Buying by tender
When a property is for sale by tender, buyers give confidential written offers to the agent before a specified end date.
Summary of important things to know
The property can be sold before the end date if the seller decides to accept offers earlier.
Buyers should register their interest with the agent and ask to be informed if someone else makes an offer before the end date, so they can also make an offer.
There may be a price indication from the seller. Buyers can choose to offer more or less.
Buyers can attach conditions to their offer such as an offer expiry date, making the offer subject to a building inspection, a valuation or approved finance or selling another property.
Sellers can attach terms and conditions to the sale such as 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.
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 the seller has decided they will accept offers before the end date and there is more than one offer, the sale may become a multi-offer process.
Identifying properties for sale by tender
The property will be listed as 'by tender'. The advertising may include the words 'unless sold prior', which means the property can be sold before the tender end date.
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 the house and land 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. You often need to present a personal or bank cheque for around 10% of your offer price with your tender. The cheque is returned if your tender isn’t successful. Your lender may want to know specific details about the property before you make an offer, even if you have pre-approved lending.
Making an offer
If the property is advertised as ‘for sale by tender (unless sold prior)’, you can make an offer at any time before the tender deadline. The seller can accept an offer at any time. They don’t have to wait for the end date.
It’s important to register your interest with the agent if you intend to make an offer so they can let you know if another offer is received before the end date.
Your offer must be in writing on a tender document, which is a type of sale and purchase agreement. You can request the tender document from the agent or ask your lawyer or conveyancer to draw this up for you.
Learn 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 have no conditions on the price you offer. Unconditional offers are generally favoured by the seller, especially if there are competing offers.
- A conditional offer means you have conditions that you want met before you agree to complete the purchase of the property.
If you make a conditional offer, conditions could include making your offer subject to getting a building inspection or valuation, confirming your financial arrangements or selling your own property.
The seller can also attach conditions to the sale such as stating the settlement date or listing the details of the chattels (for example, stove, fixed floor coverings, blinds, curtains and light fittings) that come with the house.
Checking the tender document
The tender document is a legally binding contract. We recommend you ask your lawyer or conveyancer to review the tender document and make sure you understand all the terms of the sale.
Waiting for the seller to consider the offers
The agent collects all the offers and presents them to the seller. The seller has up to 5 working days to decide which offer, if any, they will accept.
Be careful not to submit any offers for other properties until you’ve heard back from the agent or you might end up with agreements to buy two properties.
The seller doesn’t have to accept any of the offers. If your tender isn’t accepted, you don’t have to continue with the sale process, and you’re free to look at other properties. It’s important to make sure you ask for your tender offer document and cheque, if supplied, to be returned to you.
Negotiating with the seller
The seller may ask you to change the price and/or conditions in the sale and purchase agreement. If this happens, the agent will ask you and the seller to initial any changes (amendments) to show you both agree with them. Read any changes first, and make sure you understand and agree with them before initialling. You don’t have to accept any changes you do not agree with. Your lawyer or conveyancer can advise you during this process and should check the final agreement before you sign it.
The seller may also simply accept the offer you put forward without asking for any changes. The seller will sign the agreement for sale and purchase, and your deposit cheque will be cashed into a trust account or you will make an electronic transfer of the deposit funds.
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
Working through conditions
If you have added conditions to the tender 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 the vendor may be entitled to cancel the agreement or you may be deemed to have not satisfied the conditions if you don't meet the conditions by the due date.
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 your 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 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 be given the keys to the property.
Learn 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.