The real estate agent conducts all the negotiations for buying and selling. Avoid the temptation of negotiating directly with the property’s seller, if they are using an agent to sell their property. If the seller contacts you directly, always redirect back to the agent.

• If you want to make an offer, the agent will put the offer in writing – signed by you – and will present the offer to the vendor.

The seller may then either:

Accept your offer
Reject your offer
Counter offer back to you at a price which the seller finds acceptable

If the seller counter offers back to you, your options are to:

• Accept their counter offer
• Reject their counter offer and walk away
• Continue to negotiate

You could make a ridiculously low offer for a property in the hope that the seller may be naïve, desperate or not know the true value of their property. However, if you are genuine about the property, for the sake of saving time and potential heartache, it’s best to offer close to your expectations. The seller will either be interested in your offer or not and negotiations will conclude, or you will have the opportunity to move away before any ‘emotional attachment’ overwhelms you into irrational actions.

Tool tip. Real estate is by nature a very emotional purchase for many people – always be aware of your upper purchase limit and stick to it. Never allow yourself to be caught up in emotion.

If you make a legitimate low offer, inform the agent why your offer is low so they can communicate this to the seller. Reasons for making genuine low offers might be because some aspect of the property requires repair or renovation in order to make it more liveable for you.

It is in the seller’s interest to accept your offer as soon as possible. At any time prior to their acceptance, you can withdraw your offer. If the seller accepts your offer, you will be asked to sign a contract agreeing to the purchase.

Once a property is sold, it is the seller’s responsibility to prepare all the necessary contracts. Contracts becomes legally binding once signed by both parties, i.e. you and the seller. You should also pay a holding deposit at this stage. There is actually no legal requirement to pay such a deposit, but it has become an accepted act of good faith on your part as the purchaser.

On settlement date, the seller hands over possession of their property to you. Legally, this is the completion of the transaction. It is on settlement that you pay the balance of the purchase price and receive the title deeds and keys to the property in return.

At settlement, you are entitled to vacant possession of the property. If the property is not as you expect, for example, the property has been unfavourably altered in some way since you exchanged contracts, you may choose to delay settlement until the property is returned to the state it was in at the time your offer was made.

The case with auctions

With auctions, you must be prepared. This means you cannot stipulate any conditions on the purchase of the property, for example:

• Buying the property subject to a building inspection
• Buying the property subject to the sale of your own property
• Buying the property subject to arranging finance
• You must arrange all of the above aspects before the auction, or bear the risk of your bid being successful and these aspects not already being finalized by you. This is because the contract conditions are generally set at the time of auction.

Handy tip: Obtain all the relevant documentation from the agent selling the property prior to the auction. Ensure you understand the conditions – consider having it assessed by your solicitor.

If your bid is successful, you will sign the contract immediately after the auction and will not be given the opportunity to formally review the terms and conditions. The only area for negotiation may be the settlement date.

Whether the auction is being held in a real estate agent’s auction room or on-site, the process is the same:

• The auctioneer starts proceedings with a short explanation of the contract and terms of the auction
• Potential buyers may ask questions at this stage
• The auctioneer will then ask for an opening bid
• If a genuine bid is not forthcoming the auctioneer, vendor or another agent may make an initial bid
• It is legitimate for the vendor to bid
• Likewise the auctioneer can bid on behalf of the vendor as can an agent on behalf of a buyer
• The auctioneer is likely to announce a series of artificial bids if there are no other bids made
• The reserve is the minimum selling price set by the vendor prior to auction and can be changed during the auction process if desired
• Once the reserve price is reached the auctioneer will generally state that “the property is on the market” or words to that effect. Once the reserve price is met, serious bidding will begin if there are genuine bidders present.

If the final bid falls short of the reserve, the property may be passed in. The highest bidder may then enter into negotiations with the agent, by approaching him/her immediately following the auction. Alternatively, the vendor may agree to sell at this lower price, at which time the property is said to be ‘on the market’ and the auctioneer may attempt to extract more bids prior to making the sale.

Handy tip: It is a good idea to attend several auctions prior to participating in one. You will become skilled in the auction process and will probably feel more comfortable on the day. If you are looking to buy in a specific area, try to attend auctions within that same area. This tactic will help you to assess the current market value of the area.

Note that you will usually have the opportunity to make an offer on a house before its auction date. The agent can tell you the price the property is expected to reach at auction, but keep in mind that it is likely the agent will lower the reserve figure somewhat in an effort to get you to attend the auction.

Handy tip: Always have a price limit fixed firmly in you mind and DO NOT exceed that limit. Some people even ask others to bid on their behalf so as to avoid making hasty, emotional decisions. Make sure however that the purchaser name given to the auctioneer is the name which will go on the contract as this cannot be changed unless you stipulate ‘and/or nominee’ on the contract.

Completing the deal

Sign a Contract Note (Victoria only)

In Victoria only, a contract note will be prepared once you agree to purchase a property through private treaty (i.e. not at auction). This contract is effectively an offer by you to the vendor to buy the property at the agreed price and under the terms detailed.

Special conditions you may wish to include in this contract include:

• Purchase conditional on a loan approval
• Purchase conditional on the sale of an existing property
• Purchase conditional on a satisfactory property inspection
• You will be asked to sign the contract for sale/contract note. Once the vendor also signs this contract, a binding contract will exist and both you and the vendor will become bound by the terms and conditions of the contract.

Start the conveyancing process

Conveyancing involves the transfer of property ownership from one party to another. It is wise to employ a solicitor or conveyancer to perform this process. If buying privately (i.e. not through auction), the conveyancing process begins with your lawyer or conveyancer examining the contract for sale prepared by the vendor’s representative.

This contract should detail the:

• Property address
• Names of the parties (you and the seller)
• Selling price
• Terms and conditions
• Timing of settlement (when you take possession of the house)
• Your legal advisor is responsible for checking the details of the contract, ensuring it contains nothing detrimental to the purchase or intended use of the property, for example, zoning conditions or title restrictions.

Once your advisor is satisfied with the contract, you will be ready to close the deal!