Making A Written Offer!

well besides the normal building & pest clauses, make sure you get 21 days finance. 14 days is often not enough.

I always write deposit of $1000, as long as its enough to cover the 0.25% 5 day cooling off period fee. Never pay it up front, say you will pay 3 days after acceptance (or 14 days Ive done a few times)

Have a time limit on them accepting the offer, as they can play you off against other offers for weeks.

Go in $2k below what you actually want to pay. Tell the agent this is a first and final offer. If they dont accept, you will move on to the next deal.

agents like you to pay 10% deposit, as this covers their commission. tell em to get bent.

Some agents will in fact take verbal offers on property, however good agents have more than likely learnt that it is not in the best interest of the Seller to do so.  Most agents have learnt along the way that verbal offers that are accepted are more often than not never converted to contracts.   The reason is that the Buyer generally thinks that if the offer is accepted, they have offered too much. 

The act of putting the offer in contract form does in fact increase the chances of the offer being taken seriously, but it must also be taken in contex with the conditions that are included.   When buying a property it would be worth your while to consider what you would accept if the property was yours.   For instance, if the property was listed at a reasonable price of $400,000 would you go in with an offer of $300,000 subject to finance 21 days, subject to Building and Pest 21 days, subject to you changing your mind within 21 days and on a 90 day settlement with $1000.00 deposit.   My guess is that neither the Seller nor tha Agent  is going to treat this offer with any seriousness.

On the issue of low deposits, there is nothing in law to say how much a deposit should be (except at Auctions where it is specified) and I agree that when push comes to shove, I have taken low deposits (funnily enough, these contracts are usually the ones we have the most trouble with at settlement).   The thing to keep in mind is that if I have two or more offers on a property, I will advise the Seller to accept the one with the largets deposit given that price and all other conditions are similar.   So the moral is doen't get to cocky or it could cost you.    Another interesting point here is that this low deposit syndrome only comes from Investors who are borrowing cost plus in order to purchase the property.   Owner occupiers understand that the deposit forms part of the purchase price and are more often than not happy to show commitment by giving 10% deposit.

Jon

Hi Wewaz,

Life is a two way street, unfortunately most people can only see the way they are travelling and are only interested in their own benefits.    Your question – Let's say a verbal offer is made, accepted by the vendor and there is no follow through to sign the contract. What is the loss to the vendor.? is a good one, and as you rightly say, there is little loss to the Seller except perhaps dissapointment and maybe a little time.   I also agree that every offer should be taken seriously and from my point of view they are – but in writing.
It is not hard to believe that the major problem facing Sales People, Tradies, Property Managers, Lawyers and indeed anyone who is offering a service today is a lack of trust from the end user, when it comes to property transactions that lack of trust comes from both sides (the Buyer and the Seller).   If an agent continues to give verbal offers to a Seller (and lets understand that most verbal offers are going to be low ones) the suspicion from the Sellers point of view is that the agent is only giving low offers in order to get the price of their property down.   They can't see the Seller, they only hear the verbal where as if I put a written offer in front of them it becomes more transparent.  I hope this helps to clarify why written is best.

As to your point in relation to the Statutory 5 day cooling off period, it is interesting to note that the .25% of the selling price termination penalty for using this condition was placed by the Government in order to stop unscrupulous Buyers from running around and placing offers on multiple properties and then later making up their minds as to which one they wanted to keep.

Jon

Hi,
when I have been the vendor in the past I would only look at a written offer… I had an agent once that spoke to me about  a verbal offer he had for me that day… I told him to write it down  with the buyer in the form of an offer before I would consider looking at it..if the buyer isn't prepared to even do that he really cannot be taken too seriously.
I certainly wouldn't start to negotiate verbally (unless there were specific criteria ie, if buyer is on an oil rig or mine site & cannot readily access faxes etc) 
I feel if someone really wants to buy a house they would take 30 minutes out to write it down with the agent…. it is not just the dollar amount I may want to view… I need to view the whole (potentially) contract document, term's, conditions etc before I agree to anything.

if they are not prepared to make a written offer… I wouldn't take them seriously. I know & they know, that there is 5 day cooling off so there is no reason for them to not write it down.

"A verbal offer is not worth the paper it's not written on"

Mackar

OK, when you say a written offer, you mean you go to the agent's office and sign a contract for the property, or some other form, or maybe I "scribble" my own offer on a piece of paper? It usually includes a sum of money, yes? 10% sounds ridiculous on an initial offer, but you tell me from your experience the norm.

So let's get to the crux of the matter and spell out the usual form a written offer takes, since from previous threads it's still a little vague. Thanks.

yes, just go to the agents office & he will draft it for you & then present it to the owners.

probably talk to your own Lawyer first if you have never done this before, as you will need to protect yourself with conditions to contract… ie, make offer subject to Finance and/or Building & pest inspections & time allowance to achieve these things… what items you may wish, if any, to stay at property maybe…
 your agent will let you know what to look out for if he is a local professional.
bear in mind though, that you want the offer to be attractive to the owner so don't go overboard on conditions unless you do need to add them…
get it straight in your mind when you need the property to settle etc also (30 days 60 days 90 days) sometimes its worth asking agent what the owners are after… ie if they are building they may wish to settle early & rent back for 6 or more months but if they have bought already & there is a 120 day settlement they may want to settle on same day so they are not "homeless" for a couple of months…
bottom line… do your due diligence & learn as much as possible prior to offer so your learning curve is not an expensive one.

I would recommend you go to your RE agent or your property lawyer to write it up, as it is a legal document & needs to be filled in correctly to be enforcable… a badly worded offer can set you back in time & possibly money… do it right the 1st time & you have less chance of problems later on.

Mackar

doesnt it take longer to organise a day and time to go in to the agents office just to make an offer though???

That would depend on just how interested you were in the property.

what if im prepared to make an offer right there and then but would prfer it to be written?

Tell the agent, they may have a proformer contract prepared and on file.   If not they should take your details and go to you to get signed.

or do i make my really low offer verbally and then my last offer written?

This is called 'fishing' and really low offers are usually given by buyers trying to find out where the Seller is with price.   If it is a really low offer, my usual reply will go like this -"My Vendor says to thank you for your offer, however at this time it is not sufficient to secure the property would you like to revise your offer."   Most Sellers are not stupid, most know roughly where their property is positioned and silly low offers are usually treated with the disdain that they deserve. 

Jon