Formal Approval Query

I'm with you Tracey, unless you are intending to buy at Auction, just sign a contract that is conditional. 
Jodie

Hi Hilly! There's only one document/contract, which is the contract of sale which includes conditions, eg subject to finance within 21 days, subject to building and pest inspection to buyer's satisfaction within 14 days, etc. The contract doesn't become binding on you – the buyer – to complete it until these conditions are fulfilled. You can put in whatever conditions you want (in a normal sale situation, not in an auction), but of course the more conditions you want, the less attractive your offer is to the seller. You have to strike a balance between protecting your interests, but ensuring the seller still sees your offer as attractive. Generally, the more conditions you put in, the higher the price you need to offer. ie If you offer to purchase unconditionally from the outset, you can perhaps obtain a significant discount on the purchase price. If you have pretty straightforward conditions like "subject to finance", you can still negotiate a reasonably favourable price, but if you have things like "subject to sale of my previous home" or other things that make the contract fairly likely to fall through, you would have to pay pretty close to the asking price (depending on the desperation or otherwise of the vendor).

Get your solicitor to look at the contract before signing it, and make sure it includes the conditions needed to protect your position. (I, and I'm sure many other investors, don't normally bother with this anymore because I now have pretty much standard clauses, but particularly when you're starting out it's a good precaution.)

Then as soon as you've signed the contract, including the conditions, normally your real estate agent will give a copy to each person's solicitor (yours and the sellers) and they begin communicating. The process is that within the time periods specified, you must advise your solicitor to advise the seller's solicitor that the various conditions have been satisfied. eg Before 14 days are up, you have to advise that you're happy with the outcome and willing to proceed, or that you're willing to proceed provided certain repairs are carried out etc. And before the 21 days (in this example) are up, you have to advise that you do have final approval on your loan, and once all the conditions are satisfied, the contract is then "unconditional" and both parties are bound to proceed with the transfer.

Your solicitor will normally remind you, but make sure that you do advise that the conditions are satisfied within the time periods, because if it rolls around to the 15th day and you haven't advised that inspections were satisfactory, the vendor could – if they wanted – pull out of the contract. Normally they wouldn't, but if another prospective buyer has popped up during that time who is willing to pay more, you could miss out on the deal.

Best wishes, Tracey in Brisbane

If you are going to put a finance clause int the contract, it is best to name a lender and the amount. This should allow you easy exit if declined. If you just put something vague, the vendor could find you finance, at a higher rate, and you may be locked in.

Also remember for a contract (for land) to be enforceable they need your signature on a contract. If you have theirs, but they don't have your's they cannot enforce it.