Making an offer

This is where the seller’s plans and yours meet. The selling agent is aiming for the best price on a timetable that suits the seller; you want the right price on terms that protect you. Go in with your numbers written down and your offer on paper.

Private treaty: the negotiation

Before you offer, you need three numbers written down: your evidence-based value (from comparable settled sales, not the guide), your opening offer, and your genuine walk-away. The discipline isn’t the arithmetic; it’s refusing to revise the walk-away mid-negotiation because the kitchen was nice.

Open below your value but inside credibility: roughly 5 per cent under in a balanced market, more if the listing is stale (Chapter 6), less in a hot one. Lowball offers 15 per cent under don’t anchor anything; they usually tell the agent you’re not a serious buyer. Put the offer in writing with your conditions, your deposit and your settlement terms stated, give it an expiry (48 to 72 hours keeps a process honest), and justify the number with two or three comparable sales. An offer with reasons is harder to dismiss than a number on its own.

Expect a counter-offer, and be careful with the most common shortcut: splitting the difference. “You’re at $720,000, they’re at $740,000, let’s do $730,000” costs you $10,000 in one agreeable sentence. Counter in smaller steps, without rushing, and give your reasons. And use terms as currency: a settlement date that suits the vendor, a bigger deposit, a shorter finance period. Terms regularly buy what cash can’t. Our guide to negotiating the price has worked examples.

The conditions that protect you

• Subject to finance. Your right to exit, deposit intact, if your loan isn’t formally approved within a stated period (14 to 21 days is standard). Pre-approval does not make this clause redundant: final approval depends on the bank valuing this property (Chapter 8). Waive it only with unconditional approval in writing.
• Subject to building and pest. Your exit, or in practice your renegotiation lever, if the inspection finds material defects. In hot markets buyers waive it to look strong; that is exactly the market where defects can go unnoticed behind fresh paint.
• Subject to sale of your own property: the weakest condition you can attach, and many sellers won’t take it. If you need it, you’re usually better selling first (Chapter 1’s upgrader problem).

In some states conditions are standard contract furniture (Queensland’s standard contract has finance and building-and-pest clauses built in); in NSW and Victoria they’re negotiated specially. Your conveyancer inserts them before you sign, which is why they’re engaged in week one, not after the handshake.

Deposits and exchange

The deposit (10 per cent by convention, 5 per cent commonly negotiated) is paid when contracts are exchanged and held in trust, almost always the agent’s trust account, until settlement. It is not extra money; it’s the first slice of your purchase price. Exchange is the moment the deal binds both sides, and in NSW and the ACT there’s a gap between the handshake and exchange in which you can be gazumped: the seller can legally take a better offer until contracts are exchanged. The protection is speed: contract reviewed early, deposit ready, and a fast exchange asked for. In cooling-off states you can sign quickly and let the cooling-off period (Chapter 9’s table) do the protecting; withdrawing inside it costs 0.25 per cent of the price in NSW, a fair premium for locking the door behind you.

Bidding at auction: decide beforehand, bid calmly

Everything about auctions flows from one legal fact: the successful bid is unconditional, and there is no cooling-off at auction in any Australian state or territory. No finance clause, no inspection clause, deposit due on the spot. In Victoria the exclusion extends to private sales within three clear business days either side of a publicly advertised auction. So every protection has to happen before the hammer: contract reviewed by your conveyancer, building and pest done, strata report read, finance formally approved with the bank’s valuation completed, deposit cheque or transfer arranged.

On the day, how you bid matters less than folklore says, but it still matters:

• Set your limit in writing before you leave home, an odd number ($861,500 rather than $860,000, because limits cluster at round numbers and yours clears the cluster).
• Bid clearly and without hesitation. Projecting calm certainty discourages marginal bidders. Whether you open early or wait, bid like someone who intends to buy.
• Set your own increments. You can offer less than the auctioneer calls for; slowing $10,000 steps to $2,500 late in the auction slows the momentum and shows who is near their limit.
• Know the pass-in rules. If bidding stalls below reserve, the highest bidder usually earns the first (and sometimes exclusive) right to negotiate immediately afterwards. Being that bidder at a low number is a strong place to stand; brief yourself on your negotiation floor before the auction, not in the huddle.
• Vendor bids must be announced by the auctioneer. Hearing one late in the auction tells you the bidding from buyers hasn’t reached reserve. That is useful information; factor it in.