How to make an offer on a house
Published 12:54 am 2 Dec 2020
Successful real estate buyers understand the most effective home offer strategies and how to get their offer accepted on a house. DG Institute Founder and CEO Dominique Grubisa explains what you need to know and do when making an offer on a house.
How to make an offer on a house
Home finance is an often overlooked part of the offer-to-buy process. Arranging pre-approval for your finance is a simple strategy that can make your offer more attractive to a home seller. That’s because many potential property buyers will make an offer on a property that is conditional on their finance being approved. Iif they can’t get finance approval, their offer will lapse.
As the old saying goes, ‘a bird in the hand is worth two in the bush’. From a home seller’s perspective, a pre-approved finance offer is their ‘bird in the hand’!
It also saves time to have your finance pre-approved before you start looking for a home to buy. A pre-approval will let you know how much you have to spend. You can then research the properties in your price range based on your unconditional finance and make a firm, offer when you find a house you want to buy.
Tailoring your offer to suit different property selling methods
House sales in Australia can be broadly divided into four categories:
- Private treaty
We’ll now look at each of these categories in turn, including how to get the best result when making an offer on a house.
Private treaty house sale
The private treaty method via real estate agents is the way the majority of homes are sold in Australia. The seller and the agent agree on a sale price for the home and usually advertise it the day the property is listed. This gives potential buyers a house price guide. You can then submit an offer to the agent if you want to buy the house.
It’s important to be aware that many sellers will be prepared to consider and accept an offer that’s below their asking price. They often list the property at a higher price in the expectation of receiving lower offers.
Auctions are the second most popular method of selling houses in Australia behind private treaties. An auction gives you the chance to bid on a property. The auction will be advertised to be held on a specific date at a specific time. An auctioneer will encourage people to make bids and try and achieve the highest possible price for the seller on the day.
It’s important to know your bidding limit and to have a bidding strategy before you go to an action. For example, bidding lower than your limit so that you’ll have the opportunity to increase your bid if necessary.
You must register to bid before you make an offer at an auction. You can also usually make an offer before auction day for the seller to consider. If your pre-auction offer is accepted, the auction event will be cancelled.
Tender house sale
A tender is like a silent auction. A seller using this house selling method will be prepared to receive offers from potential buyers by a specific date.
However, house sales by tender differ from auctions in two important ways:
- Each potential buyer that bids doesn’t know what offers competing bidders make.
- A tender offer cannot be accepted before the specified tender closing date.
Distressed house sale
Distressed houses for sale are ones that need to be sold quickly. For example:
- When a lender has repossessed a home because a borrower hasn’t made their mortgage repayments.
- As a result of marital or relationship breakdowns.
- Deceased estates
You can often make an offer under market value that has a greater likelihood of being accepted by the seller in these situations.
There’s an old saying that ‘you don’t get what you deserve, you get what you negotiate’. It’s especially true when it comes to real estate offers. Many sellers will be prepared to negotiate on price or other terms and conditions of the house sale if you make the right offer.
Your negotiating power will increase if you have pre-approved finance and can make an unconditional offer to buy a house for sale.
Using a conveyancer/solicitor to help with your offer
Using the services of a conveyancer/solicitor can help you to include the right terms and conditions in your offer. These terms and conditions can both protect you as well as potentially make your offer more attractive to the seller.
Once you make an offer on the house for sale, it becomes a legally binding contract if the seller accepts it, you must be comfortable with the offer you make. Consulting with a conveyancing solicitor can give you that peace of mind.
More top tips for making an offer on a house (and getting it accepted)
Here are our other top tips for making a successful offer to buy a house.
Do your research!
It’s crucial to research the market thoroughly before you make an offer to buy a house. Knowledge is power! Take the time to research current market prices so you can spot a bargain when you see one.
Attend the first open for inspection
Part of doing your research is to attend the first ‘open for inspection’ day for a property that interests you. This will give you an idea of how many other people may be interested in making an offer on the house.
If you inspect a property, you like, and your research tells you it’s a good buy, it makes sense to put an offer in quickly. Don’t wait for other buyers to emerge to drive the price up. After all, the property might be a distressed sale!
It would help if you made your offer subject to a satisfactory building and pest inspection to protect yourself.
Offer your best price upfront
If you’ve found a home, you really want to buy, offer your best price upfront, but give your offer a short deadline for acceptance. This will help you to avoid being outbid by another buyer.
If you’ve done your research, the price you offer should reflect the property’s real value.
Be prepared to negotiate
Negotiating property purchase prices can be crucial for securing a good deal. Always be prepared to negotiate, but make sure you follow these home negotiation tips:
- Keep your emotions out of it. Treat your offer as a potential business transaction instead.
- Know whether you can afford to offer more if the seller rejects your initial offer.
Here are some other common questions about how to bid on a house for sale.
Can you submit multiple offers on houses?
Yes, you can submit multiple offers on the same house, each with different terms and conditions. For example, one offer might be for a higher price but with a shorter settlement date, while another may be for a lower price but with a more extended settlement date.
Be careful about submitting multiple offers on different houses. If you do and they’re all unconditional and accepted, you may face heavy penalties if you can’t proceed with the house sale.
Is making an offer on a house below asking price the best strategy?
Not necessarily. It depends on the level of interest in the property. If you bid low, you might be outbid by another buyer and lose the opportunity to buy the home you want.
What does ‘under offer’ mean in real estate?
If a house is advertised as being ‘under offer’, a buyer has made an offer that’s been accepted by the seller. However, some conditions still need to be met, like a satisfactory building and pest inspection, finance approval or the sale of the buyer’s house.
No other offers can be accepted for a house that is currently ‘under offer’. You can only make an offer if the initial potential buyer’s offer falls through for any reason.
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