making offer on house

Making an offer on a house – things you must know

by Chris Lang on August 11, 2012
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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.

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Making an offer prior to auction

by Chris Lang on June 29, 2010
Making an offer prior to auction

Property Auction I’ve had an experience lately of making an offer on a house prior to auction. In Melbourne, where vendors seem to just love selling their houses on auctions, people like me, who favour private sales, are clearly a minority :).

I used to think that when a certain house goes on auction there was no way around it, except for turning up on the auction day and bidding with the rest of the pack. So if you are thinking the same, I’ve got news for you – there is a way out, and it’s called making an offer prior to auction.

Making an offer prior to auction is a science on its own right. Mainly because you need to work out what price and settlement period would tempt the vendor into giving the auction up, without being a mind reader. You need to time your offer so that it gets accepted, before another buyer comes along and makes a better offer. The reason for this is that once one offer has been made, it will be disclosed by the agents to other potential buyers to try and get them to go higher, transforming the whole process into just another auction. This would be the opposite of what you’ve meant to achieve.

As always, agents are in advantage in any case – if the house sells prior to auction, the buyer has made their job simpler, and if not – they can adjust the vendor bid accordingly so that it’s equal or higher than highest received offer. In fact, at open houses they will encourage people to make offers, to ‘feel the market’ and to have leads to come back to, should the house pass in.

A trick that you can expect them to pull on you is to demand an unconditional offer. Just to be clear, there is no law that says “all offers on houses advertised for auctions must be unconditional”. In many cases agents will have you believe that going unconditional is the only way to get your offer passed on to the vendor – which is not true. They must pass any and every offer, conditional or not, unless the vendor has instructed them to not take anything less than X (and your offer is below), or if the vendor is not open to selling prior to auction at all.

It is true that as it gets closer to the auction, when a vendor compares two offers where one is conditional and the other one is not, the unconditional might win, even if they offer a bit less – just because it’s less risky. But if you are submitting an offer well before the advertised auction (4 weeks for example) and it is conditional on building and pest inspections done within a short period of time (a week), the risk for vendor is not all that big because there’s plenty of time left.

In my opinion, because timing is rather important, it makes sense to offer your best price and terms when making the first or the second offer. If there is a lot of interest, a buyer that is mucking around with the price and offering small increments risks losing to another person who offers a far better price at one go. Also, make it clear to the agent that you won’t be bidding at the auction and set an expiry date on your offer to put the pressure on the vendor. Make your offer expire before they have another open house, to reduce chances that they encourage another buyer to compete against you.

That’s it from me, and now it’s your turn – what are your best tips for making an offer prior to auction?

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Things estate agents can’t get away with

by Chris Lang on August 29, 2009
Things estate agents can't get away with

Real Estate Agents

I don’t know about you, but most of the estate agents I’ve seen looked intimidatingly authoritative. As a direct consequence of this appearance, when they speak – you listen, when they demand – you sign, when they say “jump”, you ask “how high?”.

But there are certain things even Estate Agents can’t get away with :)

Tenants

They can’t raise your bond, even though they have raised the rent. If your rent has been increased and you’re paying more than $350 per week, it doesn’t mean that your bond will be “topped up” and you won’t have to pay an additional bond. If they try to pull that on you, contact Consumer Affairs of Victoria (or your respective organization in another state).

Landlords

They can’t neglect checking references or not verify the information on tenant’s applications. They also can’t choose a tenant without your approval. If they do, this is a breach of property management agreement you’ve signed.

If they don’t have an “authority to manage” – a signed document which makes them your appointed Property Managers – they can’t claim or charge you any commissions or expenses.

Home buyers

If you’ve made an offer on a house, they can’t call you and say “Congratulations, the house is yours!”, and the next day call you with “Sorry, the vendors change their minds the last moment”. It is illegal for agent to mislead you regarding the status of your offer and in case you incur expenses because of such incident, you have a case.

One example of such misleading was John (not his real name). He submitted an offer on a house, subject to financing, and was notified by the estate agent that his offer was accepted. John was excited and contacted his lender immediately to arrange for property valuation – a standard procedure. What he didn’t know was that on the same day 2 offers were submitted to the vendor, his and another person’s, and in the end the vendor signed the other purchaser’s offer. John filed a complaint and the agent, with his tail between the legs, refunded the valuation fee John had to pay.

Do you have a story of your own to share about what estate agents can and can not do?

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7 things you can do to help the agent sell your house, part 1

by Chris Lang on May 11, 2009
7 things you can do to help the agent sell your house, part 1

Real estate agent caricatureDoesn’t it sound ridiculous that you need to help a person you’ve hired for the big bucks to do their job? I know you shouldn’t have to, and in an ideal world you wouldn’t have to.

However, the reality is that there are different agents, some are better, some are worse and it’s difficult to predict what kind of job will your agent do selling your house before you’ve seen them do it. Which is why you need to make sure you’re doing everything you can to speed up the process.

I would even say that in selling a house there are two parts of the deal. Agent’s part is to advertise and promote your house to prospective clients, to negotiate with the interested buyers and create a competition on your house to get you the best possible price. Your part is to get people to like your house, to expose it to the maximal number of potential buyers and to let them make an offer as soon as they are ready.

And here is how you can achieve that:

1. Have Section 32 ready before you put the house on the market.

The reason is that a buyer can’t submit a written offer before they’ve seen your Section 32 (read more about it here). So once a person has inspected your house, liked it, wants to buy it, the only thing that can stop them is the absence of Section 32 (and it really annoys the buyers if they have to wait a week to get it).

2. Write your own ad.

Think about it – who knows your house better than you do? Who can name all the advantages better than you? Who knows better all the handy amenities, all the nice things about your house and your neighborhood? You can write your own ad that will appear on the internet sites (such as domain.com and realestate.com.au), in newspapers, in brochures, leaflets and the like. Or if you feel too insecure to do it – give your agent ideas for the ad, list all the good things and the features of your house, they will only thank you and put them to some good use. Agents are amazingly cooperative in anything that means less work for them :)

3. Choose your own photos.

Yes, you can do it. The agents are not the only one with good taste in photography. Actually, judging by pictures from realestate.com.au, some agents have a pretty crappy taste in photography or simply don’t care. If you insist and put it in the contract before you sign it, they will let you choose the pictures of your house that you like. Or, more importantly, you will have the right to throw away picture that you don’t like. In an ideal world, paying to a professional photographer would mean getting the perfect pictures, but since we’ve already established that it’s not always the case, you need some control over the way your house is presented in the papers and on the internet.

Hang on, I’ve got 4 more things to tell you. Subscribe and they will be in your email the minute I publish my next post.

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Making an offer? Play it right.

by Chris Lang on December 29, 2008
Making an offer? Play it right.

One typical mistake of the first home buyers is to show too much interest in the property. Let me explain: when you’re inspecting the property, the real estate agent is inspecting you, looking at the way this house makes you feel, are you in love with it yet, are you imagining your family living there happily ever after. If he sees any signs of such weakness, your position in negotiating the price of the property will be worse, before you’ve even opened you mouth and said anything.

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How to buy a house – Part 5

by Chris Lang on October 11, 2008
How to buy a house - Part 5

Once you’ve made your offer, it will be either accepted or rejected and it usually takes a couple of days to get the answer. If the offer is rejected you can try and submit a better offer on that house and see what happens. If the offer is accepted – congratulations, you’ve made some serious progress.

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How to buy a house – Part 4

by Chris Lang on October 7, 2008
How to buy a house - Part 4

So once you’ve searched the property listings and chosen houses that look suitable to you, it’s time for action – start calling the estate agents to find out the details about those houses, go and inspect them. Don’t worry about having too many on your list – some will get filtered away by inspection, some might be under contract, some vendors won’t like your offer. It’s important to not “lock on” just one house because once you get emotional – you will be in a weaker negotiating position.

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Making an offer on a house: Contract Note explained

by Chris Lang on September 16, 2008
Making an offer on a house: Contract Note explained

To make an offer on a house in most cases people use a document called the Contract note (in Victoria). It looks pretty simple and only has 2 pages but defines every aspect of your purchase – which is why you would want to understand it completely.

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Why real estate agents push you to make an offer

by Chris Lang on May 21, 2008
Why real estate agents push you to make an offer

Read estate agents will always try to get an offer out of you. Did you notice that on any inspection the thing they are obsessed with getting your name and number? The reason they do it is to be able to ring you and say: “Hi Drew, its Mike from the real estate agency, did you like that house? Are you ready to buy it? Do you want to make an offer on it?”.

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