How to Make a Price Offer When Purchasing Property in Australia 

Failing to understand the subtleties of real estate offers will lead to costly mistakes. ‘How to Make a Price Offer’ podcast fills that gap, offering vital negotiation tactics, financial alignment, and legal strategies for successful property transactions. Overlooking such knowledge results in missed opportunities to significantly amplify property investments. 

Dedicate 7 minutes to ‘How to Make a Price Offer,’ and equip yourself with proven tips for high ROI and more astute property negotiations. 

Learned So Far

Previously, we discussed the right time to make an offer. We highly recommend listening to episode 6 first: When to Make a Price Offer When Buying a Property. It includes key considerations you need to be aware of.

Throughout our comprehensive career, we’ve gained invaluable insights from numerous seasoned and successful buyers’ advocates. Their expertise has enriched our understanding, and we’ve been fortunate to collaborate with them or have them in our network. 

Essential Steps Before the Bid 

You’re now at a turning point, ready to make an offer. So far, you’ve: 

• Actively participated in the property’s open inspections, gaining firsthand insight; 
• Arranged for a building and pest inspection, ensuring the property’s structural soundness; 
• Thoroughly compared the sales prices of this property with others in the vicinity -a smart move; 
• Acquired a deep understanding of the property’s sales history, an essential step; 
• Secured pre-approval on your finances, positioning you as a serious and prepared buyer. 

Negotiations: Three Most Important Must-knows 

The next step is negotiations. Start with an initial offer that leaves some wiggle room for the seller to make a counteroffer. Remember, always keep in mind the next three key factors of successful negotiation: 

1. Do not start negotiations with your highest offer, except in highly competitive situations, where putting your best foot forward is the smartest move. In these scenarios, you need to make a strong, impactful first impression. 
2. Secondly, it’s important that your offer aligns seamlessly with your budget. Avoid stretching your finances too thin just to acquire a property. Strive for a balance – a fair and reasonable offer that stays within your financial means. This approach ensures you comfortably afford what you’re aiming to buy. 
3. Maintain emotional detachment when it comes to negotiating the price. It’s completely natural to fall in love with a property. You’ve seen it, walked through it, and it feels just right, perfectly meeting your needs. However, in the realm of negotiation, it’s crucial to keep a level head. The emotional distance is the basis for rational decisions not swayed by feelings. Keeping this perspective ensures you negotiate from a position of strength and clarity. 

Balancing Contingencies with a Strong Price Offer 

The following step involves clearly stating your price. Consider placing a $1,000 holding deposit to demonstrate your commitment.

Outline essential conditions and your demands for the sale, such as: 

• A satisfactory building and pest inspection. 
• Making the contract contingent upon formal loan approval. 
• Conditioning the contract on the sale of another property you own. 

Contingencies 

Contingencies must be explicitly included in the contract. Without them, you effectively purchase the property without safeguards. When stating your price offer, negotiate all contingencies thoroughly. Include contingencies only if they are absolutely necessary for you. The goal is to secure a balanced approach between protecting your interests and making a compelling offer. 

Unconditional Offers: What They Are and When to Place Them 

In real estate, an unconditional offer is a commitment from a buyer to purchase a property without any attached conditions. Unlike conditional offers, which might depend on factors like financing approval or satisfactory inspections, unconditional offers provide immediate certainty to the seller. They’re straightforward and signal a buyer’s readiness to proceed without any further requirements. 

When should you consider an unconditional offer? 

Here are some typical scenarios: 

• You possess substantial savings, enough to cover a significant portion of the property’s price. 
• You’re receiving considerable financial support from family, perhaps in the form of a large deposit. 
• Confidence is high between you and your mortgage broker regarding the formal approval of your loan. 

Sellers often view unconditional offers more favourably. Unconditional offers place the buyer at an advantage over others who may have several conditional clauses providing them with multiple exit strategies. Often vendors accept a lower-priced unconditional offer over a higher conditional one. The underlying reason is the level of certainty an unconditional offer brings, ensuring the vendor of a smooth transaction and timely receipt of sale proceeds. 

Buyer’s Advocates: Required or Preferred

The decision to go for an unconditional offer is not one to be taken lightly. It requires careful consideration and expert advice. Before making such a decision, it’s advisable to consult with experienced professionals in the field. Seeking guidance from a seasoned buyers’ advocate and a property lawyer is a wise step. 

Remember, the advice we gave is not a substitute for legal counsel but is based on extensive experience in numerous transactions. Such expertise provided us with valuable insights. We share them with you to help you navigate the complexities of real estate purchasing, ensuring your decisions align with your financial and personal circumstances.

An experienced buyer’s agent greatly benefits you in several ways: 

• They handle all negotiation aspects, ensuring a smooth process. 
• They assist in crafting a compelling offer for the vendor. 
• They provide guidance on whether an unconditional offer is suitable at any given moment. 

If/ when you need a good buyer’s advocate, message us, and we’ll provide the contact details of some of the most successful experts in the field.

We highly recommend one of the best buyer advocates, Property Demand.

Documenting Details in Your Contract 

When shaping your offer, consider the following elements: 

• Establish an offer expiry date, such as a 24-hour limit, to create urgency for the vendor’s response and deal closure. 
• Indicate your desired closing date. 
• Mention any transaction items, including goods, whiteboards, and appliances, and your expectation for their inspection availability. 
• If you’re securing a loan, provide details about your lender, the type of loan, and the probability of loan approval. 

Ensuring all details are clearly documented in the contract before signing is essential, especially for contingent offers. 

Another important aspect to consider is timing your offer. Avoid hastily making an offer without comprehensive due diligence and contract review. We have explored both topics and the importance of covering all the bases in our previous episodes of the First Home Show. 

Make sure to conduct in-depth research and let the information and findings guide your decision-making process. 

Be prepared to walk away 

Be ready to step away from a deal if it doesn’t meet your specific conditions or if the price stretches beyond your budget. Remember, the real estate market is abundant with opportunities, so missing out on one deal isn’t the end of your property journey. Keeping your options open ensures you find a property that truly fits your needs and financial limits. 

It’s a strategic move, showcasing strength. Demonstrating a willingness to leave a deal communicates clear standards. It maintains financial boundaries. It also tilts negotiation dynamics in your favour. Sellers recognize a lack of desperation. They grasp the emphasis on deal quality. The market offers abundant opportunities. Walking away isn’t a loss. It paves the way for a better match with your needs and budget. 

Conclusion 

The podcast episode “How to Make a Price Offer” is a vital resource for anyone in Australia’s real estate market. It provides deep insights into making successful property transactions. Listen to the episode to grasp the importance of negotiation, financial planning, and legal aspects. Understand the market, prepare for successful bids, and navigate negotiations confidently. The guidance is invaluable for making informed decisions and securing the best possible outcomes in your property investments.