Guide for placing an offer on a home in Victoria, Aus - without all the BS!
Buying Established Homes

Placing an offer on a house

I’ve been recently helping my friend place an offer on her first investment property. After chatting to her and hearing some of the bullshit the agent was spinning, I thought I would do a post about this topic!

Placing an offer on a home is exciting, daunting, & stressful, and you’ll be riding the rollercoaster until you know 100% that you have purchased it! Here are some things I think will help break down the process and make you feel at ease about signing a contract. The offer rollercoaster goes something like this;

You’re approaching the first twist in the ride, finance. You brace yourself because you thought the home was advertised in your price range only to find out upon arrival that it’s slightly out of your budget. It’s too late, you’ve fallen in love with the home and it’s exactly like the one you made on the Sims when you were a kid *cough – 30yo*. You get the gist of what I’m getting at, and this is how I see the offer process going down for everyone- highs, lows, twists & turns. 

Topics

  1. Head VS Heart
  2. How placing an offer works
  3. If it’s not in a contract – it’s not an offer.
  4. Multiple offers – not just a tactic!
  5. Check for Grants
  6. Summary
  7. References

Head VS Heart

When you’re buying a home, as described, there are so many different emotions involved. 

Head – Often when you’re buying a home that you’re not going to live in, but rather rent out. It’s factual and analytical, and your decisions are based on what is going to give you a good return on investment. 

Heart – Usually when you’re buying a home to live in. Of course, it’s emotional, this is when all your fantasizing begins! This could be your kid’s first home, or where you’ll entertain friends and family at Christmas etc. 

What this looks like: 
What then happens is you start sacrificing your budget when you place your offer in. 

Agent: “There is another offer coming in today, so please ensure you give your highest bid”. 
You: “I really want this house, but it’s $20K over what I wanted to spend…the max I could offer is $5k more” 
Agent: “It’s up to you, but if the other offer comes in higher, then the vendor will usually go with that”. 
You: “Okay, screw it, let’s go for it!” 

Automatically, for a lot of people, you start thinking about offering the top-end price so you can beat out the competition. Here is where you end up $50K over what you can afford. 

The current housing market in Victoria (and Australia really), is fucking hard to get into. Not impossible, but bloody hard. If this was the 2010 market, when the housing crisis was at its peak, I’d tell you that this was 100% a tactic by the agent. In this competitive market, I’m telling you that it’s not. I’ve spoken to many friends in the last 12 months that have been beaten on offers because of this very situation. It’s shit! 

So when you are placing an offer and told that there is someone else offering at the same time, then look at an offer that you’re happy to win the house for, and happy to lose it for. This is so important because it helps you set a budget and not get caught up in overpaying. There are other houses on the market and you will get one. I’m a big believer in the saying “If it’s meant to be, it’ll be”. 

Placing an offer – How it works 

It’s COMPLEX and there are so many bloody scenarios. So I’ll be going into detail – saddle up partner, I’m talking about private sales!

The Process

  1. Attend the open for inspection(s).

  2. When you look through the property, try and focus on the plan of the house, the size of the land, subdivision and potential (basically can the backyard fit another house on the land – you can call the council for this indication and talk to a draftsman if you have the Section 32). Try and overlook the powder blue walls that were so popular in the 70s/80s. You can paint over it! 

  3. Try and contain your excitement in front of the agent. They will capitalize on that. Check out this article for Questions to ask during an open inspection > 

  4. Ask the agent for the section 32. This is super important. This document will tell you about the property placed on the land, any caveats, easements, restrictions, the rates, water, and gas prices. So you know what to expect if you do purchase. It will also include the contract of sale, so when you place an offer you’ll sign this document to say you accept all the terms outlined. The vendor’s special conditions are also listed. This document must be shared with your conveyancer when you’re set on a property you want to buy- they can outline any concerns or important things to note!


  5. Show your conveyancer the section 32 -they will be able to tell you about any restrictions or vendors’ special conditions that are noteworthy, and anything that will get you into trouble later. 

  6. Call the agent when you’re ready to place an offer and arrange a time to catch up! (Sometimes, there is an urgency around this as multiple people are going through the open, you might feel pressure to offer immediately out of emotion). Be mindful of this, don’t make decisions that will get you into trouble. If you’re very passionate about the home and it feels right then, do you boo? I’m just giving you the options! Some conveyancers are usually available on the weekend during business hours if you need them to check contracts. In the worst case, in Victoria, you have a 3-day cooling-off period.

  7. In the contract, make sure you check the price that you’re offering includes or excludes GST. You don’t want to be charged more after you’ve agreed to buy the home! 

  8. Consider a building and pest inspection. This will tell you if there is anything structurally wrong with the home or if it has termites and/or other pests. 

    Pro Tip: Ask the agent if there is a current building and pest inspection that has been conducted -could save you some time & $$. 

  9. In your contract, you can include special conditions like “Subject to building and pest inspection”, and “subject to finance” (pre-approvals included in this – unless you have unconditional finance). You can even have “subject to the successful sale of existing home” – if you’re in the middle of selling your own. In some cases, you can include things like “Subject to the spa in the backyard” – if you really want it haha. In saying this, the vendor has no obligation to accept those conditions which means that your offer will enter a negotiation. If your offer is accepted then you will need to ensure that those “subject to’s” are actioned and completed within 14 days- the date is outlined in your contract. If any of the conditions aren’t met, the purchase will fail and you’ll be up for some costs. 

  10. Contract terms are also great negotiation points like; settlement period, deposit amounts, etc. So if you want to offer a lower price on a property, then you could negotiate (if you’re in a position to) with a 30-day settlement or drop a bigger deposit at offer time or first deposit stage (within 14 days of signing the contract). It’s all relative because the vendor might want a 60/90 + day settlement, so 30 days won’t help you there.
    Let the agent guide you on what the vendor wants!
    Having unconditional finance is a massive win, it means they aren’t waiting for approval for $$. 

    Note:  with unconditional finance, you’re expected to drop your first deposit on the day (10%+). You’ll get this back if the offer is rejected, however, if you change your mind during the 3-day cooling-off period then you are required to pay 0.2% of the offered price or $100, whichever is more expensive.

    E.g. Offer: $500,000 deposit: $50,000 (10%). If you cool off – Vendor takes 0.2% = $1000 (as it’s dearer than $100). You walk away with $499,000. So it’s very important when making an offer that you reallllly want the house or are at least aware of the $$ you could lose during the process. 

  11. Deposits. There are 3 instances when you could make a deposit, depending on your financial situation.

    a). Initial offer – signing contract. A deposit of at least 0.2% of the offer price is taken (or more depending on you and the agent). This amount is to show the vendor you’re a serious buyer and you’ve prepared to leave part of a deposit today to secure the home. This is deducted from the total purchase price.

    b). After 14 days (or earlier if your finance is cleared and all contract conditions are met in that time). Usually anywhere from 10% + is payable and is then deducted from the total purchase price.

    c) At settlement, the remainder is then due to be paid on the day of settlement. All payments can be made by EFT or cheque. 

    Example

    Subject to Finance =
    You’re buying a home and have offered $500k and making a 10% deposit once the funds are cleared.
    Offer: $500,000. At Offer time a deposit of $1000 (or more) is made. (0.2% of the total purchase price. or more usually).
    At the end of the 14 days, the 10% is paid, $50,000.
    At settlement, the outstanding balance is due: $449,000. 

    Unconditional finance = approved for a total home loan. 
    Offer: $500,000 At offer time a deposit of 10% (or more) is made, $50,000 (if it’s at 10%)
    At settlement outstanding balance is due: $450,000. 

  12. If your offer is accepted, you’ve bought a house! Congrats! Now, before you continue celebrating this phenomenal achievement, you’ll need to contact some people other than your mates and family! The broker/bank, conveyancer (if you don’t have one before going to an open that’s okay, the agent can usually recommend one), and the building and pest inspector (if you’re getting one). You’ll need to send them a copy of the section 32 & or section 27. They will ensure that everything is in order by the 14th calendar day that you have from signing your offer.

  13. If your offer is rejected, welcome to the art of negotiation! Traditionally, the vendor will return the contract you signed with the price or conditions you offered crossed out and the price they want and conditions they don’t agree to, crossed out. It’s at this point that you either; accept the price noted or reject it and add another price you’re willing to pay. These days the negotiation is all verbal, the agent will call you and you can counter-offer verbally. Then commit to the final price in the contract where all parties will sign off.



    Note: If you are emailing an agent your initial offer instead of putting it in the contract, it’s not a legally binding document. This means the agent can sell to another buyer. If you’re serious about the property all final negotiation prices should be in a contract with an initial deposit paid

    Second note: The only time you will put offer details in an email is when you can’t meet physically. The agent will ask you for all your details (name, current address, conveyancer/bank names, loan amounts etc.). They will then put the contract together and send it via DocuSign or another electronic contract signing company. Then you’ll sign the contract after you’ve reviewed it (or shared it with a conveyancer)!

  14. Following your acceptance, you’ll have to engage with the broker/bank, conveyancer and building and pest inspector. Make sure everything is all ready to go! Plus: Any other services you’ve made “subject to” in this offer. 
    note: You have 14 calendar days to action all “subject to” clauses. 

  15. Pay the remainder of the deposit as per the set date in your contract. At this point, your finance will have been unconditionally approved and funds can be released. This will be paid into either a trust account or held by the agency. 

  16. Following this, the agent should prepare another inspection for you once the first deposit is paid. This is to snap a Kodak moment of you in front of the “Sold” sign! Exciting! Then give you a chance to measure up the house so you can plan your furniture purchases and start getting excited! This is known as the ‘Final Inspection’ and it will be the last time you see the house before you move in!

  17. Wait until settlement! This is the time you should be preparing to move. I have another article that talks about this here: What you need to do before you move out of your rental
    If it’s mum and dad, just say thanks and take your shit and go. Nicely, of course, they put up with your a$$ <3

  18. Settlement day! You should be ready to move along with your fam/friends that are kind enough to help you move – or at least sort out a removal truck!

    Pro Tip: Bunnings will let you borrow a trailer for 2 hours at $0! But it has to be back within 2 hours! Grab the keys from the agent, this could be at their office or the property location. They will get in touch with you to arrange this before settlement day! Settlement times are outlined in your contract, it occurs between 9 am – 4 pm unless otherwise discussed with your agent. So tell your boss to piss off and make sure you have the day off (well don’t tell them to piss off, without a job you can’t afford the new house). So be politically correct and give them ample notice, that way you get the whole day off, or longer! 

    Note: The vendors have 0 obligations to clean the property to any particular standard before they leave (so shit). It’s not like rentals where there needs to be a deep clean. If it’s really bad you can report this to your agent or conveyancer (they might not be able to do anything if it’s after settlement but it’s worth a shot). Otherwise, it’s just shit-house (if you pardon the pun).

    Second note: Some conveyancers charge per the contract that they need to read. Others bundle packages together where they include multiple contract reviews. Do your research there to ensure you’re not costing yourself extra unnecessary $$. 

If it’s not in a contract it’s not a bloody offer! 

There are good apples and bad apples. Want to know how to tell them apart?
Read this Article: Red flags of shitty Real estate agents. 

So I’ve outlined the process and I just want to make this so clear. When you want to place an offer on a property the NORMAL process is to sign a contract, with a deposit paid and all the contract terms laid out. 

If the agent says “we’re only accepting verbal offers or offers by email”, this is lazy AF and such a disservice to the vendor. Most importantly, it’s not an actual offer. They have ZERO obligation to take this to the vendor. 

If it’s in a contract it’s a legally binding document and they have to take it to the vendor! Then you stand a better chance of getting the property. 

Multiple offers – are not just a tactic in this market. 

Sometimes when you place an offer on a property (usually this scenario occurs after the home’s very first open for inspection) there are like 20 people going through the home, and 4 of you want to place an offer.

How this works: 
The agent will accept offers in writing (with a contract) from all 4 of you. 

Legally, the agent cannot tell you what the other people are offering. They will tell you, however, that they are taking multiple offers and offering your best price/contract terms. Keep this in mind, I said it earlier. Place an offer that you’re happy to win the property for, and happy to lose it for. The offers are then presented to the vendor at the same time, and they choose which offer suits them best! 

Use the agent to guide you on favorable terms for the vendor e.g. Short settlement period, greater deposit etc.

Check for grants: 

The government are doing sooo much around grants for buying a home at the moment. I’ll cover this in another article (coming mid June)

In the meantime, it would be worth getting in touch with your broker (if you’re using one) and asking them for any assistance in grants. They’ve usually done this way before you start offering on properties but just in case you forgot – here is your reminder! 

Summary

Don’t forget to celebrate! I’ve gone through some heavy shit here and your head must be exploding – soz. 

You are buying a home, you’ve saved up enough money to enter the market and live in your own space! You can get a pet!! pls get a pet and share your pics on this forum <3

In all seriousness, well done. It’s not easy and it’s always so exciting getting to move into a place that’s all yours with no bullshit landlord or parents telling you to clean up your room. You did it and if no one said it, I’m proud of you!  Drop me some feedback below so I can keep making content you want to see and that is going to help you break into this market! It’s tough, but you can do it! Share your “Sold Sticker” kodak moment below – let’s celebrate you! 

References

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