So you’ve found a home and want it to be yours. Here’s what to do next.
Your emotions can swing wildly from excitement to terror when you make an offer on a property – it’s not everyday you end up committing yourself to spending hundreds of thousands (or even millions) of dollars on something you’ve realistically only seen a few times.
There can be so many unknowns...
- Are you paying too much?
- Are you up against other offers, and what are they?
- Is this actually a good investment?
Doing your homework on a property will help you to decide how much to offer and what your conditions will be.
When you’re thinking of a price to offer, consider what the market’s doing at the moment, look back at when the seller bought it and how much they paid for it then (they may have bought it recently and are selling to make a quick buck), the condition of the property, and the likely cost of any work you’ll need to do to it.
But most importantly, work out what you can afford.
It might be tempting to be cheeky and put in a really low offer, but only do this if you’re prepared to miss out on the property. Remember, your offer needs to convince the seller that you’re the best bet to negotiate with or to accept.
You should also leave yourself some room to negotiate – if you’ve maxed out your budget and can’t stretch it with a counter-offer you’ll need to negotiate creatively and look at reducing some conditions, settlement date, or just go hardball and stick with your original offer being your best and only offer.
One way to make your offer more appealing to the seller is to have as few conditions as possible on your Sale and Purchase Agreement. Offering the highest amount doesn’t guarantee you the deal - when sellers are faced with a choice of a high offer that’s loaded with conditions and a lower offer with hardly any conditions, a seller will weigh up the benefits against the risks of an offer falling through/taking longer to settle.
Sometimes a seller will provide a building, valuation and/or LIM report as part of the marketing for their property – this helps to reduce the number of conditions you might need to include in your offer.
Flexibility about your settlement date could really appeal to a seller, and could put your offer over the finish line ahead of the others even if your price is slightly lower.
This is where it pays to check with the agent first to see if the seller is under any time pressure, such as an unconditional date looming for another property purchase.