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By Kirsty O’Hara
An interesting development in the mortgage space is that we’ve started to see more conditional offers successful at tender. Of course, it’s not guaranteed, however it’s a big jump from the seller’s market of the past few years. If you had asked us even a few months back, we would have replied there was no chance without completing due diligence prior to tender.
Recently, we have seen buyers (particularly in the $1-1.5 million residential market) snap up property with conditional offers. We are yet to see this trend translate into the first-homebuyer and sub-million markets, but hope to see more success for buyers in these more affordable property markets in the months to follow.
Please remember, if you are wanting to make a conditional offer, do consult your lawyer for the specific clauses to add to best protect you while you complete your due diligence. And, for peace of mind, here are some tips on what to keep in mind …
1. Which conditions do I need to include?
On all properties, before you make an unconditional offer, you need to complete due diligence across the following five areas. If you are yet to complete any of these items prior to offering you will want to add a condition for each item yet to be satisfied.
2. How many conditions should I add?
If you have a lot of conditions to cover, your lawyer may suggest you go for adding a “generic blanket condition” that allows you to walk away from a property without any explanation required. From our experience, this is not advised (if you want to successfully secure the house), as it is off-putting to agents and vendors given you can basically walk away for any reason you choose without having to give them a reason.
We suggest listing the relevant conditions that you require as part of your due diligence process, as it makes you look more committed to pursuing the purchase, providing everything checks out.
3. What conditions should I add? And how do I write them?
Only add conditions for due diligence for items that you are yet to complete. This may be due to lack of time (i.e. if it’s a short lead time till tender or a tender is called forward), it may be because it is a POA (Price by Arrangement), or it could be because you’re taking a punt and you don’t want to burn through cash on due diligence until you know you have the property under offer (especially if you have a deposit less than 20% and will need to include a valuation condition).
Once you know what your conditions are, your real estate agent will often assist with the specific wording. When it comes to contracts, this is really where your lawyer comes in, so we would always suggest (particularly if you are new to this) that you check the conditions with your lawyer that are best for your situation.
Please remember, if you are wanting to offer on any property, we do need to confirm the property is acceptable to the bank prior to offering.If this has not been confirmed, always include a finance condition.
If you want to talk through the conditions you should add on any upcoming offers, please do give your solicitor a call or talk to your financial adviser for a list of conditions specific to your situation that you need to include and discuss with your lawyer.
Before you make any decisions you should talk through your specific family situations with an adviser from Velocity Financial and also potentially your families other professionals such as a lawyer and accountant to come up with the best solution for your specific situation. Click here to view a copy of our disclosure statements.
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