Making offers

From: Apprentice Millionaire


I am about to make offers for properties around my area (Melbourne). I remember reading somewhere that it is best to make written offers. So it prompted a few questions:
- is it really better to make a written offer?
- what are the advantages and disadvantages with respect to making a verbal offer?
- is there a format for making a written offer (as opposed to free format)?
- if a verbal offer is made, what must be said, and what words should one use?
- I know of conditions such as subject to finance, inspection, builders warranty insurance, but what other conditions does one add?
- does anyone have a handy template for written offers that I could peruse?
- does anyone have a script of how to make a verbal offer (for example to avoid being drawn in to giving too much details to the RE agent, or how to get the most details out of a RE agent)?

Thanks in advance for any information, opinion, advice, suggestion, recommendation, pointers, information.

Replies to this post might probably be candidates for the new FAQ forum.

Cheers
Apprentice Millionaire
(aka Jacques)
 
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Reply: 1
From: Michael Yardney


I'll start this discussion off, as I sit on both sides of the fence.
I make lots of offers on property (at present we are buying about one development a week for our clients) and I receive a lot of offers.
>- is it really better to make a written offer?
YES a verbal offer is not binding - you can always retract it. While this may be what you want, if you are serious make a written offer because it shows you are genuine. A written offer with a cheque attached is much harder for a vendor to refuse. And if they do it is easier to get them to negotiate because a smart agent will get them to amend the written offer eg higher price, countersign it and then bring it back to you to continue the round of negotiations.
>- what are the advantages and disadvantages with respect to making a verbal offer?
I've sort of answered it - its not binding on you so that's an advantage, but assuming you're serious...why would you want to get out of the contract
>is there a format for making a written offer (as opposed to free format)?
Most agents will have a standard letter of offer, but nothing is as appealing to the vendor as a contract note (in Melbourne where you are a REIV contract note -it shows you are for real)
>- if a verbal offer is made,what must be said, and what words should one use?
Include the same terms & conditions as a written offer
>- I know of conditions such as
>subject to finance, inspection, builders warranty insurance, but what other
>conditions does one add?
I understand where you are coming from, but the more conditions, the less likely the vendor would be to accept it. Would you if you were the vendor???
I understand as a beginning investor, you may consider getting all the conditions in a contract to protect you, but it all boils down to knowing your market well and recognising when you find a good buy / bargain

Good Luck with the offer
Michael Yardney
Metropole Properties
 
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Reply: 1.1
From: Lewis O'Brien


There is a free pro-forma offer letter and some basic discussion about offers at FreeLawyer.com.au. (Under buying a house)

Both written and verbal offers can be withdrawn at any point before they are accepted.

Lewis O'Brien
 
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Reply: 1.1.1
From: Jay Hunter


Hi,

I've been collecting as much info as I can over the last few months for the time when I find the first property I want (soon I hope) to live in. I want to do this before buying IP's (stop renting).

I've found this written offer template that seems to be very good. It has some additional things such as Expiration of the offer to put some urgency/pressure on the vendor to make a decision.

http://www.mastermindforum.com/resources/writtenoffer.htm


enjoy
Jay
 
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Reply: 1.1.1.1
From: Jeremy Laws


AM,
PLEASE dont follow the lead of the uninformed blindly and take up written offers. IF there is a burning need to put a specific item or items in writing get them to take down a couple of points. To make an offer on properties in some countries takes a 6 page telephone book type, bigger than A4 sized document. Fax that a couple of times and it is total gobbledegook. The more people make written offers the closer we will get to that. Every person that thinks they look more professional doing that I hope feels very proud of their achievement in 20 years or so when the nightmare of paperwork gets to simple straightforward purchases.
 
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Reply: 1.1.1.1.1
From: Apprentice Millionaire


Wow, Jeremy, that's a strong opinion!
If I understand well, sounds like you feel that if everyone makes written offers we will end up in paperwork hell.
The example Jay has given doesn't look too complex, and I would certainly simplify it (no "hereafter known as .." stuff).
Do you see no advantage at all in written offers, and does this disadvantage really outweigh all other issues with written offers?

Cheers
Apprentice Millionaire
(aka Jacques)
 
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Reply: 1.1.1.1.1.1
From: Jeremy Laws


AM
It is a strong opinion, and I feel its very justified. Ask yourself a simple question. "Is there an advantage to making a written offer?" I doubt there would ever be. Take it a step further. I thought of this today. Imagine the share market requiring written offers. They are so legally protective of everyone that they become meaningless anyway, so the protection is null and void, but the paper war continues unabated! Buying 2-3 properties per day would become totally untenable. I made offers on two properties overseas and for 2 weeks used 3 rolls of fax paper. I am also involved in litigation from an offer contract amended after I had signed it. This involves $30,000AUD and has so far taken 18months. If the whole process had involved a few phone calls and been completed in a day or so this would not have happened. People will end up with what they have demanded, I just hope they realise what they are demanding.
 
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