Is this a "cash offer"?

[HappyCamper]

I've been closely watching an within 10kms of Sydney for a good 3 years and am planning to buy a property here at 65-70% LVR. I have pre-approval and will be getting final approval prior to making any offers but am yet to find the right property. I do not expect issues with borrowing capacity and am quite sure the prices I offer will be very close to the mark and unlikely to have bank valuation issues, but I'll still be wanting building/pest done during the cooling off period.

Is this what agents would consider a "cash offer"?

 

[Propertunity]

Is this what agents would consider a "cash offer"?

No. Cash is where you don't need a loan or a valuation to get finance.

 

[Bill.L]

Hi garbage,

probably not the best name you could have chosen,

whatever,

I feel that a cash offer is an unconditional offer, not subject to anything. This is why you can low-ball with a cash offer. From the sellers perspective a subject too clause, whether finance or something else, is not as good as unconditional.

bye

 

[HappyCamper]

Thanks for the replies. So in this situation, would it be prudent to include a "subject to finance" clause or just a "subject to bank's valuation" clause in the written offer?

 

[Propertunity]

Thanks for the replies. So in this situation, would it be prudent to include a "subject to finance" clause or just a "subject to bank's valuation" clause in the written offer?

In NSW we tend not to muck around making written offers - but that's your call. We tend to do verbal ones - as it can go back & fwd a few times. Once a vendor agrees you have a choice of doing a REA exchange with a cooling off period - during this period is when you do your P&B reports and get finance approval. Otherwise you can do the solicitor exchange and take your chances on being gazumped.

 

[wylie]

I feel that a cash offer is an unconditional offer, not subject to anything. This is why you can low-ball with a cash offer. From the sellers perspective a subject too clause, whether finance or something else, is not as good as unconditional.

This is a "cash offer". No conditions. As soon as the offer is in, it is unconditional (except that nowadays there is a cooling off period).

I could not cope with verbal offers, with the chance of being gazumped. At least in Queensland, once the contract is signed by both parties, it is solid. Of course, it can fall over on the clauses, but nobody can gazump you after it is signed. I would be a nervous nellie trying to buy in another state .

 

[JamesGG]

At least in Queensland, once the contract is signed by both parties, it is solid. Of course, it can fall over on the clauses, but nobody can gazump you after it is signed. I would be a nervous nellie trying to buy in another state .

For whatever it's worth, it's a done deal once the contracts are signed by both parties in Vic, too.

Come to think of it, I'm yet to hear of gazumping anywhere other than NSW...?

 

[Sheryn]

Nah - I was a nervous nellie in QLD and have had 7 experiences

I could not cope with verbal offers, with the chance of being gazumped. At least in Queensland, once the contract is signed by both parties, it is solid. Of course, it can fall over on the clauses, but nobody can gazump you after it is signed. I would be a nervous nellie trying to buy in another state .

Wylie

Having purchased in QLD (overseeing son's purchase of H&L package and signing & cancelling 2 x written contracts to purchase a block of land and a H & L package & having 2 offers for property turned down [properties sold for under our offer later] & attending auction at Calamvale).


That's 7 experiences in QLD.

IMHO - NSW process is much easier.

In NSW our experiences have been the REA agent picks you up in their car and drives you around looking at properties and you can discuss each property.

In my experience x 3 in QLD the REA drives themselves to the properties and you follow madly trying to concentrate on following the REA through the Brisbane traffic.

Then the REA shows you the property, stands outside and says I will give you time to discuss whether you are going to buy.

In NSW - as you get out of the car (I do anyway) at your house I say to agent put in an offer $$$ with 60 day settlement subject to finance. Or I may say I will discuss with hubby and get back to you.

Agent may ring back and say offer accepted or rings back and says Vendor has counter offered with $$$.

You decide to negotiate or accept Vendor offer etc.

We have purchased in NSW x 11 and sold in NSW x 9 times and we very comfortable doing so.

IN QLD we only have actually purchased once, more experienced at cancelling offers to buy in QLD as the lack of verbal offers hinders process IMHO.


Regards
Sheryn

 

[Jacque]

I've been closely watching an within 10kms of Sydney for a good 3 years and am planning to buy a property here at 65-70% LVR. I have pre-approval and will be getting final approval prior to making any offers but am yet to find the right property. I do not expect issues with borrowing capacity and am quite sure the prices I offer will be very close to the mark and unlikely to have bank valuation issues, but I'll still be wanting building/pest done during the cooling off period.

Is this what agents would consider a "cash offer"?

Others have pretty much summed it up but there's no better news to an agents ears than you being ready to sign an unconditional contract- as good as cash. So, if you're keen on a property and think that you're in the ballpark on price (after verbal conversations with the REA) do your b/p, get the contract reviewed, get the ok from your lender (they will need to value and so allow time for this) and then sign the contract with a s66W form. Once the vendor signs and they're exchanged the property is sold to you.

 

[HappyCamper]

In NSW we tend not to muck around making written offers - but that's your call. We tend to do verbal ones - as it can go back & fwd a few times. Once a vendor agrees you have a choice of doing a REA exchange with a cooling off period - during this period is when you do your P&B reports and get finance approval. Otherwise you can do the solicitor exchange and take your chances on being gazumped.

Thanks for clearing that up. I had read through these boards and was seeing a lot of references to written offers, so I thought I must have just been doing it wrong in the past. But yeah, I've bought once and attempted two sales in NSW and have not come across anything written.

 

[wylie]

Wylie

Having purchased in QLD (overseeing son's purchase of H&L package and signing & cancelling 2 x written contracts to purchase a block of land and a H & L package & having 2 offers for property turned down [properties sold for under our offer later] & attending auction at Calamvale).

Written contract only becomes binding when the other party signs it. If you change your mind before it is presented, or the other party doesn't sign, or countersign then you only need to cancel if you no longer with to go ahead. Even if you sign, and the other party countersigns, until you initial the countersignature, it is not binding. I don't see a problem with this, but I have never bought in another state. I do like the fact that in Queensland once signed it is "a done deal" and nobody can slip in a higher offer.

In NSW our experiences have been the REA agent picks you up in their car and drives you around looking at properties and you can discuss each property.

That is up to the agent. I know agents will pick up a purchaser in Brisbane too .

In my experience x 3 in QLD the REA drives themselves to the properties and you follow madly trying to concentrate on following the REA through the Brisbane traffic.

Is it really the case that all/most agents in NSW pick up prospective purchasers. I find that hard to believe, but happy to have it confirmed. My mother often drove her clients to different properties. I don't think it is a NSW thing.

Then the REA shows you the property, stands outside and says I will give you time to discuss whether you are going to buy.

In my experience no agent has ever stood around and given me time to discuss whether I want to buy. If I want to buy, I ask if I can please sign a contract.

In NSW - as you get out of the car (I do anyway) at your house I say to agent put in an offer $$$ with 60 day settlement subject to finance. Or I may say I will discuss with hubby and get back to you.

Same in Queensland if that is what you want to do. I generally want to buy it NOW . If I wait, someone else might snatch it from under my nose.

Agent may ring back and say offer accepted or rings back and says Vendor has counter offered with $$$.

Same in Queensland, but it is done on a piece of paper which becomes the contract. That way there is no "oh sorry but someone offered $1K more since I phoned you.

You decide to negotiate or accept Vendor offer etc.

Same in Queensland, but again, on paper, which becomes binding once both signatures are on it.

IN QLD we only have actually purchased once, more experienced at cancelling offers to buy in QLD as the lack of verbal offers hinders process IMHO.

Why do you cancel offers?

Regards
Sheryn

I don't want my answers to appear smart, but am just curious about why you would cancel an offer, unless you have changed your mind. I have only ever heard of people cancelling offers when they have signed a contract, and the vendor has not signed it. Perhaps the vendor is waiting for a better one. In the meantime, purchaser decides they don't want the house after all, and rather than risking the vendor signing the contract and completing the contract, they ask in writing that it be cancelled or withdrawn. In that scenario, you need to cancel it in writing in case the vendor decides to sign it and you then are locked in.

The initial purchaser for my mum's house that has just gone unconditional today (yeay!!) did just this. Flew up from NSW, made an offer, mum countersigned higher. There is no way this contract could have come together until the purchaser coungersigned (or initialled) the counteroffer, but she called the agent from the airport to ask that her offer be withdrawn.

In this case, it was (I imagine) a notice to the agent not to bother following up to see if she wanted to initial the countersignature and make a contract, and allowed the agent to forget her and continue to market it.

Having never bought in NSW I don't know the pros and cons of verbally agreeing to a price, when that can be gazumped. I like the certainty of knowing that once two signatures are on the contract, only the purchaser can pull out on any clauses. The vendor cannot agree to a price, and then change his/her mind and accept a higher offer.

Our agent has a daughter who has just moved to NSW from Queensland and it is driving her crazy, the way the system works down there .

Added: I think what I am really wondering about is that I understand that in NSW the vendor could be phoned with "Mrs X wants to offer $500K cash unconditional". Vendor says "that is great, bring around a contract". In the meantime, they could be offered $501K and decide to take that offer instead. Is this correct?

In Queensland that original $500K offer is signed by the purchaser before the vendor even knows about it (generally) and presented straight away and instead of a verbal "yes" the vendor signs the contract. They can then not accept a higher offer.

 

[twobobsworth]

In NSW - as you get out of the car (I do anyway) at your house I say to agent put in an offer $$$ with 60 day settlement subject to finance.

Can you provide more details about your subject to finance clauses. I have asked a number of times on this forum if anyone has actually inserted this into a NSW contract with not one response. Two solicitors I have dealt with in the past say they haven't seen one for in a contract for more than 10 years.

 

[Bill.L]

Hi all,

Wylie,

I don't want my answers to appear smart, but am just curious about why you would cancel an offer, unless you have changed your mind. I have only ever heard of people cancelling offers when they have signed a contract, and the vendor has not signed it.

When buying in Qld a few years ago we made verbal conditional offers, via time. We needed a definite yes within a certain timeframe for the deal to proceed as we (a friend and myself) were on a buying trip but had limited capital. For the week we were there we bought 3 houses between us but made many offers subject to time. I can recall telling one REA that the offer was subject to 'not buying x property first'. ( I got a very quick response on that one )

My only regret is that I did not buy EVERY property we inspected and made offers on. c'est la vie.

bye

 

[bunjiBing]

Others have pretty much summed it up but there's no better news to an agents ears than you being ready to sign an unconditional contract- as good as cash. So, if you're keen on a property and think that you're in the ballpark on price (after verbal conversations with the REA) do your b/p, get the contract reviewed, get the ok from your lender (they will need to value and so allow time for this) and then sign the contract with a s66W form. Once the vendor signs and they're exchanged the property is sold to you.

So let's say you literally have the cash (or LOC), how would that affect the deal:
- one less condition for the deal, agent & vendor happy,
- shorter settlement period, vendor happy.

Has anyone had experience with a vendor who is happy to discount the purchase price due to buyer having cash?

-bB

 

[wylie]

I don't have any experience of getting a big discount due to a cash offer, but last place we bought they had an offer of $450 (I think). They countersigned at $470K. While this purchaser was deciding whether to increase their offer, we offered $460K cash.

Obviously the vendor had to decide to either wait for the other buyer to possibly agree to $470K with conditions attached or accept our cash offer but knowing that it was a "done deal" as soon as they signed the contract (which they did).

 

[Jacque]

Offering cash with an unconditional contract is a very large carrot to a motivated vendor, particularly one who's had conditional offers fall over. It's offering the cash at the right time to the right vendor in the right way that makes all the difference

 

[Sheryn]

Can you provide more details about your subject to finance clauses. I have asked a number of times on this forum if anyone has actually inserted this into a NSW contract with not one response. Two solicitors I have dealt with in the past say they haven't seen one for in a contract for more than 10 years.

When making offer to REA say you want 60 days settlement, subject to finance (this is for a block of land). I did also try for only putting down $1000.00 deposit if offer accepted but REA said the vendors would come at that so I put down 5%.

The contract comes back with a settlement date in our case in July. The finance clause is subject to finance ( I think it gives us 14 days) from exchange to have finance organised.


Sheryn

 

[Sheryn]

I don't want my answers to appear smart, but am just curious about why you would cancel an offer, unless you have changed your mind.

Contract was signed on a block of land, then we went looking for project home to go on it and found that one corner of the block just curved in to much for a flat on the ground house, if we went double storey son could afford so we cancelled contract.


Added: I think what I am really wondering about is that I understand that in NSW the vendor could be phoned with "Mrs X wants to offer $500K cash unconditional". Vendor says "that is great, bring around a contract". In the meantime, they could be offered $501K and decide to take that offer instead. Is this correct?

Yes Except Vendor and Purchaser usually end up signing contract at Lawyer or conveyancers office.

In Queensland that original $500K offer is signed by the purchaser before the vendor even knows about it (generally) and presented straight away and instead of a verbal "yes" the vendor signs the contract. They can then not accept a higher offer.

Funny how we can live in the one country and have so many different systems.

 

[wylie]

I agree about the different systems. I have always thought it would be great thing if vendors all over Australia had a building and pest report done so that every potential purchaser didn't have to do it. I think this might be the case in some states, but not sure.

It is hard enough to feel confident to buy in another state, and I don't think I would be comfortable buying in another country, like some of the shows I have seen where Brits buy in Spain and other places, and often get it very wrong.

 

[Tano]

What happens to a cash offer if finance falls through and your using a $2 company? Just the company gets sued and you loose your $2 company and deposit (plus the associated costs of setting up a new company)?

Are there any legal fees involved?