Making an Offer on a Property: A Step-by-Step Guide

Here is what you should know before making an offer on a property.

Confirm Your Property Budget

Before negotiating, confirm how much you can comfortably afford.

Your budget should include more than the purchase price. You may also need to allow for:

• Transfer duty or stamp duty

• Conveyancing or legal fees

• Building and pest inspections

• Registration and settlement costs

• Lenders mortgage insurance

• Home insurance

• Body corporate fees

• Moving expenses

• Repairs or renovations

Your maximum borrowing capacity may not be the amount you should spend. Consider whether the repayments would remain affordable if your expenses or interest rates increased.

Consider Home Loan Pre-Approval

Home loan pre-approval can provide an indication of how much a lender may be prepared to lend.

It can help you:

• Establish a realistic price range

• Search for suitable properties

• Avoid offering above your borrowing capacity

• Identify potential finance issues early

However, pre-approval is not formal approval. The lender may still need to assess the property, complete a valuation and confirm that your financial position has not changed.

Research the Property

Before deciding how much to offer, review recent sales of similar properties in the area.

Consider:

• The property’s condition

• Land and building size

• Recent comparable sales

• How long the property has been listed

• Local buyer demand

• Required repairs

• Flood, bushfire or environmental risks

• Council zoning and future developments

Advertised prices and online estimates are only guides and may not reflect the final selling price or lender valuation.

Have the Contract Reviewed

Ask the real estate agent for a copy of the contract before signing or submitting a binding offer.

Your solicitor or conveyancer can review:

• The title

• Easements and encumbrances

• Settlement requirements

• Included fixtures

• Special conditions

• Body corporate matters

• Tenancy arrangements

• Deposit requirements

They can also recommend suitable conditions and explain your legal obligations.

Decide How Much to Offer

Your offer should reflect the property’s market value, condition and your personal budget.

Before negotiating, decide on:

• Your opening offer

• Your preferred purchase price

• Your maximum price

Setting a limit in advance can help prevent emotion or competition from pushing you beyond your budget.

You may choose to offer below the asking price if the property requires repairs, has been listed for an extended period or comparable properties have sold for less. In a competitive market, however, a stronger offer may be required.

Choose Your Offer Conditions

The price is only one part of an offer. Conditions can provide important protection while you complete your finance and property checks.

Finance condition

A finance condition provides time to obtain formal home loan approval.

The finance period should allow enough time for:

• Credit assessment

• Property valuation

• Additional document requests

• Formal approval

Pre-approval does not automatically mean your finance condition has been satisfied.

Building and pest condition

This condition allows you to arrange professional inspections.

The reports may identify structural problems, termite damage, moisture issues or significant maintenance requirements.

Depending on the contract wording, you may be able to proceed, renegotiate or terminate the contract if serious issues are identified.

Sale of another property

You may want the purchase to depend on selling your existing property.

This may reduce your financial risk, although it can make the offer less attractive to the seller.

Settlement date

Your offer should include a proposed settlement date.

A settlement date that suits the seller may strengthen your offer without requiring you to increase the price.

Your solicitor or conveyancer should advise you about the wording and suitability of all contract conditions.

Submit the Offer in Writing

Offers may be submitted through a signed contract, written offer form or email.

You may be asked to provide:

• Your full legal name

• Offer amount

• Deposit amount

• Finance timeframe

• Building and pest timeframe

• Settlement date

• Solicitor or conveyancer details

• Any special conditions

Make sure all important terms are included in writing. Do not rely on verbal assurances from the selling agent.

Negotiate With the Seller

The seller may accept, reject or make a counteroffer.

During negotiations, they may request:

• A higher price

• A larger deposit

• A shorter finance period

• Fewer conditions

• A different settlement date

The highest offer is not always the successful offer. A seller may prefer a buyer with suitable finance arrangements, fewer complications or a flexible settlement date.

However, do not remove important conditions simply to make your offer more attractive without obtaining legal and financial advice.

What Happens After Your Offer Is Accepted?

Once the contract is signed and becomes binding, important deadlines may begin immediately.

You should:

1. Send the contract to your mortgage broker.

2. Send the contract to your solicitor or conveyancer.

3. Pay the deposit as required.

4. Arrange building and pest inspections.

5. Arrange insurance if advised.

6. Provide any updated financial documents.

7. Monitor the finance approval deadline.

Your lender may then arrange a property valuation and complete the formal home loan assessment.

What if the Property Valuation Is Low?

The lender may value the property below the agreed purchase price.

If this happens, you may need to:

• Contribute a larger deposit

• Reduce the requested loan amount

• Renegotiate the purchase price

• Request a valuation review

• Consider another suitable option

• Reconsider the purchase

Speak with your mortgage broker and legal representative before making a decision.

Buying at Auction

Auction purchases are commonly unconditional and may not include finance or building and pest conditions.

Before bidding, you should generally:

• Obtain home loan pre-approval

• Have the contract reviewed

• Complete building and pest inspections

• Research comparable sales

• Confirm your maximum bid

• Check the required deposit

Pre-approval does not guarantee that the lender will approve the property or final purchase amount.

Common Mistakes to Avoid

Common mistakes when making an offer include:

• Offering before confirming borrowing capacity

• Assuming pre-approval guarantees formal approval

• Signing without legal advice

• Removing the finance condition too early

• Forgetting stamp duty and purchase costs

• Offering above your maximum budget

• Missing contract deadlines

• Applying for new credit before settlement

Speak with your mortgage broker before making significant financial or employment changes during the approval process.

Frequently Asked Questions

Should I get pre-approval before making an offer?

Pre-approval is not compulsory, but it can help you understand your likely budget and identify potential finance issues before committing to a property.

Can I make an offer subject to finance?

Yes. Private-sale offers may include a finance condition. Your solicitor or conveyancer should review the wording and timeframe.

Is a verbal offer binding?

Property sales generally require a written and signed contract, but the rules can vary. Obtain legal advice before submitting or signing an offer.

Can I withdraw my offer?

You may be able to withdraw before the seller accepts it. Once a binding contract is formed, withdrawing may have legal or financial consequences.

What should I do after my offer is accepted?

Send the signed contract to your mortgage broker and conveyancer immediately, pay the required deposit and begin completing the finance and inspection conditions.

Prepare Your Offer With Mortgage Matrix

Making an offer involves more than choosing a price.

Your borrowing capacity, deposit, purchase costs, contract conditions and settlement timeframe should all be considered before you commit.

At Mortgage Matrix, we help home buyers understand their borrowing capacity, obtain pre-approval and manage the finance process from accepted offer through to settlement.

Book an obligation-free appointment with Mortgage Matrix before making an offer on your next property.

This information is general in nature and does not take into account your personal objectives, financial situation or needs. Property laws and contract requirements vary between states and territories. Obtain independent legal advice before signing a contract. Home loan approval is not guaranteed.

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