All Topics / Help Needed! / Harm in making an offer via email BEFORE an official offer?

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  • Profile photo of Jay SizzleJay Sizzle
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    I'm waiting for my solicitor to get back to me with our official offer. The agent has asked me what we are likely to offer, so that we 'do not waste our time'.

    Will responding with a figure via email (or phone?) BEFORE sending the official offer do any harm? If not, how specific should I be re. Amount and terms?

    ie. exact figure, or ball park range (ie. 'mid-high' 700s)

    ie. should I mention settlement length and deposit?

    I'd really appreciate some responses here – still waiting on my lawyer!!!

    Profile photo of Jay SizzleJay Sizzle
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    Anyone?!

     Kinda want to get back to the agent today, but don't want to compromise our negotiations.

    Profile photo of Jamie MooreJamie Moore
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    Your offer should be an exact figure – don't provide a range.

    If you require conditions such as finance approval and building/pest inspection – make sure you mention them.

    Don't sign anything until you've had your solicitor go over the contract and you're satisfied that your conditions have been met.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
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    Profile photo of Jay SizzleJay Sizzle
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    Thanks – just writhing email now.

    should I include the length of settlement in the offer at this point?

    Profile photo of Jacqui MiddletonJacqui Middleton
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    Hi Jay

    I am unclear why you need to wait for your lawyer before merely making an offer. 

    (You would get your lawyer involved in nailing down the exact contract wording before you sign the contract of sale.)

    As Jamie says, your offer should be for an exact figure, and should mention any conditions you intend to be applicable.  For instance you could say "subject to 60 day settlement, buildng and pest, and 90% finance" and if they accept your offer you would work with your lawyer to get some savvy wording to describe the building, pest and finance clauses.

    Jacqui Middleton | Middleton Buyers Advocates
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    Profile photo of Corey BattCorey Batt
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    I do know of a number of agents who count email offers as tyre-kickers also, just something to consider.

    A lot of the older school agents respond well to in person, in writing offers. But there is a large shift from this demographic in the industry.

    Corey Batt | Precision Funding
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    Profile photo of Richard TaylorRichard Taylor
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    Hi Jay

    Which State is the property in ?

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

    Profile photo of minds-eyeminds-eye
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    Hi JacM,

    I am at the stage where I am looking to buy my first IP.

    I find it interesting that you mention 90% finance.

    Can you please elaborate?

    Profile photo of Jamie MooreJamie Moore
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    minds-eye wrote:
    Hi JacM,

    I am at the stage where I am looking to buy my first IP.

    I find it interesting that you mention 90% finance.

    Can you please elaborate?

    Probably best to keep it vague like "a sufficient amount for buyer to complete the purchase" rather than stipulating an amount.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
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    Profile photo of Nigel KibelNigel Kibel
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    Hi Jay

    An offer by email in most cases will not be looked at. An offer is really only if its in writing with a deposit. This way the agent will always treat your offer seriously. 

    I have made verbal offers in the past, but because I have worked as an agent they will talk to me.

    My suggestion is if you like a property, make a written offer

    Start at a lower price, make it subject to finance and a building inspection so it gives you an out

    By law an agent must present a written offer but can ignore a verbal or an email

    Nigel Kibel | Property Know How
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    Profile photo of minds-eyeminds-eye
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    Hi Jamie.

    Thanks for your reply. But it wasn't the figure amount that I was questioning.

    Why 90% finance? Would you not give the seller a lump sum of the full amount?

    If you are referring to a 10% deposit. Would you give this out of your own pocket? and then give the bank another 20% deposit on the remaining amount?

    Seems like a lot of deposits going around. Best to keep a chunk of cash handy!

    Profile photo of Jamie MooreJamie Moore
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    minds-eye wrote:
    Hi Jamie.

    Thanks for your reply. But it wasn't the figure amount that I was questioning.

    Why 90% finance? Would you not give the seller a lump sum of the full amount?

    If you are referring to a 10% deposit. Would you give this out of your own pocket? and then give the bank another 20% deposit on the remaining amount?

    Seems like a lot of deposits going around. Best to keep a chunk of cash handy!

    Nope – you never give the seller the full amount on offer. You normally exchange on a 5% or 10% deposit and then the balance is paid upon settlement of the property.

    If the purchase is an IP, it's ideal to use "borrowed" funds rather than cash for the deposit (if possible).

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
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    Profile photo of minds-eyeminds-eye
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    Thanks Jamie,

    When you make an offer on a property and provide the seller with a 10% deposit, do you "borrow" the entire property value (i.e. 400K) from the bank. Have it sitting in your account, then you make a withdrawal of 40K and give it to the seller for deposit?

    Then in 6 weeks or so after settlement you transfer the remaining amount?

    Profile photo of Jamie MooreJamie Moore
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    minds-eye wrote:
    Thanks Jamie,

    When you make an offer on a property and provide the seller with a 10% deposit, do you "borrow" the entire property value (i.e. 400K) from the bank. Have it sitting in your account, then you make a withdrawal of 40K and give it to the seller for deposit?

    Then in 6 weeks or so after settlement you transfer the remaining amount?

    No worries.

    Nope – not like that.

    There's a couple of main ways to fund a deposit – the first being with cash and the second from equity from another property (borrowed funds).

    With equity, you need to arrange the equity release beforehand so the funds are available to you when signing the contract. 

    For arguments sake, let's say you were purchasing a $100k IP.

    You use an existing property to access $25k in equity which covers the 20% deposit and costs.

    You then set up the remaining $80k loan separately – and those funds are available on the day of settlement.

    Make sense?

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
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    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of vagirl2012vagirl2012
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    Excuse the probably dumb question, but why isn't an email viewed as a written offer?

    Profile photo of RobertoHRobertoH
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    ^^^

    yeah, I would like to know this, too.

    Profile photo of CattleyaCattleya
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    Emails can be changed, for example you can make changes before you forward / print it. Email address can also be fake and some email addresses are from free accounts like hotmail, etc. If it is on paper, you have address, name and signature. Plus nobody can make changes without somehow damaging / leaving marks on it. This is also why emails are not as strong as written evidence in the eyes of the law. Cheers, Catts.

    Cattleya

    Here to learn the ropes of property investing & share knowledge, not trying to sell anything at all.

    Profile photo of Nigel KibelNigel Kibel
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    A written offer must be on a contract with a deposit which is known as consideration. In other words if the owner accepts your offer the agent knows that the deal is going to go through. An email is not an enforceable offer. You may also be interested to know that if you buy a property at Auction you have not purchased the property until the contract is signed. 

    Nigel Kibel | Property Know How
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    Profile photo of bbrummbbrumm
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    Cattleya wrote:
    Emails can be changed, for example you can make changes before you forward / print it. Email address can also be fake and some email addresses are from free accounts like hotmail, etc. If it is on paper, you have address, name and signature. Plus nobody can make changes without somehow damaging / leaving marks on it. This is also why emails are not as strong as written evidence in the eyes of the law. Cheers, Catts.

    Thanks for the clarification. I understand that emails can be changed and aren't as legally strong, but if someone goes to the effort of writing an email to offer a specific amount and conditions, it would still indicate they are serious from an investment perspective?

    Also, how else would a written offer be provided other than going into an office and signing a piece of paper?

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