Offer Management
There is more to it than just getting the best Price
When an offer is presented to an owner, quick and informed decisions need to be made. From day 1 I make myself aware of any external timelines and factors that may have a bearing on what an owner can and cannot accept.
This insight will help me guide offers closer to what is best suited for my owners but also allows for discussions with buyers where I can further qualify their position. Sale price is often the deciding factor when picking between offers however, there are 2 additional items I would recommend be considered:
The conditions of the contract.
The buyers making the offer.
Complex conditions or buyers not fully committed to the property can result in terminated contracts & the campaign losing momentum. Should the worst happen and the contract is terminated, it is hard to recover at the same level.
An offer might be subject to:
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This is requested by a buyer if they require another property they own to sell before going unconditional on the new property. The details and extent of this special condition will vary depending on what stage the other property is at in its campaign and if it is under contract, unconditional, still available or yet to come to market. Unless it is suitable for both parties, it is generally advised that this is one of the riskier special conditions to accept and should be avoided where possible. Sales campaigns can drag on for months, leaving you and your property in limbo and at the mercy of external factors.
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When purchasing a property with development or renovation potential, buyers will sometimes want to include a clause stating that they only agree to buy and settle if their development plans are approved by the local council. Applications can take months to be approved and in some cases, years. Again, conveyancers can insert clauses to protect the seller in long situations, but I still advise avoiding this where possible.
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Allows buyers and their solicitors to conduct a number of searches relating to the property and its title along with the complex if the property is strata titled. Should the searches unearth any unwanted findings, the buyers have the right to terminate the contract. An example of this might be that searches for the property find that running through the backyard is a water pipe that stops the potential for any future extensions or pools. Preparation before the campaign often helps navigate this extra clause.
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Buyers may have plans to renovate a property, but want to check if the property contains any Asbestos material before settling the property. Upon the findings, they may terminate the contract or propose a reduction in price to compensate for additional costs related to the removal of the material
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There may be a lease in place at the time of making an offer; however, at settlement, the buyers want the property vacant, meaning the owners have to organise for the current occupants to relocate by settlement if their lease is beyond that of settlement.
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Buyers make their offer subject to pet approval as they don't wish to buy the property unless their pet is allowed to reside in the unit. The decision is up to the Body Corporate committee and although it is becoming harder to knock back pet applications, it is still known to happen.
What to look for in an Offer.
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This is always the first thing to consider and the main deciding factor. Generally speaking, the highest offer will be successful however if multiple buyers have the same or similar offer amounts, the decision to go with a buyer will then turn to other factors such as the conditions attached to the sale price.
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Deposit amounts vary but generally range between 3-5% and cannot exceed 10%, agents hold the deposit in a trust account as security in case the buyer decides to abandon (illegally) the contract. Some deposits are just an initial payment required within a couple of days of signing the contract, others will be split across 2 time periods... the initial deposit and another once the contract goes unconditional.
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Outside of the price, these elements are typically the deciding factors for contracts. Unless a seller's situation lends itself to an alternate scenario, the most ideal contracts will generally have; as few conditions as possible and as short a timeframe as possible.
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Settlement: 30 - 45 days. This can be shorter or longer depending on the individuals that make up the contract and their circumstances.
Finance: 7 - 21 days. This is generally what you can expect, some banks work faster than others.
Building & Pest: 7 - 14 days. This is the normal turnaround time, extension requests are common if problems are found and need to be negotiated.
Additional Clauses: 7 - 14 days. The timelines for additional or extra clauses are normally aligned with other condition time periods as to not lengthen the conditional period.
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In Queensland, all contracts have a 5 business day cooling off period where buyers have the right to terminate the Contract, it is like a "change of mind" clause for the buyer. If buyers use the cooling-off period to terminate the Contract there is a termination penalty of 0.25% of the purchase price.tem description
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Often overlooked, the buyers behind the offer play a very crucial part when deciding to accept an offer. The right buyers will make for a smooth and seamless process whereas buyers who haven't been properly vetted always come with the risk of contract extensions, complications and/or terminations, wasting everyone's time and impacting the property along with its sales campaign.Item description
