What to do with competitive offers.

At the moment it seems like every property under $1,500,000 has numerous buyers fighting over it. So what are your options if somebody else is making offers on the property of your dreams? Here are some to consider:

Option 1 – match the other offer and race to exchange contracts unconditionally
Required steps:
1. Let the selling agent know that you are about to make an offer and want a copy of the contract
2. Have the contract reviewed by a solicitor/conveyancer
3. Order a strata search or building/pest inspection as appropriate (or take the risk of not getting one, though we would never recommend this)
4. Book the bank valuation if you need one (unfortunately this can put you at a disadvantage)
5. Organize to sign the contract and get the 66W certificate signed by your conveyance or solicitor (this waives the 5 day cooling off period)
6. Get the signed contract, 66W and deposit cheque to the vendor’s agent or solicitor and make sure they exchange contracts immediately
The risks are that another buyer might beat you in the race to exchange (especially if they have had a head start) or that you will still need to increase the offer in order to be the successful buyer.

Option 2 – offer the asking price (or even a bit more)
You will then still need to race to exchange as another buyer could still match or better the offer. Depending on whether the selling agent discloses offers or not, this could be a good strategy as the vendor may treat you more favourably – though there are no guarantees.

Option 3 – try to exchange with a cooling off period
Required steps:
1. Let the selling agent know that you are about to make an offer and want a copy of the contract
2. Organize to sign the contract
3. Take the contract and your deposit cheque to the vendor’s agent for exchange
You will then have 5 business days within which to:
4. Have the contract reviewed by a solicitor/conveyancer
5. Order a strata search or building/pest inspection
6. Book the bank valuation
7. Change your mind
However, with other serious buyers it would be unlikely that the agents/vendors would agree to a conditional exchange of contracts. And if you do change your mind, there is a penalty of 0.25% of the agreed purchase price.

For more information go to www.gooddeeds.com.au