MYTHS FOR REAL ESTATE BUYERS
Myths for real estate buyers
By David Beattie, Licenses Real Estate Agent in SA and Buyer Agent
Always start with a very low offer
Over the years I have seen too many people make a mess of a purchase with this strategy as they offend the seller and the agent does not consider them serious enough to negotiate further with.
Where you start depends if the market price of the property is fair or overpriced and the competition to buy the property.
The best offer is a quick settlement date
It may have been true once when we could settle in five days while you may have cash the seller most likely has a loan and bank systems require three to four weeks to making the quick settlement in most cases a thing of the past,
Also it depends on the sellers’ settlement flexibility or if they want a long settlement or a set settlement date.
The best offer is cash
People assumption that a seller considering two offers will always go with the cash offer, this is true if they offers are identical and the agent believes the cash offer will last through the cooling off period.
If the buyer has pre-approved finance or is borrowing below their borrowing limit their offer would equals a cash offer
A finance offer with a high deposit can beat a cash offer with a low deposit eg. If both offers were the same and one had a cash offer with $2,000 deposit and the second a finance offer with $50,000 deposit – which would you choose?
Never offer a subject too sale
While a sale subject to selling your property is rarely popular, if you are offering the right amount and a settlement date the seller is happy with there is no reason for not offering a subject too sale but remember in a competition situation a matching finance or cash offer could beat your offer.
With subject too sale offers a good selling agent would include a clause allowing the seller a 48 hour let out clause if they receive a cash offer, with the subject too purchaser having the 48 hours to decide to walk or change their offer to unconditional.
Once you sign an offer or contract you are bound by it
In South Australia you must get two clear days cooling off rights after you are sent or given a copy of the Form 1 (Cooling off rights) during this time you change your mind for any reason. The only time this does not apply is at Auction or if you waive your cooling off rights by signing in front of a lawyer.
If the seller counters my offer I must accept it or reject it
While all agents would love you to accept the counter offer, you can always re-counter with your own offer.
In most cases these counter offers are resolved the same day but in one case I had multiple counter offers from both sides over two months with counter offers up to a week apart until a final figure both parties could accept was reached.
Up to settlement you can be gazumped (another buyer can offer more and get the property)
It South Australia once the seller has signed the contract you cannot be gazumped unless you do not complete a term of the contract and even still the agent has to give you notice and time to complete that term.
Once you sign a contract you must settle on the date in the contract
Not always, most Real Estate Institute of SA (REISA) contract include the clause “and/or other date as may be agreed between the parties in writing”, this allows settlement to be moved forward or backward if both parties agree and protects against problems in transfer paperwork completion/signing or the lender meeting the original settlement date. However if the fault is on the purchasers’ side penalty interest may be charged.
If you take your children to an open the vendor will accept less
Fortunately I have only seen this a few times in my career in Real Estate, with buyers bringing their children who pick their bedrooms then the parents expect the seller to accept their top offer (below the expected selling price) so the children will not be disappointed.
This has to be the worst strategy as the agent marketing the property will most likely only tell the seller about the children after the property has been sold.
If you have a real estate question feel free to email or message me or if you need an Agent or Buyer Agent (A Buyer agent can find, negotiate or just bid at action on your behalf – their job is to take the stress out of buying and help you purchase the property for the lowest price).