making offers process?

Hi,

I'm hoping someone can help me out in what to do as I'm a bit confused! I'm reading other threads but thought I'd post and see if I can get some answers for exactly what I need to do.

Basically my husband and I are wanting to buy a house in Melbourne. We currently live with my parents. It's our first home so FHOG applies and we have a 10% deposit as well - our budget is about 300k for a house and we have preapproval for 270k (so with our deposit that makes 300k). We'd like to move out asap as I'm due to give birth in 2 months to our DD#2.

Anyways we found a house around that mark that is due to go for auction in 2 weeks. We spoke to the REA about making an offer before as we would like to buy asap. He said because it was going to auction we can't make an offer subject to finance. As it's our first house and even though the person who deals with us for our finance has said it shouldn't be a problem and it takes 3 weeks for full approval we're obviously wary of making any kind of unconditional contract.

Our bank guy said after we spoke to him that to get an evaluation done.

So my q's are

- is it true you can't do subject to finance contracts before an auction?
- what are the risks in unconditional contracts? woudl we lose our deposit if we couldn't get our finance approved in time?
- are auctions unconditional as well? if we bid at auction would we be in the same position as making the offer beforehand?
- if they wont take our offer now and the auction doesnt bring the price they want can we make an offer subject to finance after the auction?
- if we can make subject to finance clause offers is the REA obliged to pass it onto the vendor?

The agent has indicated to us that the vendors are in a real hurry to sell for whatever reason (i think they need it for a house they have bought).

Thankyou in advance!
 
Welcome & congrats on DD#2!
The story is that the vendor will have an auction contract prepared, which is unconditional (as are all auctions). I think that it MAY theoretically be possible for you to submit a conditional contract offer(?) but it's unlikely to be accepted, as if the house goes to auction the vendor gets an unconditional sale. If the vendor has advised the agent that they are not interested in any conditional offers then your offer will not be presented.
I'm pretty sure that if the house passes in you must offer subject to auction terms within the first 3 days after the auction. After this time, if the house is still not sold then you can submit your offer.

Sorry there's not better news. The risk is that yes, you can lose your deposit if you don't get finance. I strongly advise you to get in contact with one of the mortgage brokers on this forum & make sure you know the relative risks of your situation. You say that you have preapproval for 270k. If that is your maximum borrowing capacity then it is more risky for you to bid unconditionally than if, say, you have pre-approval for $350k. I am certainly not the person to advise you on this, as I have always bid unconditionally on the presumption that someone somewhere will give me the money by settlement (in this case 90 days is a lot safer than 30!). Then again, perhaps you could get the $ but have to pay a premium if the majors turn you down & you may need to work out if you'd be prepared to do this. The other consideration in your case is that you are looking for LMI and that's not as easy to get through as it was 18 mths ago. That said, a good broker shoudl be able to assess your situation after dealing with these things day in, day out. Good luck!
 
Last Sunday I the asked same question to a REA and he told me that If I failed to get finance from bank before settlement, I can get fine up to 10% of the offer.
I am still searching on this topic.
Thanks.
 
I made an 'offer' on a house today.

It went something like:

"you reckon they'd take 80k?"
"no way"
"hrm, how about 100?"
"I think they'd prefer 130, 140, honestly"
"ask them about 100 anyway"
"ok, but I think I know what the answer will be"

I can't seriously afford this property unless the agent does something with my other house (or there's some really creative brokers on here), but there's nothing wrong with putting in offensively low offers on something that could clean up to be worth $500k :D

Nothing ventured, nothing gained. The vendor, in this case, is God. Its a church.
 
Hi,

Thankyou everyone :) I'm finally starting to make sense of how things work with buying a house.

I had a question regarding if the bank valuation comes lower than expected? Does that mean they won't lend us the money or they will only lend a certain amount? For e.g. we want to borrow $270,000 from the bank. The houses we looked at today we'd pay around $320,000 for (so about $50,000 from us as a deposit). If they valued it at $300,000 for e.g. what happens with our finance? If they lend us $10000 less than expected we're OK as we can get money from family but not if they lend us $30000 less. I'm just a bit confused how valuations and finance work.

Thankyou!
 
I had a question regarding if the bank valuation comes lower than expected? Does that mean they won't lend us the money or they will only lend a certain amount?

They'll lend to X% of the value - i.e. if you are going for a 90% LVR, and the val comes in at $200k, they'll lend you $180k..... you need to make a low offer.....

Cheers,

The Y-man
 
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