This article explains the term “Under Offer” in the Australian real estate industry, which can be confusing for a first-time buyer or seller. We will discuss the meaning of “Under Offer” and the conditions a property must meet to be considered under offer. It is helpful to understand the process even when you have availed of the services of a real estate agent in Wanneroo.
Under Offer means that the seller has accepted an offer from a potential buyer for their property, but some conditions need to be fulfilled before the sale can be finalised. The property stays under offer until these conditions are satisfied. While under offer, the seller is no longer accepting offers unless the first deal falls through. Buyers should understand the details of the offer, including any requirements or deadlines, to avoid misunderstandings or disagreements in the future. This helps both parties know what they need to do to fulfil their obligations.
When a home is labelled as Under Offer, it means the buyer and seller have agreed on the transaction terms, but the sale is not yet final. There could be still several possible outcomes:
When interested in buying a property, you may see it advertised as ‘Under Offer’, which means that the seller has accepted an offer from a potential buyer, but the sale has not yet been completed. For a property to be officially marked as ‘sold’, there are certain conditions that must be met.
In Australia, to purchase a property, it is important to have a pre-approval letter from a bank or lender. The letter outlines the details of the loan, including the amount and the lender’s name. The contract of sale will include a ‘Subject to Finance’ clause, meaning the buyer’s purchase is contingent on securing financing. This clause protects both the buyer and seller, ensuring financial security and avoiding uncertainties regarding financing.
In Australia, buyers often add an inspection clause to their purchase contract. This allows them to request a building and pest inspection before making an offer. This helps them determine the property’s condition and pest problems, which can impact its value. If the inspection reveals major issues, the buyer can renegotiate the property price or cancel the contract. Note that the property being ‘Under Offer’ does not guarantee its sale, as other potential buyers can still make offers, and the seller may withdraw their offer if specific conditions are not met. Failure to meet the conditions within a specified period can result in the property being put back on the market.
There are several steps involved in the process, from surveys and negotiations to exchanging contracts and completing the sale. Here are the steps:
After accepting an offer, the buyer must conduct surveys and searches on the property to spot any potential issues such as structural problems, boundary disputes, or issues with the local authority. The buyer will also have the option to check out the neighbourhood especially when the buyer plans to move into the property after the transaction is concluded. The buyer can also arrange a mortgage if needed. Since surveys and searches can be time-consuming, it is advisable to organise them as early as possible.
After surveys and investigations, the buyer’s attorney drafts a contract, which is then reviewed and negotiated by the seller’s attorney. Once both parties have signed a contract, the client must be aware of the terms, conditions, and deadlines to avoid future misunderstandings or disputes.
After signing the contract, buyers must pay a non-refundable deposit of approximately 10% of the property’s purchase price to the seller’s solicitor, who will hold it until the contract exchange. Buyers should have the deposit ready in advance and be certain of their decision, as the funds may take several days to clear at the bank.
After receiving the deposit and agreeing to the terms of the contract, the solicitors for the buyer and vendor will determine a time to exchange contracts. The deal would have now been agreed to by both parties and taken on legal significance. After the exchange, the buyer is responsible for purchasing property insurance and will receive the keys to the property on the day of completion.
On the closing date, the buyer takes possession of the property and the purchase price is transferred to the seller’s attorney. The new owner should prepare in advance for the move and conduct a final inspection to ensure the property’s condition.
An offer would have been made when a property is marked as “Under Offer” or “Under Contract.” ‘Under Offer’ suggests that the vendor has accepted a conditional offer, whereas ‘under contract’ indicates that a binding contract has been reached. Offers can be made at any time, and the property can still be marketed. There may be variations in terms between sites, and a backup offer can be offered if the first one is rejected.
The seller is not obligated to take into consideration any more offers on a property that is “Under Offer,” as another offer has already been accepted. If you are uncertain about the seller’s position before making an offer, consult with a real estate agent. It is important to avoid making offers on “Under Contract” properties as the seller cannot consider them. Always use a reputable real estate agent to negotiate and avoid making offers you cannot fulfil, which in turn can damage your reputation. When buying a property, seek expert advice from reputable real estate agents like ABRealty WA to guide you through the process and avoid costly mistakes.