Placing an offer on a home is a key step in the home-buying process. But did you know that there’s more to making an offer on a house than just the price? From listing out the terms and conditions to making sure you’ve got your finances in order and navigating the property market, it’s important to familiarise yourself with the intricacies that come with making an offer.
In this article, we’ll be covering the basics of how to make an offer on a house, along with some tips and common FAQs.
Understanding the basics of making an offer
Making an offer is a formal process in which the buyer, or the buyer's agent acting on their behalf, communicates the intent to purchase a home by proposing a specific price and terms to the seller or vendor. While it is possible to make a verbal offer, it’s always best to put everything in writing to avoid confusion. A written offer is usually submitted via the seller’s real estate agent, who then presents the offer to the seller.
The offer typically outlines the price the buyer is willing to pay and can include additional conditions like:
Subject to finance approval
Completion of satisfactory building and pest inspections
A preferred settlement period
Once the seller receives the offer, it’s up to them to accept it, reject it or propose a counteroffer. If both parties agree on the terms, the property moves to the next stage of the sales process, which typically involves signing contracts, paying a deposit and finalising the transaction during the settlement period.
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What you need to make an offer
If you’re serious about buying, it often helps to have all your ducks in a row to maximise your chances of securing a property. This involves organising your finances, understanding the property market and knowing how to write an offer for a house.
With this in mind, here’s a quick breakdown of what you need to put an offer on a house.
Get your finances in order
Before you even consider making an offer on a property, it’s important to understand what you can afford to buy. There’s no point in putting an offer on a house if there’s a good chance your home loan application will be knocked back by the bank.
At the very least, you should take the time to calculate your borrowing power, but it’s often worth taking it one step further and getting pre-approval for a mortgage through your lender or mortgage broker. Even though you can make an offer without pre-approval, it can give you a bit of extra confidence when making offers, and it also signals to agents and sellers that you’re a serious buyer.
While you’re in the process of understanding your finances, don’t forget to factor in the other upfront costs that come with buying, including stamp duty, legal fees and establishment fees to name a few. These extra costs can add thousands to the sale price of a property and many of them need to be paid in full just after your new home has settled.
Research the market
Before making an offer, it’s important to do some market research. By understanding the local property market, you’ll be better positioned to make more informed decisions, especially when it comes to making reasonable offers and understanding whether the seller has listed a fair asking price.
Take a look at the recent comparable sales in the area to gauge property value. It also helps to understand the local market conditions and whether it’s a buyer’s or seller’s market.
If you’re considering making an offer on a house below the asking price, it’s important to make sure you’ve done your research and understand the market conditions, the seller’s situation and the property’s condition. In a seller’s market, a low offer could be outright rejected, but in a buyer’s market, with high supply, sellers may be more open to negotiation.
At Aussie, we offer free property value reports that include value estimates, property details and past sales to help you with your research.
Understand the key details of your offer
Once your finances are in order and you understand the local market, it’s time to draft your offer. Along with your proposed price, be sure to include key details like conditions and a settlement timeline.
Common conditions include a satisfactory building and pest inspection and finance approval, which can protect you from financial penalties if your loan falls through. Settlement typically takes 4–6 weeks, but adjusting this to suit the seller’s needs can improve your chances.
By understanding the seller’s motivation, you can craft an offer that balances their preferences with your own interests.
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Tips for making a winning offer
Putting forward an attractive offer could mean the difference between securing a home or missing out. To help you improve your chances, here’s some advice on making an offer on a house:
Know your limits: Stay within your budget to avoid financial strain and having your finance approval rejected by your lender.
Be prepared to act quickly: Have your finances and application ready to go if you find a property you’re interested in. This is especially important in a hot market where buyers quickly snap up properties.
Make your offer stand out: To help catch the attention of the seller, it could be worth offering a slightly higher price, even waiving minor conditions (where appropriate), and, if possible, being flexible with settlement dates to suit the seller.
Build a rapport with the seller: Some buyers like to personalise their offer by including a letter explaining why they love the property. While this approach might appeal to some sellers, it doesn’t always work.
What happens next?
Once you submit your offer to the seller, they’ll usually go with one of three potential responses:
Accept: If the seller accepts your proposed price and terms, the property moves into the next phase, which involves signing a sales contract.
Reject: The seller could decline your offer outright if it doesn’t meet their price expectations or terms. If this happens, you can choose to revise your offer or walk away.
Counteroffer: The seller might propose adjustments to your offer, like a higher price or different settlement terms. You can either negotiate further, accept the revised terms or walk away.
If your offer is accepted, you and the seller will sign the contract of sale. This is a legally binding document that details:
The agreed purchase price
Conditions (EG. subject to finance or a building and pest inspection)
Settlement date and timeline
Based on the legal nature of this document, it’s essential to understand exactly what you’re signing. It’s for this reason that many buyers and sellers will engage a conveyancer, solicitor or settlement agent to manage the legal aspect of the transaction.
At this point, you’ll also need to pay a deposit for the property, which is usually a percentage of the purchase price. This amount is held in the real estate agent’s trust account until the settlement is finalised. Depending on where you live and the type of property you’re buying, you might also need to take out building insurance.
After signing the contract of sale, you’ll need to complete due diligence within the agreed timeframes. This typically includes securing finance approval, arranging building and pest inspections, and, for units or townhouses, conducting a strata check. If issues arise, you might be able to renegotiate or withdraw from the sale, depending on the contract terms.
After the conditions have been met, the contract will go unconditional and your team will prepare for settlement. Read our blog on the home loan settlement process to learn more.