as possible up until the exchange of contracts. An owner can ask an agent to simply decline offers under a certain price. If your offer is low and unlikely to even interest an owner, an agent may often suggest this in discussions and indicate for your offer to be given proper consideration needs to be in x to y range.
Q / I made an offer that was accepted but have since been told I have missed out as somebody else has offered more. Is this legal?
A / Unfortunately, yes it is – this is called gazumping. Gazumping occurs when an agent or seller accepts an offer you make to buy a property at an agreed price but the property is sold to someone else. This usually happens when the vendor sells the property for a higher amount. The agent is legally obliged to pass on to the vendor any further offers received for the property up until the exchange of contracts. In NSW, a property sale is binding on the seller and buyer when contracts are exchanged between the two parties. If you are gazumped, neither the agent nor the seller are obliged to compensate you for any money you may have spent on legal advice, inspection reports, finance application costs or inquiries. For this very reason it’s important to understand the offer process and how to negotiate firmly and in a strong market quite quickly to avoid disappointment.
Q / Can I withdraw my offer?
A / Until the point of exchange, you are not obligated to your offer. Before this, you can change your mind at any point and there are no penalties. If a contract has been exchanged, penalties in most cases will apply if you choose to no longer proceed. These vary from losing your part deposit in a cooling period or even losing your whole deposit after a cooling period expires. So be sure to get legal advice prior to signing.
Based on these questions, we’ve put together a couple of recommendations to help you when approaching making your next offer. Refer back to these at any time.
- Stay calm and don’t lose your head
- Make offers in writing and often CC your Lawyer/Conveyancer if you have any concerns
- Request a response from the agent when making an offer
- Be ready to sign a contract if your offer is accepted
- Get legal advice before signing
- Know your rights and get your head around the do’s and don’ts