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How to make an offer on a house

Mark Bristow avatar
Mark Bristow
- 7 min read
How to make an offer on a house

Once you’ve been preapproved for a home loan, you can start house-hunting with confidence, knowing your finances are ready. Once you find a property that suits your needs and your budget, you can take the next step and make an offer. But what is the exact process of making an offer on a house, unit, or investment property? 

Different processes may apply when buying a property at auction or buying off the plan. But if you’re looking at buying a property before auction or via private treaty, you may be able to expect to follow these steps: 

Review the contract

You can often view the contract for a property being offered for sale when you attend an inspection, or you can contact the listing agent for a copy. This contract should include:

  • The vendor’s name and address.
  • The property’s address and other details.
  • Any conditions the vendor wants to include in the deal.
  • Whether the property is available with vacant possession or if it is subject to a lease.
  • Any inclusions and exclusions, covering fixtures and fittings, carpets, curtains, air conditioners, appliances and more. 

Because contracts of sale are legal documents that may prove complex, it’s often recommended that you have your solicitor or conveyancer review the contract. They may be able to spot issues with the property or the sale terms that you may have missed, and that could affect your offer on the property. 

Make an offer and set conditions

You can make an informal offer on a property by contacting the real estate agent and/or the vendor over the phone or in person and pitching it to them. While this can give you an idea of if the vendor is interested and if your offer has a chance of being accepted, it likely won’t be considered a serious offer until it’s in writing.

You may want to base your offer’s price on a range of factors, including the vendor’s asking price, recent sales of similar properties in the local area, how much you feel the property is worth to you, and how much you’re comfortable borrowing and spending.

This is also where you set any conditions for your offer. This may include making your offer subject to finance, where it won’t go unconditional until you organise final home loan approval, or subject to the property passing a building and pest inspections. You may also be able to ask for a shorter or longer settlement period, waive a cooling off period, or to pay for the deposit using a deposit bond rather than cash.

You don’t need to get a solicitor, mortgage broker or other expert to draft up a formal offer letter for you, though they may be able to help you work out which conditions may best suit your situation. 

Your offer can be as simple as an email to the real estate agent detailing your offer and any conditions, including:

  • Your offer price
  • How much deposit you can offer
  • Your preferred settlement time and date
  • Any conditions, including any inspections, checks or work to be done before the contract can go unconditional
  • Your solicitor or conveyancer’s details
  • Your mortgage lender’s details

The agent will send the offer to the vendor, who will decide (with the agent’s advice) whether or not to accept it.

Do you need to have pre-approval ready to make an offer?

It is possible to make an offer on a property if you don’t have mortgage pre-approval organised. You could even make an offer with no finance organised at all, though the vendor may choose not to accept the offer.

If you make an offer without finance pre-approved, and your offer is accepted, you may need to move quickly to compare home loans and get a mortgage offer approved by a lender before settlement date arrives.

Pay the expression of interest deposit

In some states and territories around Australia, you may be asked to put a deposit down on the property as part of your offer, to help show that you’re serious about buying.

This doesn’t mean that the vendor has accepted your offer – vendors may accept deposits from multiple potential buyers, before eventually accepting one. If one of the other buyers ends up buying the property, your deposit should be refunded to you.

Keep in mind that you don’t necessarily need to have a cash deposit saved. You may be able to rely on a deposit bond, which guarantees that you will pay the full deposit after you get the home loan and settle the contract.

Exchanging contracts

If a vendor is happy to accept your offer, you’ll be given an amended copy of the contract to sign. It’s important to consider having your conveyancer or solicitor review this contract, as the details could have changed since you saw it last.

If you’re happy with the contract and are ready to proceed with the sale, you can sign the contract and return it to the vendor. Once they have signed the contract, the deal is done – you will soon be a homeowner!

Cooling-off period

In most of Australia’s states and territories, after exchanging contacts there will be a cooling-off period, which is a limited time where either the buyer or the seller can pull out of the deal without being in breach of contract. Keep in mind that in some cases, even if you as a buyer pull out of the contract during the cooling-off period, you could still end up losing your deposit.

You may have the option to waive your cooling-off period when setting conditions for the contract. This could signal to the vendor that you’re very keen on the property, as once you sign, there’ll be no backing out without legal consequences.

Arrange home insurance

Many mortgage lenders require you to hold home insurance from the settlement date as a condition of the home loan. Now could be a good time to compare insurance quotes and organise a home insurance policy.

Arrange full mortgage approval

If you haven’t already organised it, now may be time to get the ball rolling on turning your home loan pre approval into unconditional approval for a mortgage. 

This may include your lender getting the property professionally valued to ensure it can secure the home loan fulfil the lender’s Loan to Value Ratio (LVR) requirements.

In some cases, this valuation could come up short, which could mean you won’t be approved for the amount you need to buy the property. If you still want to proceed with the sale, you may need to organise a bigger deposit, Lenders Mortgage Insurance (LMI), or a guarantor to get the loan you need over the line. You could also look for an alternative lender that may be able to offer the loan you need, though you may be racing against the clock to get approval finalised.

Settlement

Even once you’ve signed and exchanged contracts for a property, you may not be the owner until the deal settles. Your settlement date can vary – between 30 and 90 days is common, though some buyers and vendors may specify shorter or longer settlement periods in the contract to better suit their individual needs.

On settlement day, the solicitors and conveyancers for the buyer and the seller will make sure that everything is in order to finalise the purchase and transfer the property into the buyer’s name. Once this process is complete, the buyer is now a home owner.

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Product database updated 14 Jun, 2024

This article was reviewed by Personal Finance Editor Alex Ritchie before it was published as part of RateCity's Fact Check process.