Child with paper heart | BetterBond

You've found a place and it's time to put in an offer.

You're probably wondering whether to go in high or low against the asking price? The answer to this question has a few parts to it: Firstly, how badly do you want the property? Secondly, do you know the market? And thirdly, can you play the game?

The most important thing about an Offer to Purchase (OTP) is that it's legally binding, so don't offer what you cannot commit to. Once you and the seller have signed the OTP, you're both bound by it. An OTP constitutes a Deed of Sale so there could be financial penalties if you pull out. Consult an experienced estate agent if you need guidance.

for first-home buyers

  • Do give your OTP extra oomph by letting BetterBond pre‑approve you for a home loan. A pre‑approval validates you and your offer as legitimate, so when you see a house you love, the seller will take you seriously.
  • Do speak to a lawyer or estate agent to make sure your you've filled out the OTP correctly.
  • Don't become emotionally attached to a home that is not yours... yet. This is another moment when you should not let your heart rule your wallet!
  • Don't put in an offer without having seen a property and do so in decent light! A good estate agent will be happy to take you for a second viewing.
  • Don't rush to put in an OTP. Ask as many questions as you need to in order to understand what you're committing to.

How to put together an OTP that gets the deal!

You could use an estate agent as go-between with the seller. The agent will present your offer to the seller, which will then be accepted, rejected, or met with a counteroffer. The OTP is concluded once you agree the final purchase price.

Make sure your OTP gets you the deal on your first home by keeping these things in mind:

  • If you have it, flaunt it! Don't be shy to show off your credentials as a buyer. If you have a BetterBond pre‑approval for a home loan, make sure the seller knows this as it puts you in a favourable negotiating position.

  • Is the price fair? The purchase price should be in line with similar properties in the area. If it's higher, you could have room to negotiate. Do a bit of online research and look at property listings portals like Private Property to give you an idea of what's on the market. You can also ask your estate agent for more information relating to the sales in the area.

  • Why are they selling? If it's an urgent sale, the owner might accept a lower offer.

  • How long has the place been on the market? The longer a property remains unsold, the more negotiable a seller will be.

  • Anything major that needs fixing? Have the property inspected by a home inspector before you get too attached, especially if you're worried about hidden faults. The seller is legally obligated to disclose them, but might not tell you everything.

  • Does your OTP have an expiry date? Give the seller a date by which they must get back to you. Don't leave this open-ended as it causes stress and uncertainty.

  • Are you paying a deposit? If so, a 10% deposit is the standard. Make sure it's refundable if the deal falls through. The OTP should stipulate that it will be held in an interest-bearing trust account until the property transfers to your name. You're entitled to the interest when the deposit is released. Use an attorney bank account for your deposit - do not pay money into someone's personal bank account, and verify the banking details with the recipient directly before you transfer any funds. For more on deposits... How much you could gain by saving a deposit Higher deposit, lower LTV, better home loan

Now, for the fine print!

Fine-comb the fine print and make sure you understand the agreement before you sign. Ask your estate agent if you’re unsure about anything – rather clarify now than have regrets later. Some of the most important things to look out for, include:

  • Your details and the seller’s details.

  • The description of the property must match the Title Deed.

  • The purchase price must be what you agreed to.

  • The occupation date can either be on transfer of the property into your name, or earlier, in which case occupational rent will be charged. The amount should be stipulated.

  • Make sure you know upfront what’s going and what’s staying. Fixtures are things that are permanently attached to the property (e.g. ceiling fans) and chattels are not (e.g. appliances).

  • Full list of defects.

  • Any special conditions that could delay the sale.

How low can you go?

First-home buyers often wonder how much less than the asking price the seller would consider, or from where to start negotiating.

  • It’s generally accepted that you don’t offer the full purchase price, but don’t submit an offer that’s so low that it offends the seller and causes the deal to fall through.

  • Make an offer that is reasonable – an amount that will appeal to the seller while also saving you money by being lower than the asking price.

  • If you’re not sure where the sweet spot is, ask a real estate agent who has a good reputation and knows the area. You could also get a second opinion from another agent, to make sure you get a balanced view.

The best negotiators are willing to walk

If the negotiating part of buying your first home makes you uncomfortable, don’t feel alone! But don’t shy away from it either – it’s your future on the line.

  • When you negotiate, decide before the time what terms you’re willing to accept and where you’d be prepared to compromise.

  • You will be in a position of power if you can take the emotion out of it. Be as objective as you can and don’t take anything personally.

  • Don’t get hung up on a property before it’s yours. Then you can calmly work toward getting the best deal… and walk away just as calmly if it doesn’t come through.

No regrets

The number one regret of many first-home buyers is not negotiating harder on the purchase price, so don’t make that mistake.

There's never been a better Time to Bond

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