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The Offer and Acceptance Process When Buying a Property in Australia

Have you finally found the perfect pad but have no idea how to take the next step? 

Don’t worry, like many buyers out there, you’re not alone!

Whether it’s a four-day cooling off period, no cooling off period, making a verbal offer or using a contract to put an offer in writing, the offer and acceptance process varies in every state and can be as confusing as, well, a contract.

To help make things a little easier for you, we get down to the nitty gritty of making an offer and finds out exactly what you need to know.

Victoria

Sellers who thought they had an advantage by signing an ‘unconditional’ contract don’t really have the upper hand.

All contracts in Victoria have a three-day cooling off period, regardless of whether or not you’ve already had legal advice.

Whenever the agent takes an offer to the vendor now, instead of being able to say, ‘sign this and it’s a done deal’ now they say, you can’t back out but the buyer can.

Before you could take it to a solicitor and they would waive the cooling off period.

Now you could take it to the Queen and you would still need your cooling off period.

There is, however, still no cooling off period three days prior to auction, at an auction and three days after auction.

If you decide to get out of the deal during the cooling off period, you have to pay 0.25 per cent of the property’s purchase price.

However, this is a relatively cheap “get out of jail” card compared to the cost of the property.

When you make an offer on a property in Victoria, you actually write and sign a contract.  Melbourne property skyline

You can of course make an offer as an expression of interest, but your offer will only be taken seriously if it’s on an actual contract.

Agents still have the right to ‘gazump’ you even after you’ve signed a contract. 

Gazumping occurs when a higher offer from someone else is accepted, nullifying yours.

This practice can also be referred to as ‘shopping the offer’ in instances where agents use your offer to encourage other buyers to outbid you.

The agent is legally obliged to work in the best interests of the vendor.

There’s nothing to stop someone else coming along and saying, ‘I’ll give you an extra $5,000’.”

As for off-the-plan land sales, developers and buyers could previously hold money in a joint account, but deposits must now be held in a trust by a legal practitioner, conveyancer or real estate agent.

This ensures that if any money is misappropriated, the buyer has access to a statutory compensation scheme and gets a refund.

New South Wales

It’s handy for buyers in New South Wales to have some spare cash – you’ll need it to make an offer on a property you like or pay an initial deposit as an expression of interest.

This won’t mean the property is yours or that it gets taken off the market. sydney

It merely proves to the seller your offer is serious.

In fact, the seller or agent can take as many preliminary deposits as they like for the one property.

However, when you pay a deposit, the agent must provide you with a receipt and tell you in writing that;

  • They have no obligation to sell the property to you,
  • You have no obligation to buy the property, and
  • They’ll refund your deposit if you don’t end up entering into a contract to buy the

The agent must also let you know if someone else makes an offer on the same property.

If your offer is accepted, be ready to sign the sale contract and proceed with the exchange process.

However, before you sign the contract, the vendor is free to negotiate with other potential purchasers, even if they’ve verbally accepted your offer. Sydney property market

If the vendor accepts another offer and exchanges contracts with another buyer, you’ve then been gazumped.

If you’re gazumped, you won’t be compensated for money you spent on inspection reports.

In NSW, you have a five-day cooling off period from the time contracts are exchanged.

However, be aware that if you decide not to go ahead with the purchase, you’ll lose 0.25 per cent of the purchase price to the vendor.

The amount forfeited will be recovered from the deposit you paid.

Any deposit (normally 10 percent is required) will be paid by your solicitor or conveyancer to the real estate agent and held in the real estate agent’s trust account.

Queensland

Queensland buyers have a five-business day cooling off period, which starts the day the contract is signed by both parties.

If the contract is signed on the weekend, the cooling off period starts Monday morning and ends at 5pm on the fifth day.

The buyer can, however, waive or shorten the cooling off period by giving the seller’s agent a form that’s been signed by a lawyer. queensland brisbane city water sky QLD map state capital australia

On the other hand, if a contract is terminated within the cooling off period, the seller must refund the buyer’s deposit within 14 days, but can still deduct a termination penalty equal to 0.25 per cent of the purchase price.

Buyers normally write their offer on an actual contract, which becomes binding once the vendor also signs it.

Agents must submit all offers to the seller, but they also have a right to shop your offer around.

The agent is obliged to let you know whether or not you’re in a ‘multiple offer’ situation, where there are at least two offers on the property.

Buyers are encouraged to pay a deposit when signing the offer but if the contract falls through, the buyers is entitled to receive a full refund of their deposit.

The money is normally held in a real estate agent’s trust account.

Western Australia

Gazumping doesn’t exist in WA but there is what’s known as a ’48-hour clause’.

If a second buyer comes in and they’re really keen on the property, they can invoke the 48-hour clause.

What it means is that if the original purchaser can’t come up with the finance within that period (48 hours), then the second offer can supersede it, provided that the seller has agreed to that.western-australia-1413166_1920

For example, this means if someone has already offered $450,000 for a property and it’s under contract, which includes the 48-hour clause, you could offer $460,000.

The seller could then go back to the original purchaser and tell them they have to come up with the $450,000 within 48 hours, or they’ll accept the higher offer.

This isn’t a standard part of the contract, it’s normally inserted when the buyer wants to make an offer that’s conditional upon the buyer selling their own property.

If you’re a keen bidder and love the thrill of auctions, you’re looking in the wrong place. 

Only two to three percent of properties are sold through auction in WA.

Most offers are through private treaty and the agent is required by law to present all offers, usually written on a contract, to the vendor.

What tends to happen is when you get to that point, you get into the bartering process. house-computer-search

The contract goes back and forth until a final price is agreed.

Be careful what you wish for though – there’s no cooling off period in WA. 

Although, strangely enough, the exception is retirement villages.

There’s also a cooling off period if an agent gets a listing by randomly knocking on someone’s door or making a phone call.

However, you can still protect yourself by making a contract subject to finance and you’ll get all of your deposit back if the sale falls through.

Any deposits are held by an agent, solicitor or conveyancer.

South Australia

If you find a property you instantly fall in love with in South Australia, don’t bother making an offer over the phone.

All offers must be made in writing, whether that’s through a contract or a letter of offer. 35097909 - view of downtown area in adelaide, south australia, at twilight

The agent then has 48 hours to present this to the vendor, unless the buyer gives the agent a strict deadline of, say, 5pm that day.

Agents are also allowed to receive multiple offers and shop them around, as the contract is only legally binding once the vendor signs it.

The Real Estate Institute of South Australia (REISA) acknowledges it receives complaints about this, but there’s not much it can do.

The reality is, you may only get one chance to make one offer so we always recommend it’s your first and final offer.

Ask yourself, ‘How much am I willing to pay?’ and consider this in making an offer.

If your offer does go under contract but you suddenly wake up at 2am and realise you’ve made a terrible mistake, rest assured buyers have a cooling off period, albeit a very short one.

It expires two business days after the buyer receives what’s known as a Form 1, required by law, which includes information about the property such as title particulars, covenants and zoning.

You don’t have cooling off rights if you buy a property through auction, in the name of a company or by tender.auction graph sale sell house property

Dummy bidding or fake bidding at an auction is against the law in SA, but the auctioneer is allowed to make up to three vendor bids if the amount is less than the reserve price.

A vendor bid is a type of bid made by the auctioneer on behalf of the vendor as a tactic to keep the bids moving.

It’s supposed to be clearly announced so that genuine bidders know what’s going on.

A 10 per cent deposit is payable after the contract has been signed.

The money is usually transferred to the vendor’s agent or conveyancer, who will then place it in a trust account.

If you’ve engaged a conveyancer, they can organise this for you.

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