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Making an offer on a house – things you must know

by Chris Lang on August 11, 2012

Making an offer on a house

In any private sale making an offer on a property is one of the important steps. If you make an offer and it’s accepted – just keep your part of the deal and the house is yours. In case you’re thinking of a verbal offer or writing an email to the agent “Listen, Joe, I want to offer such and such amount for the house on 15 Lime avenue” – that’s not enough.

The way it is done in Victoria is the buyer signs a Contract of Sale – it’s a proper contract on a house and once the vendor (the seller) accepts the offer, they sign the contract as well and the house is sold. The Contract of Sale should specify the exact details of the deal a buyer offers to the vendor – how much the buyer offers to pay for the house, the amount of deposit (normally 5-10%), the settlement date (when the rest of the money is paid and buyer gets the keys to the house) and conditions of sale.

More often than not the real estate agent selling the house will ask you (the buyer) to come into their office and sign the contract of sale in their presence. This is, however, not the only way. You can ask to receive the contract of sale on paper or via email, fill and sign it when and where it is convenient for you, and send it back to the agent’s office or email. You will also need to sign a signature page of Section 32, as it is required by law.

Many people prefer signing the contract in the comfort of their own home for many reasons. This is an opportunity to give some more consideration to all the details – the price, the dates, all the conditions, etc. It also eliminates the pressure from the agent who always tries to drive the offered price higher – instead you get a chance to make this step on your own terms.

When it comes to signing the Contract of Sale, you should know that by law you’re entitled to 3 days cooling off period – meaning if you change your mind, you can give a written notice to the agent and the contract will be dismissed. Do not forget to read the fine print – it will still cost you money to get out of contract even using the cooling off period, the amount is either 100$ or 0.2 percent of the house price, which ever is the highest (for instance, for a house that costs 280,000 it would be about 500$). Not all private sales have a cooling off period – there are exceptions. There is no cooling off (for private buyers who purchase residential properties) in case

  • The house is sold 3 days prior to or 3 days after an auction
  • This is not the first time buyer is signing a contract on the same property

There used to be another exception saying that if a buyer seeks legal advice prior to signing the contract they do not have the right to a cooling off period – but luckily this unfair exception was recently dropped. Now you can get all the legal advice you feel is needed in your situation and still keep your right to the cooling off period.

There is a clause in the Contract of Sale that starts with “Subject to” and in many cases property goes under offer subject to Building and Pest inspections. The reason it is done this way is for buyer to avoid paying for inspections on property that he won’t end up buying because the vendor has rejected his offer. After the offer was accepted by vendor, the buyer gets (typically) one or two weeks to do the inspections. In case there were found serious structural problems or evidence of termites, buyer can get out of the contract and get all his money back.

Do you have any questions about making an offer on a house? Leave a comment below – we want to know.

{ 7 comments… read them below or add one }

val weber October 28, 2012 at 12:36 pm

hi i would like to get some info on buying a property in PEI ( cottage )
this place is for sale by owner.. and want to know where to start with making an offer. do i get realtor or lawyer from ont.
thanks

Reply

Chris October 28, 2012 at 2:08 pm

Hi Val,

Sorry I can only suggest the course of action if you’re in Australia …

Reply

Joelle January 12, 2013 at 10:47 am

We went to a house inspection on the 22/12/12. The house price was $495000 plus. Because it had everything we were looking for, on the 24 we went to agent office and we made an offer. Before that he agent told us that the seller was expecting 8 to 15% on top of selling price??? Is it legal? Anyway we made an offer at 10% more, which is $50000 more, a lot of money. A few days after the agent told us that the offer was not accepted…. Since they had 2 other house inspection… What should we do? Did the agent really gave the seller our offer? Can we go and see the seller ourself? We will also ask consummer affair next week. Thank you if you can help and answer. Best regards. Joelle

Reply

Chris January 12, 2013 at 4:27 pm

Hi Joelle,

Sometimes you really do wonder if the agent submitted your offer to the vendor or not. By law they have to – but who would know if they didn’t? The only thing you can do, if you suspect the agent is dodgy, is mail your offer straight to the vendor’s home address, and include a way for them to contact you in the same envelope. If the vendor doesn’t live in the property you want to buy, if they live elsewhere, you can find the vendor’s address in the Section 32 for the property you’re making an offer. Send your offer via Express post with tracking and you will be sure it reached the right person.

Hope this helps – if you need anything else please comment here.

Reply

Tabatha February 2, 2013 at 6:12 pm

Hi,
Have I understood the order of things correctly for a property purchase in Victoria?

1) I view property and if I like it I make an offer (being sure to include clauses such as ” subject to pest/building inspections, subject to loan approval”

2) If my offer is accepted by vendor it is THEN that I arrange for pest/building inspections, have bank assess house for approval

**must I have paid a deposit and signed a contract at this stage??**

3) If my loan is approved and I am happy with results of pest/building inspection then process continues to settlement

Thanks,
Tabatha

Reply

Chris February 2, 2013 at 9:04 pm

Hi Tabatha,

1) Absolutely right
2) When you make an offer at that time you will need to sign the contract of sale, so the only thing missing will be the vendor’s signature. As soon as they sign, you need to arrange for pest/building inspections and loan approval. The contract you are signing when making an offer will specify a date for the deposit to be paid – it is not uncommon to pay it after two weeks from the contract date (the date you signed it).
3) Yes

hope this helps!

Reply

Michael June 17, 2013 at 11:05 pm

Have signed a contract of sale to sell my home which is subject to the buyers selling their home. The deposit of 10% is payable after their house is sold and the balance 2 months later. They have 3 months to sell their home. I no longer want to sell. Can I revoke the sale as no consideration has been paid.

Michael

Reply

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