An offer is five things, not one
Most buyers treat an offer as a price. Vendors do not. A vendor is choosing between offers on price, deposit, settlement date, conditions and how likely each one is to survive to settlement. Two offers $20,000 apart regularly go the other way because the lower one was cleaner.
That is good news, because price is the one lever that costs you money and the other four are usually free.
Do these before you make any offer
- Get finance pre-approved. An offer from a buyer who has not applied for a loan is treated as an opinion.
- Price the property yourself. Pull every comparable sale within a few streets from the last six months. Adjust for land size, condition and aspect. The price guide is a marketing number, not a valuation.
- Get the contract to your conveyancer. They read the title, the zoning, the easements and the special conditions. This takes a day and it has stopped more bad purchases than any inspection.
- Order the building and pest report if the timeline allows, or make the offer subject to one. See the building and pest inspection guide.
- Decide your walk-away number and write it down before you talk to the agent. Not your dream number. The number above which you would rather lose.
The five levers
Price
Where you open depends on evidence, not nerve. If your comparable sales say $1.05 million and the guide says $1.1 million, open at your number with the sales attached. An offer with three recent sales printed underneath it is an argument. An offer without them is a haggle.
Deposit
The standard is 10%, but 5% is negotiable in most states with the vendor’s agreement. Offering the full 10% when others are asking to reduce it signals you are not stretched. Offering more than 10% is rarely useful and ties up cash you need at settlement.
Settlement length
This one is free and it is badly underused. Some vendors desperately want a long settlement because they have not found their next house. Others want a short one because they have already bought. Ask the agent which, then match it. Matching a vendor’s preferred settlement is often worth more to them than $10,000.
Conditions
Every condition you attach reduces the value of your offer to the vendor, because each one is a way out for you. Finance, building and pest, and sale of your existing home are the common three. The last one is the killer: an offer subject to selling your own house is worth dramatically less than one that is not.
Expiry
Put a deadline on it, usually 24 to 48 hours. Without one your offer becomes a free tool the agent uses to pull a better number out of someone else. With one, the vendor has to decide.
Put it in writing, and understand gazumping
Always make the offer in writing, by email, with the price, deposit, settlement, conditions and expiry all in it. A verbal offer is not binding anywhere in Australia and it is also not evidence.
But writing does not make it safe. Until contracts are exchanged, a vendor can accept a higher offer from someone else, even after telling you yours was accepted. That is gazumping, and it is legal in every state. In New South Wales it is common enough to have shaped how buyers behave: the way to shut it down is to be the party ready to exchange first, with the contract reviewed, the deposit ready and your conveyancer instructed.
Cooling off, state by state
If your offer is accepted and you exchange, this is the window you have to change your mind. Buy at auction and there is no window at all, anywhere in Australia.
| State | Cooling-off period | Cost to walk away |
|---|---|---|
| New South Wales | 5 business days, 10 for off-the-plan | 0.25% of the price |
| Victoria | 3 clear business days | The greater of $100 or 0.2% |
| Queensland | 5 business days | Up to 0.25% |
| ACT | 5 business days | 0.25% of the price |
| Northern Territory | 4 working days | Generally nothing |
| South Australia | 2 business days | Up to $100 |
| Western Australia | None | Conditions in the contract are your only protection |
| Tasmania | None | Conditions in the contract are your only protection |
Two traps. In Victoria the cooling-off period does not apply to a contract signed within three clear business days either side of a scheduled public auction, even if that auction was called off. In New South Wales a vendor will often ask you to sign a section 66W certificate, which gives up your cooling-off rights entirely in exchange for the vendor taking the property off the market. Never sign one until your conveyancer and your inspections are done.
Offer builder: what to offer, on what terms, and the email to send
Enter what the evidence says the property is worth and what your ceiling is. The tool sets an opening number against the competition and how long it has been listed, tells you which free levers to pull before you add money, applies your state’s cooling-off rules, and writes the offer email for you.
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How to put the offer to the agent
The selling agent works for the vendor, but they also want a deal to happen. Give them something easy to carry.
Two things never to say to a selling agent: what your maximum is, and how much you love the house. Both are used, immediately, and neither helps you.
Conditions that actually protect you
Write conditions with dates and definitions in them. A condition that says “subject to finance” with no date and no amount is close to worthless.
- Finance: subject to unconditional written approval from a lender for a stated amount, by a stated date, at least 14 to 21 days out.
- Building and pest: subject to a report satisfactory to the buyer, in the buyer’s sole discretion, by a stated date. The words about discretion matter.
- Strata: for an apartment, subject to a strata report satisfactory to the buyer. See the strata report guide.
- Repairs before settlement: name the work, name the trade licence required, and hold money back at settlement if it is not done.
When they say no
A rejected offer is information. Ask the agent two questions: was it the price or the terms, and is the vendor still talking to other buyers? The answers tell you whether to improve the offer or walk.
And leave the offer open. A rejected offer that stays on the table has a habit of being accepted three weeks later when the campaign runs out of buyers.
Common questions
How much below the asking price should I offer?
There is no rule of thumb worth using, because asking prices are set differently in every state and by every agency. Work out what the property is worth from recent comparable sales and offer from that, not from a percentage of somebody’s marketing number.
Is my offer binding?
Not until contracts are exchanged and, in most states, not until any cooling-off period has passed. Before exchange either side can walk away. That cuts both ways, which is why speed to exchange matters.
Can I offer on more than one property at once?
You can, and buyers in fast markets do, but be careful. If two are accepted and exchanged you are contractually bound to both. Keep it to one live offer with a short expiry rather than several.
Should I offer an odd number?
Slightly. $1,013,500 reads as a number somebody calculated; $1,000,000 reads as a starting point. It is a small effect and it is free.
What if the property is passed in at auction?
The highest bidder usually gets the first right to negotiate, immediately, in a room with the agent. Know your walk-away number before you go in, because that conversation is designed to move it.
Do I need a conveyancer before I make an offer?
Yes. The contract review has to happen before you exchange, and in a competitive market you will not have time to find one afterwards. Engaging a conveyancer costs nothing until they act.