How To Make An Offer To Buy A Unit (Ep10)
Making an offer on a unit (or any property for that matter) can be a daunting task. In this article I will walk you through exactly how to make an offer to buy a unit as well as tasks to complete before having an offer accepted.
You are not required to make an offer in a certain way by law (see Fair Trading). You can literally make an offer in any way you desire, it is only once money and contracts start to be exchanged that things start to get serious.
It is important to note that an offer on a unit works very similar to the offer on a house. So most of the below information is applicable to houses as well as units.
5 Common Ways To Make An Offer To Buy A Unit
1. Tell the agent your offer in person
2. Write it on a piece of paper and give it to the agent
3. Send an email to the agent with your offer
4. Send a text message to the agent with your offer in it
5. Phone the agent and verbally convey your offer over the phone
Some Not So Common (But Still Viable) Ways To Make an Offer To Buy A Unit
1. Write the offer amount on your forehead and show it to the agent
2. Get the agent to guess the offer saying “higher” or “lower” until she lands on the right amount
3. Send the agent your offer via Snapchat
5. Tweet the offer – make sure to @ the appropriate real estate agent
6. Post your offer on the agent’s Facebook wall or Instagram Feed
7. Hire a skywriter plane to write the offer in the sky
8. Go to an open for inspection and hide the offer somewhere in the property, then make the agent find it. Give them clues or a map to help them
Ok I kid (about #8) but you really can make an offer in any way you desire as long as you are serious.
I have made offers verbally, through email and even through the ‘Contact the agent” forms on sites like RealEstate.com.au
Please be aware that making an offer in Queensland is a little bit different. Most offers are made in writing and when accepted form a contract for sale.
You May Also Want To Negotiate On Terms
Your offer does not have to be just a figure straight out. You may also want to negotiate on the terms of the agreement.
- I would like to offer $500,000 with a 60 day settlement
- I would like to offer $400,000 with $300,000 paid on settlement sate and $10,000/month paid each month for 10 months after settlement date
- I would like to offer $300,000 plus 3 sheep, 2 cows and a plasma TV
- I would like to offer $1,000,000 with a 7 day settlement providing a 4.5% deposit prior to settlement. I would also like the owner to provide a 100 inch Samsung LED TV free of charge.
As you can see you can negotiate however you want. However, it is most common to simply negotiate on:
- Settlement date
- Cooling off period
- Amount of deposit
What Happens After You Make An Offer
After you make an offer the agent will take the offer back to the seller. In most cases they are obligated by law to take that offer to the seller, even if it is a low ball offer.
Not all agents will do this and very few buyers will force their hand with the agent, still it is good to be aware of this.
Exchange of Contracts and Cooling Off Period
Once the offer is accepted an exchange of contracts take place and you are required to pay a small deposit, usually 0.25% of the purchase price. This changes from state to state. Look at this graph to see what is required in your state.
In most cases you will enter into what is called a cooling off period – in NSW the standard cooling offer period is 5 day, but this can be extended or removed completed if necessary.
If you withdraw your offer during that cooling off period you will lose the 0.25% deposit you paid for the property.
In most cases a more substantial deposit is paid (usually around 10% of the value of the property) after the cooling off period ends, but this is negotiable and may be paid at the exchange of contracts.
After The Cooling Off Period
After the cooling off period you are obliged to purchase the property. If you fail to do so you lose any agreed upon deposit you have paid.
Most agents request a 10% deposit but this is negotiable.
You then have a period of time, commonly 6 weeks, until settlement date.
This is where you pay the seller the remaining amount for the property and you take over the ownership of the title.
If you fail to pay the owner on settlement date there may be associated fees and if you cannot pay at all (due to lack of financing etc) the seller may be entitled to keep your full deposit.
How To Make An Offer For A Unit At Auction
Make an offer to buy a unit at auction is a different kettle of fish. When making an offer at an auction you cannot make an offer that is subject to conditions (eg. Building inspection, obtaining finance etc)
There is no cooling off period when your offer is accepted at an auction.
If you are the successful bidder you will be asked to immediately sign the contract for sale. You will then have to pay the deposit specified in the contract unless otherwise agreed.
When bidding always be confident and clear in your offer. You do not have to increase bids by the amount the auctioneer suggests, you can make any offer you want (even if it is just $1 more) but the auctioneer also has the right to refuse any offer.
Speak to the agent prior to the auction to let them know you are a serious bidder, as the auctioneer is not allowed to accept bids from non-serious parties (sometimes known as dummy bidding).