Legal Considerations When Making An Offer
Legal Considerations When Making An Offer
You’ve found an ideal house that you’re wanting to purchase and you’re ready to make an offer; Here’s a simple guide to understanding the process of making an offer and any legal obligations that you may need to fulfil, plus tips and tricks to aid you through the negotiation process.
The right fit?:
Before making an offer on a house you like, the simplest, yet most important step is making certain that the house is an ideal fit for you. Make sure you’ve inspected the property and have a good understanding of all its assets and potential flaws.
Check out other similar properties in the same area to gauge the market value of the property. Once you’re absolutely positive that this property is the best fit for you, you’re ready to start the negotiation process.
It is essential that before you make an offer on a property, you have pre-approval on the home loan that you require to purchase the house. Vendors will feel far more confident in entering the negotiation process with someone who has pre-approved loans as it directly illustrates that you’re serious about purchasing their home.
Offers on a property can be made conditionally or unconditionally.An unconditional offer is an agreement to purchase the property in its current state, whereas a conditional offer is an offer that states certain conditions that must be met in order for the sale to go through.
A conditional offer allows more flexibility for the purchaser and allows for specific requirements to be met by the vendor. Have a think about what conditions your purchase may require, and clearly state them in your original offer.
Does the property require a level of cleanliness, or need any repairs? Think carefully about these conditions, as purchasing a home that needs additional repairs at the buyer’s expense can be more costly than one would think.
Make your offer:
Once you’re happy with the property and have an understanding of any conditions you may require, it’s time to submit your offer to the vendor. Start by submitting an offer within the lower end of the market range for similar properties, anticipate that the vendor will likely request a higher price, and prepare to enter the negotiation period.
After submitting an offer, sit back and wait for the vendor to get back to you. It’s common courtesy for the person selling their property to reply to the offer within 24 to 48 hours, however some vendors may take longer. There is, however, no legal requirement for the vendor to reply to an offer they are not interested, so be aware that if a vendor takes too long to respond, they’re most likely not interested.
We recommend waiting no longer than 7 days for a response; Keep in mind that a very late response may be indicative of the vendors efficiency, or lack thereof.
If you do receive a response from the vendor it will be one of the following:
Acceptance: The ideal response to your offer would be an immediate acceptance. Although this is a rare occurrence, if the offer is right for the vendor, they may immediately agree to your offer, and draw up a sales contract.
Rejection: If the offer isn’t what the vendor is interested in, they will either ignore it or respond with a rejection, this doesn’t mean you need to give up though! You have the right to change your offer and submit it back to the vendor as many times as you like.
Counteroffer: The more common response to an offer is a counteroffer, this is when the vendor responds with an offer of their own, which may mean a slightly lower price, or a re-evaluation of any stated conditions. You have the option to accept a counteroffer or respond again with a counteroffer of your own.
Closing the deal
When both you and the vendor are happy with an offer, you can proceed to the sales contract. You are within your legal rights to pull out of purchasing a house up until the moment you sign a sales contract, or make a deposit. Make certain that you’re happy with the contract and ready to purchase before putting pen to paper, as pulling out of a contract after signing it is a lengthy and difficult process.
When you’re in agreement with the contract and happy with the property, it’s time to close the deal!
Making an offer is an exciting step towards purchasing the home of your dreams! Make sure to be careful and considerate during the negotiation period in order to get the best deal for your property.
If you need any extra tips, tricks or advice make sure to check out our other helpful articles at Homesta.