Finding the perfect house for you is only the beginning of the process. While identifying the right home can be exciting, you must position yourself to make a serious offer to the seller. Though the process can be tedious, we will explain in detail how you can make an offer on your dream house.


What Should Your Offer Letter Include?

  • Names and addresses of the seller and buyer
  • Property address and purchase price
  • Conditions of sale, such as structural inspections
  • Contract clauses to ensure essential features of the property are in working order; for example, electrical wiring and plumbing systems.
  • Settlement date

Before preparing an offer letter, however, there are numerous steps a buyer should take to be well-informed about the property they are trying to purchase.


Get Pre-approval

Gaining pre-approval from your lender signals to the seller that you are serious about securing the property. This makes you more attractive as a buyer. Pre-approval also helps you set your budget and narrow down the type of property you want to buy. To get  pre-approval:

  • Complete and sign a short form
  • Provide evidence of your income, savings and debts
  • Completion of preliminary assessment
  • Choose a lender and they will review for final approval

Our team of specialist mortgage brokers can help guide you through the pre-approval process. Contact us at 1300 889 743 or fill in our online assessment form and we will contact you.


Do Your Research

Here are a few ways you can research a property:

1. Determine a fair price

Before jumping into making an offer, do thorough research to determine what would be a fair price for the property. Attend open homes, look at the sales of comparable properties near the one you want to purchase over the last six months, enquire with sales agents and check online sales reports. After concluding your research, you will have clarity on the value of the property you want and you can strategise for moving forward with your offer.

2. Check The Condition Of The House

As a buyer, you can ask the seller for permission to inspect the property before you make an offer. This checks the home for issues related to numerous things, such as pest control, structural damage, electrical wiring, plumbing and gas. Also check the amount of time the property has been on the market and any formal offers that have been made on it.

3. Know the seller’s motivations

As with most negotiations, knowing the seller’s motives helps you understand the terms of sale and what kind of offer the seller would find most attractive.


What Is A Reasonable Offer On A House

Contrary to popular belief, your first offer should be an indication of how serious you are as a buyer. This does not necessarily mean you have to meet the seller’s asking price. Your first offer should reflect your estimate of the property’s value. Most sellers are willing to accept offers only if they are within 5-10% of their asking price. For this reason, it’s better to come in with a strong first offer.

Know How Much Deposit You’ll Need

Different lenders require different minimum deposits for their various products, with varying interest rates and Lenders Mortgage Insurance (LMI). Some borrowers let you borrow up to 95% of your property value, thus requiring only a 5% deposit on your part. However, this usually comes with a high interest rate and requires paying LMI. If you put down a deposit of 20% or more, you avoid paying LMI.

Learn more about LMI and waived LMI here. Our specialist mortgage brokers can help you figure out the minimum deposit you’ll pay and if you can avoid LMI costs. Reach us at 1300 889 743.

Be Ready For Negotiations

It is difficult not to get caught in the frenzy when a lot of properties are being sold at increasing prices. Buyers often forget to research and prepare properly before making an offer. But patience can pay off. Just because a seller has set an asking price does not mean that it is the final price. It merely serves as a starting point. Expect multiple offers and counter-offers. 

Remember, there is usually room for negotiation. As a buyer, you must understand why the seller rejected your offer or made a counter-offer, so you can make a new offer that is more likely to be accepted.. If your offer is accepted, then your next step is to have your agent draw up a contract.

Withdrawing Your Offer

Buyers can have a change of heart, banks can change their lending policies or interest rates. Cases like these are why there is a cooling-off period between when the contract is signed and when it becomes binding and the sale is final. Times vary in different states and territories. In most cases, the buyer can opt out of the purchase during the cooling-off period and pay a small penalty, about 0.2% to 0.25% of the purchase price. In some states, such as South Australia, the buyer is required to forfeit a holding deposit. A buyer can include a cooling-off period in the contract of sale.

Can The Seller Withdraw From An Accepted Offer?

Once an offer has been accepted, it is generally difficult for the seller to withdraw; however,  there are exceptions, such as when there is a vendor cooling-off period or the buyer failing to meet certain requirements. 

Pre-auction Offers

If a seller is desperate to get the property off their hands and you make an offer that is too good to pass up, they may agree to sell the home to you and forgo an auction. However, remember to operate within your budget. 

As a buyer, taking the steps mentioned above will give you an advantage over other buyers. It is about portraying yourself as a serious buyer to the seller. Gaining pre-approval and doing your research on the desired property will help you draw up an offer letter that satisfies the seller’s demands and motivations.


To get started on the search for your dream home, please give us a call on 1300 889 743 or fill in our online assessment form and one of our specialist mortgage brokers will get back to you. 

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