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.