Submitting An Offer
You can’t purchase property without both parties signing a contract. Contracts of sale for properties in Australia vary from state to state, but it’s clear in each state that all the terms and conditions of a contract have to be expressed in writing and form part of the contract.
This means that if you make an offer on a property by letter and it is accepted by the vendor – even though arguably there is an ‘offer’ and ‘acceptance’ and other features of a contract in other situations – it doesn’t form a binding contract. Some lawyers may argue the point but
I would honestly advise you not to waste your time in litigation because even with a signed contract, lawyers can find ambiguities and anomalies. If you’re in the property business, stay out of the litigation business. If a vendor wants out of a contract, let them go. When you’re ready to submit an offer on a property, I recommend the following process:
• Ask the agent to submit a verbal offer.
• Get a verbal acceptance from the vendor via the agent.
• Ask the vendor to submit the contract to your solicitor.
• Have your solicitor include any necessary clauses and execute the contract.
• Pay a nominal deposit, maybe $5,000 or five percent of the purchase price.
• Sign the contract – subject to finance or some sort of due diligence that allows you to carry out building inspections and other reports you may need. Generally, a vendor will give you 21 days to carry out the necessary inspections and reports. I generally go for a longer-term contract – 90 days plus – to give me time to finalize financing. In essence, you are able to tie up a property for that time, prior to committing or ‘going unconditional.’
• Have the vendor sign the contract. A competent solicitor will be able to advise you.
A word about auctions
In a boom market agents love an auction for many reasons, one being that if you purchase a property at auction, they can claim that once the property is knocked down to you, you’re bound to buy it. They have your de facto power-of-attorney to sign on your behalf. Again, this may be legally debatable, but in any case, I have to say that over the thousands of properties I’ve bought, only one was at the auction. That was a mortgagee in possession auction and I was the only bidder. And even then, I was buying the property for less than half what the bank was owed and they took two months to accept my terms and conditions.