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Consider pre-approval
If you’re ready to make an offer on your dream home, by now you’d no doubt have your deposit saved and burning a hole in your pocket.
Before you go flashing the cash to your real estate agent though, it’s a great idea to speak to a lending expert and get pre-approved for your loan, so you can make an offer with confidence.
1. Know your borrowing power
First things first. You’ve got a ball-park figure for how much you’ll need to buy your home. Give yourself five minutes to take advantage of our handy Borrowing Power Calculator. Simply punch in a few numbers about yourself and get an idea of how much you’d be able to access to finance your purchase.
2. Know your deposit amount
Knowing exactly how much you'll need for your housing deposit gives you the correct savings goal to work towards. Take into amount whether of not you'll need to apply for Lender's Mortgage Insurance.
Research and strategise
Failure to prepare is preparing to fail.
This process isn’t as simple as buying some gum at the checkout, so it’s recommended you do your homework.
1. Do your homework
In the lead-up to making your offer, consider the asking price of your potential property. Ask your agent or get online and look into the selling history of the surrounding streets.
Look for houses with comparable block size, building structure and property features to yours. Be sure to consider whether the market in the area is on the up or is cooling. These factors will help you devise your strategy.
2. Finalise your game plan
Based on your research, you should be able to arrive at a figure you think is reasonable for the property you want to buy.
For example, you may wish to make an initial offer 10-15% below the asking price if you think that the agent and seller have added on 5-10% due to the suburb being on the up. Or you may be willing to offer slightly over the asking price, but with some stipulations that the owner make a number of changes to the property before you exchange contracts.
Avoid the pitfalls
To give yourself and your offer the best chance of success, there are a few behaviours you should avoid during the process.
Don't play games
Be up-front about your interest in the property. Being honest and open is a two-way street.
Be flexible
If you really want the property, you may have to be willing to meet the agent and seller halfway.
Have perspective
Try to understand the vendor’s motivation to sell, and how that may be influencing their decision-making.
Make your offer
When you’ve ticked all the above boxes, approach the agent and make your offer. After all the prep-work, it really is as simple as throwing a number out there and seeing if you get a bite.
Unfortunately, it’s at this point when you’re at your most excited where patience is most crucial. Be sure to give the seller and agent some space, and to avoid disappointment, be prepared for the possibility of further negotiation.
If you’re looking for a way to use this time productively, why not start thinking about the right insurance for what could be your new home? You’ll need your Home Insurance in place for when contracts are exchanged, so be sure to get a quote that’s both great value while suiting your needs.
Celebrate!
With the right prep, your offer will hopefully be accepted and you’ll be the owner of a brand new home!
Here’s what to do next:
1. Buy Champagne
Preferably the best you can get your hands on and afford.
2. Chill it lovingly
Then, remove the foil and wire cage from the bottleneck.
3. Pop that cork
Propose a toast to your brand new home - congratulations!
Your questions answered
What is the rule of thumb for making an offer on a house?
Speaking generally, there are a few things you can do to put yourself in the best position to make an offer on a house.
These include having your deposit saved, accounting for additional costs, securing pre-approval, doing your research and not being afraid to negotiate.
Obviously, you want to secure the sale for the lowest price possible as a buyer, so don't be afraid to start your offer on the lower side and negotiate.
How do you make a strong offer on a house?
To make your offer as strong as possible, it's really a case of doing your research and work in the lead-up, and being willing to act quickly.
Having your deposit and pre-approval in the bag will make your offer more attractive usually, as will showing interest early on. Attend the first open or contact the agent beforehand to get a seller's estimate, and put your offer forward as soon as you can.
Don't be afraid to start your offer lower than the estimate, but keep your price ceiling, or best offer in reserve.
Should you make an offer on a house right away?
If you notice that the open house you visit is poorly attended, or that a house doesn't go under offer right away, you may be inclined to wait it out in the hope that the seller chooses to lower their price out of desperation.
Often, this waiting simply allows time for other potential buyers to emerge, so generally, it can be wise to initiate contact right away if you really mean to buy.
How does making an offer on a home work?
Making an offer on a house is as simple as contacting the seller's agent and stating what price you're willing to pay for the property. The agent will then take this price to the seller, and there is usually some back and forth between the agent as you negotiate on price or conditions of sale.
After negotiations take place, you and the seller will have contracts drawn up to exchange.
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++ $2,000 cashback for loans ≥$250,000 with LVR of less than or equal to 80%, or $3,000 cashback for loans ≥$500,000 with LVR of less than or equal to 80%,. Applications must be submitted by 31/05/2024 and funded by 31/08/2024. Only one (1) Cashback Payment per eligible loan, and for first eligible loan only. Not available in conjunction with any other promotional payment. Offer may be varied or withdrawn at any time. See the full Cashback Offer Terms and Conditions. Terms, conditions, fees, charges and credit criteria apply.
~At the end of the fixed rate period customers can chose to re-fix their loan for another fixed rate period or let the loan revert to the applicable variable interest rate based on the loan and repayment type.
^Comparison rate is based on $150,000 over 25 years. WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.
#Discounted rates include a discount on Home Loans of $150,000 or over and for owner occupied Home Loans with an LVR 80% or below and for investment Home Loan with an LVR 80% or below and apply to new borrowings only. Discounted rate not available for Line of Credit facilities.
+Additional costs may apply if your loan has a fixed rate.
All new interest-only home loans, attract a 0.10% p.a. margin above the applicable Principal and Interest base rate. All new Line of Credit home loans, attract a 0.10% p.a. margin above the applicable Line of Credit base rate. The all-up interest rate which includes any margins, will be set out in your credit contract. View our Terms and Conditions.
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