Buying by negotiation and deadline
A seller may choose to sell by deadline sale, sell at an advertised price, sell by negotiation or variations of these.
Summary of important things to know
If a property is being sold by deadline sale, the seller sets a date and buyers can make an offer at any time before that date. The seller may indicate the price, and buyers can offer more or less than that price and negotiate the sale.
If a property is being sold by asking price, the seller sets an asking price and buyers can choose to offer more or less than that price, and negotiate the sale. There is no end date for offers.
A seller may choose to sell by negotiation when it’s difficult to estimate the market price of a property. There is no end date for offers. Buyers make offers based on what they think the property is worth in the current market.
In all cases, buyers can attach conditions to their offer. Examples of conditions include making the offer subject to a building inspection, a valuation or approved finance or selling another property. Buyers can change their offer at any time before the seller accepts it and can include an expiry date on the offer.
Sellers can also attach terms and conditions to the sale, for example, the settlement date and which chattels will be included.
If you can’t meet the conditions or need an extension, you need to talk to your lawyer or conveyancer and the real estate agent as soon as possible.
A deposit will need to be paid either on acceptance of the agreement by the seller or on the agreement becoming unconditional (depending on the terms of the offer).
The remainder of the purchase price is due on settlement day (when the property changes ownership). Check the settlement date and make sure you have all your finances and other arrangements in place before then.
If there is more than one offer, the sale may become a multi-offer process.
Identifying properties for sale
A deadline sale may be advertised using the terms ‘deadline treaty’ or ‘deadline sale’. The property advertising may include the words ‘unless sold prior’, which means the property can be sold before the end date.
A sale by advertised price may be advertised using the terms ‘asking price’, ‘buyer enquiry over (BEO)’, ‘buyer budget over (BBO)’ or ‘price on application (POA)’.
A sale by negotiation is likely to be advertised as ‘by negotiation’.
Researching the property
Before you make an offer, learn as much as you can about the property and ask your lawyer or conveyancer to review and help you understand any reports you get.
- Work out the value of the property.
- Do a title search.
- Get council information.
- Check out the house, land and neighbourhood thoroughly.
- Get a property inspection report.
Learn more about researching the property here.
Confirming your finances
Make sure your finances are in order before you make an offer or make finance approval a condition of the offer. Your lender may want to know specific details about the property before you make an offer, even if you have pre-approved lending.
You will need to pay a deposit when the agreement is signed or soon after. The deposit is usually around 10% of the purchase price.
Making an offer
If you’re interested in a property that is being sold by deadline, let the agent know straight away. The seller can accept your offer or any other offer at any time. They don’t need to wait for the deadline date.
When you’re ready to make an offer in a deadline sale, advertised price sale or by negotiation sale, talk to your lawyer or conveyancer or the agent selling the property. Your lawyer or conveyancer or the agent will prepare a sale and purchase agreement for you to sign.
Read more about the sale and purchase agreement here.
Deciding what kind of offer to make
You can choose to make either an unconditional or conditional offer on the property:
- An unconditional offer means you do not have any conditions to meet before buying the property. This is sometimes known as a cash offer.
- A conditional offer means you have conditions that you want met before you agree to buy the property.
If you make a conditional offer, the real estate agent will negotiate on behalf of the seller. Conditions could include making your offer subject to getting a building inspection or a valuation, confirming your financial arrangements or selling your own property.
The seller can also attach conditions to the sale such as changing the settlement date or specifying the details of the chattels (for example, stove, fixed floor coverings, blinds, curtains and light fittings) that come with the house.
Checking the sale and purchase agreement
If the agent prepares the sale and purchase agreement, you should get your lawyer or conveyancer to review it before you sign it.
Waiting for the seller to consider your offer
When you’re happy with the sale and purchase agreement, the agent will present your offer to the seller to consider. If there is more than one offer, the sale may turn into a multi-offer process.
Learn more about the multi-offer process here.
The seller doesn’t have to accept the highest offer. They can accept any or none of the offers and may negotiate with anyone who submits an offer.
Completing the sale process
If your offer is accepted by the seller, they will sign the sale and purchase agreement. You will either pay your purchase deposit now or when the agreement goes unconditional, depending on what you and the seller have agreed.
Working through conditions
If you have added conditions to the offer such as arranging finance, or getting the property checked by an expert, you will have to complete these before a date agreed with the seller (and set out in the sale and purchase agreement). It’s a good idea to get things moving as quickly as possible because you may have to pay penalty charges if you don’t meet conditions by the due date.
You should also let the agent know if you intend to make an offer as part of the tender process or, if the seller has indicated they will consider selling prior to the tender deadline, if you want to make an offer to be presented to the seller to consider immediately.
If you need to have finance approved, your bank or lender will ask for a copy of the sale and purchase agreement. They may also require a valuation, which you will need to organise and pay for. You can list finance approval as a condition of the sale.
When all the conditions have been met, the sale becomes unconditional.
If you need an extension to complete any conditions, you must speak to your lawyer or conveyancer who will negotiate with the seller through their lawyer or conveyancer. Any changes will need to be added to the sale and purchase agreement and signed off by you and the seller.
What if something goes wrong after my offer is accepted?
If there is a problem meeting the conditions of the sale such as your finance arrangements falling through or you are unhappy with the results of a building inspection and you want to withdraw from the sale, you must let your lawyer or conveyancer know as soon as possible. They will contact the seller’s lawyer or conveyancer. Remember, this can only occur if you have stipulated these conditions in the sale and purchase agreement.
If all the conditions have been met and the agreement is unconditional but you fail to complete the sale, you may lose your deposit, be taken to court or be penalised by the seller. You can consider adding a condition to the sale and purchase agreement that you will pay the deposit when the sale is unconditional.
Pay the agreed amount by the settlement date
You must pay the remaining amount agreed for the property on the settlement date. You usually pay the remaining amount through your lawyer or conveyancer, and on settlement day, you will get the keys to the property.
Read more about settling and moving in here.
Getting help if things go wrong
Unfortunately, sometimes things go wrong when buying property. There are steps you can take and organisations that can help you when you need it.
Find out more about getting help if things go wrong here.