Putting in an Offer on a House
When you are satisfied with the documentation that supports the property, you are ready to make an offer! Make sure you understand the documentation you have analysed prior to making an offer, as in Western Australia there is no cooling off period once you have submitted your offer.
Negotiations can get tough or drawn out, so it is important to stay calm and focused when placing an offer. As previously discussed, you may wish to engage the services of a buyer's agent to do this for you.
Be sure to refer back to your affordability figure at all times during negotiations, as although you may be tempted to stretch that further few thousand dollars, the implications of your actions now may place financial burden and stress on you in the future.
When placing an offer on a property, you will be required to sign an Offer and Acceptance contract. The Offer and Acceptance contract is made up of two separate parts, namely the contract for sale of land or strata title by offer and acceptance (commonly referred to as the O&A contract), and the joint form of general conditions for the sale of land (commonly referred to as the general conditions).
The general conditions is a booklet created by REIWA and the Law Society. Hopefully you will not need to refer to the general conditions as most transactions are navigated in compliance with the general conditions, and should any potential dispute arise your settlement agent will be able to assist. An O&A contract is also produced by REIWA, although it should be noted that many real estate agencies adopt their own O&A contracts for you to sign. YOU SHOULD READ THE O&A CONTRACT EXTREMELY CAREFULLY, and query any areas that you do not fully understand / agree with.
Areas that particular attention should be paid to are:
Price
The price you are willing to pay for the property should be displayed in a clear and prominent place on the O&A contract.
Deposit
You will need to indicate the deposit you are willing to deposit, if any, as part of your offer. A deposit will indicate that you are serious about your offer, although particular attention should be paid as to what will happen to your deposit upon acceptance of the offer. For example, if you are unable to acquire finance, will you get your deposit back? In what conditions may you lose your deposit?
Finance
It should be noted that any finance that is ‘subject to’ is not approved finance. Even if you have done the right thing and obtained pre-approval for finance, you are still not guaranteed finance approval and as such it is important to notify your broker to seek unconditional finance immediately.
You may also wish to consult your broker if the real estate agent offers to ‘assist’ you with preparation of your finance condition within your O&A contract. At this point the real estate agent may be in a state of ‘commission rage’ and as such may try to reduce your finance period or recommend a broker of their own. Luckily the majority of real estate agents will act in good faith, although any finance clause should be checked over prior to signing.
You cannot deliberately enforce failure of finance if you decide you do not want to proceed with the purchase of the property, and you may be charged damages if you are found to do so, so it may be worth consulting your mortgage broker prior to placing the offer.
Settlement Date
You will also be required to estimate settlement date for the purchase of your property. You should consult your settlement agent in regards to this as some transactions may have particular complexities. The department of Commerce recommends that a minimum period of 4 weeks is required for settlement, although generally 6 weeks is considered viable, so don't feel pressured into reducing the settlement period.
Special Conditions
As every property transaction is unique there may be some special conditions that you wish to place in the O&A contract. For example, you may wish to specify items you want to keep such as curtains, pool equipment, or light fittings. Another common special condition is that P.C items such as ovens and air-conditioning will be operating as intended at the time of final inspection.
It is important to consider these clauses as many O&A contracts will state that fixtures and fittings will be of the same operation as they were at the time of offer. If this is the case you should ensure that everything around the property is working, or have the condition changed. Legal advice should always be sought prior to inserting any special conditions, as wording is everything when signing a contract.
Exclusions
Exclusions may exist as part of the contract that you are signing. For example, a patio may not have acquired the relevant approval or be structurally unsafe, although as it is considered an exclusion it will not be required to be fixed by the seller prior to purchase. Consider the implications of any exclusions listed on the contract.
Inspections
You should ensure that you have a clause written in the contract that the offer is subject to a building inspection and timber pest inspection. Carefully read the wording of these annexures, so that you are aware of the items that are the responsibility of the seller to rectify. For example, a structural defect to the roof framework should be required to be rectified by the seller, whereas a cracked tile should not.
Regulations
If you have a pool then you should ensure that the equipment is in good working order and the barriers comply with the requirements of all authorities. Smoke alarms and RCD’s are also protected by legislation. Most real estate agents use the standard REIWA contract when addressing these items, which will state the legislative requirements for these items. This is where an electrical safety certificate should be acquired. This is an item that the real estate agent should produce for you, although you should always liaise through your settlement agent.
The Australian Consumer Law contains protections in relation to unfair contract terms. Unfair terms in standard form consumer contracts may be declared void by a court.
Negotiations can get tough or drawn out, so it is important to stay calm and focused when placing an offer. As previously discussed, you may wish to engage the services of a buyer's agent to do this for you.
Be sure to refer back to your affordability figure at all times during negotiations, as although you may be tempted to stretch that further few thousand dollars, the implications of your actions now may place financial burden and stress on you in the future.
When placing an offer on a property, you will be required to sign an Offer and Acceptance contract. The Offer and Acceptance contract is made up of two separate parts, namely the contract for sale of land or strata title by offer and acceptance (commonly referred to as the O&A contract), and the joint form of general conditions for the sale of land (commonly referred to as the general conditions).
The general conditions is a booklet created by REIWA and the Law Society. Hopefully you will not need to refer to the general conditions as most transactions are navigated in compliance with the general conditions, and should any potential dispute arise your settlement agent will be able to assist. An O&A contract is also produced by REIWA, although it should be noted that many real estate agencies adopt their own O&A contracts for you to sign. YOU SHOULD READ THE O&A CONTRACT EXTREMELY CAREFULLY, and query any areas that you do not fully understand / agree with.
Areas that particular attention should be paid to are:
Price
The price you are willing to pay for the property should be displayed in a clear and prominent place on the O&A contract.
Deposit
You will need to indicate the deposit you are willing to deposit, if any, as part of your offer. A deposit will indicate that you are serious about your offer, although particular attention should be paid as to what will happen to your deposit upon acceptance of the offer. For example, if you are unable to acquire finance, will you get your deposit back? In what conditions may you lose your deposit?
Finance
It should be noted that any finance that is ‘subject to’ is not approved finance. Even if you have done the right thing and obtained pre-approval for finance, you are still not guaranteed finance approval and as such it is important to notify your broker to seek unconditional finance immediately.
You may also wish to consult your broker if the real estate agent offers to ‘assist’ you with preparation of your finance condition within your O&A contract. At this point the real estate agent may be in a state of ‘commission rage’ and as such may try to reduce your finance period or recommend a broker of their own. Luckily the majority of real estate agents will act in good faith, although any finance clause should be checked over prior to signing.
You cannot deliberately enforce failure of finance if you decide you do not want to proceed with the purchase of the property, and you may be charged damages if you are found to do so, so it may be worth consulting your mortgage broker prior to placing the offer.
Settlement Date
You will also be required to estimate settlement date for the purchase of your property. You should consult your settlement agent in regards to this as some transactions may have particular complexities. The department of Commerce recommends that a minimum period of 4 weeks is required for settlement, although generally 6 weeks is considered viable, so don't feel pressured into reducing the settlement period.
Special Conditions
As every property transaction is unique there may be some special conditions that you wish to place in the O&A contract. For example, you may wish to specify items you want to keep such as curtains, pool equipment, or light fittings. Another common special condition is that P.C items such as ovens and air-conditioning will be operating as intended at the time of final inspection.
It is important to consider these clauses as many O&A contracts will state that fixtures and fittings will be of the same operation as they were at the time of offer. If this is the case you should ensure that everything around the property is working, or have the condition changed. Legal advice should always be sought prior to inserting any special conditions, as wording is everything when signing a contract.
Exclusions
Exclusions may exist as part of the contract that you are signing. For example, a patio may not have acquired the relevant approval or be structurally unsafe, although as it is considered an exclusion it will not be required to be fixed by the seller prior to purchase. Consider the implications of any exclusions listed on the contract.
Inspections
You should ensure that you have a clause written in the contract that the offer is subject to a building inspection and timber pest inspection. Carefully read the wording of these annexures, so that you are aware of the items that are the responsibility of the seller to rectify. For example, a structural defect to the roof framework should be required to be rectified by the seller, whereas a cracked tile should not.
Regulations
If you have a pool then you should ensure that the equipment is in good working order and the barriers comply with the requirements of all authorities. Smoke alarms and RCD’s are also protected by legislation. Most real estate agents use the standard REIWA contract when addressing these items, which will state the legislative requirements for these items. This is where an electrical safety certificate should be acquired. This is an item that the real estate agent should produce for you, although you should always liaise through your settlement agent.
The Australian Consumer Law contains protections in relation to unfair contract terms. Unfair terms in standard form consumer contracts may be declared void by a court.