Once you have found the house you want, a series of events takes place. This involves the buyer making an offer to the current owner, who either accepts it or makes a counter-offer with a different price. Please note that every marketplace is different from one to another and the way offers are presented may not apply to this article.
Making an offer
Verbal promises are not legally enforceable when it comes to the sale of property. Talk with your solicitor or estate agent, who will explain the written contract and advise on conditions to facilitate the purchase. When the contract is drawn up the agent will pass it to the vendor and his/her solicitors. If the property is being sold by auction, then the particulars will go to the vendor's lawyer before the auction, subject to change.
What the offer contains
The purchase offer you submit, if accepted as it stands, will become a binding sales contract. It is the agent's job to go through the contract so that the buyer does not need to worry about all the items in this document. However, it contains such details as:
* Address and legal description of the property.
* Sale price.
* Special conditions.
* Settlement date.
If your offer includes conditions, you are saying you will only purchase if those conditions are met. The following are some of the common conditions:
* The buyer obtaining specific finance from a bank. If the loan cannot be found, the buyer will not be bound by the contract.
* Inclusion of specific, unattached fittings and furnishings such as curtains, carpets etc.
These are additional clauses which may be added beneath the standard conditions and are specifically put in to protect both parties in the instance of specific requirements being needed by either party.
* A satisfactory structural survey by a surveyor within a specified number of days after acceptance of the offer. The vendor must wait that number of days to see if the report is satisfactory. If not, the contract becomes void.
* Selling the current house. If the purchaser needs to sell in order to buy they are given a time frame to sell within. Another "cash out-clause" is put in to protect the vendor, which allows them at any time to accept another offer which they consider to be more attractive. In this case, the purchaser must be advised in writing and is given a certain number of working days to "settle" or the contract is void.
The estate agent will make sure all details are outlined in the written contract.
You are in a strong bargaining position with a seller if:
* You are a cash buyer.
* You already have approval for a mortgage.
* You do not have a present house that has to be sold before you can afford to buy.
In these circumstances, the agent may be able to negotiate some discount from the listed price. On the other hand, in a "hot" seller's market, if the perfect house comes onto the market, you may want to offer the list price (or more) to out-do other early offers.
It is very helpful to find out why the house is being sold and whether the vendor is under pressure. Keep these considerations in mind:
* A vacant house that remains unsold may represent extra expense for the seller.
* For personal reasons, they may just want out quickly.
The vendor's response to your offer
You will have a binding contract if the vendor, on receiving your written offer, signs an acceptance, unconditionally. The offer becomes a firm contract as soon as you are notified of acceptance. If the offer is rejected the vendors cannot change their minds at a later date and hold you to it.
If the vendor likes everything but the sale price, or the proposed closing date, you may receive a written counter-offer, with the changes the vendor prefers. You are free to accept or reject counter-offers or even make your own counter-offer. You can even walk away from the whole deal if the vendor makes a counter-offer that does not suit. However, this should not happen if you really want the property and the agent is skilled. The document becomes a binding contract only when one party finally signs an unconditional acceptance of the other side's proposal.
Withdrawing an offer
In most cases, you can withdraw an offer right up until the moment it is accepted, or even if you have not been notified of acceptance.
The agent takes the purchaser's deposit and puts it into a bank on the same day. It goes into a non-interest bearing trust account for 10 days. After that, it usually goes to the vendor's solicitor, sometimes directly to the vendor. No money is passed to the vendor until the agreement becomes unconditional. If anything happens such as the deal falling through, then the agent pays back the deposit. The deposit is simply a sign of good faith that the agreement between the purchaser and the vendor will precede.