We are delving into a topic of great importance for all first-home buyers: determining the best time to make an offer on a property. Timing your offer correctly will have a profound impact on your journey in the real estate world.

Buying a Property: When is the Best Time to Make a Price Offer?

So, when is the ideal time to make an offer? This is a question that preoccupies the mind of every home buyer. It’s essential to consider a variety of factors when deciding to place an offer. Let’s explore the key considerations, understanding that timing is a critical element.

The First Step: Data Gathering and Property Research

The initial consideration in this process is property research. It’s imperative that you conduct thorough research on the property you’re interested in before proceeding with an offer. 

• Have you undertaken a professional home inspection? 
• Have you visited the property during an open inspection with a building inspector to assess its structural integrity? 

Such steps are crucial, as uncovering significant defects could influence whether you decide to make an offer or decide to look elsewhere.

Reflect on whether you are fully aware of the property’s history and how it compares to others in the neighbourhood. 

Real-life Example

Imagine a scenario where a vendor is asking for $750,000 for a house. Upon researching on realestate.com.au, you discover that the same property was sold for $550,000 two years ago, and for $500,000 the year prior. The history of the property’s pricing indicates a consistent annual increase of $50,000. 

This information might suggest that the vendor’s current asking price of $750,000 could be excessive. With this newfound understanding, you realize that your best and final offer might need to be adjusted accordingly.

Recommendations

• Conduct thorough research on recent sales of similar properties in your chosen area to get a clearer picture of their fair market value. 
• Determine if the vendor’s asking price is considerably higher than what similar properties have been advertised or sold for in the last six months. Real estate agents and online tools, such as realestate.com.au, are valuable resources in this regard. 
• Engage with several real estate agents to gain diverse perspectives, as their expertise can be invaluable in formulating your offer. 
• There are numerous online forums and Facebook groups for first-time buyers where you can connect with agents and other property experts who can offer insights and opinions before you finalize your offer.

The Power of the Information When Buying/Selling a Property

In real estate, being well-informed is a powerful advantage. Various factors, including the property’s location, its unique character, size, floor plan, and more, greatly affect its value. Relying on accurate and comprehensive data is essential. A robust research and data collection process will position you effectively to determine the most appropriate offer.

If you want to get an accurate, professional estimate of the property value, we recommend reaching out to Local Valuers, one of the best Real Estate Service businesses in Australia. Based on our experience and numerous reviews on Birdeye and Google, they’ll provide easy-to-understand, precise valuation for any residential and commercial property.

Consulting a Lawyer 

Another crucial step before making an offer is consulting with a legal expert. Have a conveyancer or a property lawyer review the contract before you proceed with your offer. 

Many real estate agents will ask you to document your price offer within the contract and sign it. Writing your offer into the contract is a positive step, as it signifies your seriousness about the purchase and provides the agents with concrete evidence to discuss with the vendor. The contract should include specifics like:

• offer price, 
• the amount of the deposit,
• any conditional due dates that are pertinent.

However, refrain from signing the document until it has been meticulously reviewed by a property lawyer or an experienced licensed conveyancer. Feel free to mark up the contract as needed, but avoid signing it until after the contract has been thoroughly vetted. The precaution is vital to avoid the risks associated with committing to a property purchase before all due diligence has been completed.

Find out all the important tips in our first podcast episode “Don’t Buy Without A Contract Review”.

Avoiding The Risk of Signing the Contract Early

Signing prematurely may leave you in a challenging position if you later discover significant issues with the property. Remember, in regions like Victoria, you are purchasing the property ‘as is,’ inclusive of all its existing problems. For a more in-depth discussion on the importance of contract reviews, I recommend listening to the first episode of my podcast.

Financial Preparations

The next essential consideration is preparing your finances before making an offer. It is of utmost importance to ensure that your financial situation is well-organized before making an offer. Speak to your mortgage broker to secure a pre-approval for your loan. We are available to connect you with reputable mortgage brokers who can meet your specific needs. 

Obtaining pre-approval for your loan not only establishes your budget but also signals to the seller that you are a serious buyer, ready and able to proceed with the purchase. The pre-approval will significantly encourage both the agent and the seller to engage in meaningful negotiations with you.

To ensure your pre-approval is in order, and properly prepared, we highly recommend the mortgage broker Capital For Castles. Contact us for further instructions or reach out to them via their website Capital For Castles.

Understanding the Seller’s Motivation 

An additional vital consideration is gaining an understanding of the seller’s motivation. Before making an offer, endeavour to discern why the seller has put the property on the market. 

• Are they looking to sell quickly? 
• Have they received other offers already? 

Comprehensive knowledge of the seller’s circumstances can greatly assist you in making an astute decision. 

For instance, if they are urgently seeking to sell the property due to personal reasons such as a relationship breakdown or it being part of a deceased estate, they may find themselves in a stronger position to negotiate a more favourable price.

The Long-term Importance of the Price and Timing

It’s important to recognize that the price you offer will have a direct impact on the amount of equity you can accrue in the property and the potential for future value increases, which are key if you’re aiming for wealth creation through property investment. Overpaying now might mean waiting longer to access equity in your home, which could be essential for funding your next purchase. 

Discussing the concept of equity with your mortgage broker is advisable, as they can provide insight into whether the margin between your purchase price and the potential increase in property value is substantial enough to support future investments.

Are the Interest Rates Important When Buying or Selling a Property

Based on our experience, it’s generally wiser not to base the timing of your offer on fluctuating interest rates or the current state of the buyer’s market. Delaying your purchase in hopes of a more favourable market condition can often lead to missing out on securing your dream property at a competitive price, as property values tend to appreciate over time. 

The delay could also affect your ability to have sufficient equity later to invest in another property. Interest rates rise and fall, but property prices maintain an upward trajectory over the long term. Entering the market based on interest rates alone might result in missing out on securing a property at an advantageous price, or paying more later due to market appreciation, thereby affecting your potential equity gains.

Listen to the episode now!

Conclusion

Accurately timing your offer is crucial in any home-buying journey, whether you are a first-time buyer or an experienced property investor. Remember, purchasing a home is a process, and it’s perfectly acceptable to take the time needed to make well-informed decisions. 

Adhering to the due diligence steps we’ve outlined will position you to make your offer at the most opportune time and price. For further insights into this topic, we invite you to listen to our ‘The First Home Show’ podcast episode titled ‘When to Make a Price Offer.’

If you have any questions or require additional guidance regarding your first home purchase, please do not hesitate to reach out to us. We are committed to assisting you in navigating this significant milestone in your life with confidence and clarity. Making the right decisions now can set the foundation for a successful and rewarding journey in the world of real estate.