Buying a property is often the biggest financial decision that a person will make, and making an offer is a significant step in that process. You should be prepared before submitting an offer to the agent or seller.
Here’s some advice from industry experts and the NSW Dept of Fair Trading. Things to do before making a property offer.
Check the title.
Different types of titles exist for different property types, and each has its own legalities. Australian houses typically have a freehold Torrens Title. Australian units, townhouses, villas, and commercial spaces are usually governed by Strata or Company titles, and each system has its own bylaws, levies, and responsibilities.
When choosing a property, consider the advantages and disadvantages of each type and title as well as your plans for the property in the future.
Review the paperwork.
When a property is ready to be sold, the seller (also known as the vendor) will create a contract with details about the property.
The contract of sale includes information about zoning, drainage, land plan, and ownership. The contract will also outline the sale process, payment terms, and transfer of ownership. This information has legal implications and can be very complex to the untrained eye so it’s important to seek professional advice at this point.
Engage a conveyancer or solicitor.
Once you have narrowed down your choices, it’s time to review the specific details of each property with a conveyancing expert. A conveyancer or solicitor can provide valuable insights and guidance and this step is essential before making a property offer.
This step of the process is necessary to raise any red flags and pave a smooth road to settlement. Both conveyancers and solicitors can provide valuable services to ensure your property transaction proceeds smoothly and legally.
Organise building and pest inspections.
The inspection process is a key step in the legal checklist when purchasing a property and is seen as a final hurdle. A qualified professional is required to inspect your potential property and its overall condition including any damage or pests. Then, they a report is drafted with their overall findings.
Steps to take when making an offer
Have your finance pre-approved
Make an offer verbally or in writing. Tip: Putting offers forward in writing (for example, email) may help you keep track of negotiations and confirm why an offer wasn’t accepted.
Auctions – Understand what agents should tell you about price
If you inspect a property and ask what the agent expects the property will sell for, the price information they provide cannot be less than their estimated selling price recorded in the agency agreement. Note: the seller can instruct the agent not to publish or provide any price estimate to potential buyers. They do need to provide it to other people.
Understand what pricing information is provided: Agents do not have to provide the reserve price or the estimated selling price. Remember that, for an auction, the reserve price may not be decided until auction day.
There are laws in place to balance the interests of sellers, buyers and agents by:
- increasing protections for prospective buyers by ensuring any price information provided is accurate
- preserving the seller’s opportunities to get the best possible price for their property
- providing a level playing field for agents in a competitive market.
Underquoting – a buyer’s guide
Underquoting is when a `less than honest’ agent falsely advertises a property’s estimated selling price or tells you that it will sell for an amount that is less than their actual estimated selling price in the agency agreement they have with the seller. This is an offence, and agents can lose their fees and commissions and be fined up to $22,000.