Offer with no contract

J

jackbak

Hi all

Ok, so there's 2 properties we are interested in at the moment. One goes to auction 18/05 and the other on 25/05.

We'd like to make an offer this week on the property going to auction on the 25/05 but they don't have the contract ready. Is there any risk in making an offer without a contract and what would be the best way to word the offer to minimise the risk?

Thanks
 
Why does it take so long to get a contract ready. Cant it be written up using a standard contract (with any applicable additions) on the spot?
Is it a commercial property?
 
The offer, to be taken seriously, needs to be in writing.

Sounds like an agent wants to use up his or her full marketing/advertising allowance first.
 
Don't you need to have a contract in Vic before going to market?

That aside, yes there is a greater risk in not having a contract & S32 to review - what are you buying immediately springs to mind.
 
If you make an offer in writing via email/letter and there is not a contract that has a signed section 32 the offer is not binding and thus there is no risk as far as entering an agreement.

The benefits of a letter of intent are that it shows the vendor that you're serious and willing to put pen to paper and thus they'll start to think, do I really want to risk an auction if I have a bird in the hand.

The main con with a letter of intent is that it gives away your initial position allowing the agent to use it to create more urgency for the other parties to make offers too.

If I were in your shoes I'd have a good conversation with the agent and explain that you like this property more than another one but that one is going to auction on the 18th.

Explain you want to make an offer and are happy to provide a letter of intent so you can get an acceptable position from the vendor before the 18th otherwise you'll just go and buy this other property.

The agent will then present your offer and if it's strong enough recommend that the vendor seriously considers it whilst explaining that they might lose you as a buyer if it's not accepted.

If your offer is low, they'll probably just run it to auction... It has to be at a price that is more than what the vendor's reserve, but less than where you see value... if that makes sense.
 
jackbak said:
Great response! Thanks everyone
Click to expand...
An offer without a contract is nothing, Just a he said / she said. Not binding, The vendor may instruct that no contract will be considered before auction , the agent cannot make this decision, A letter of intent works against both parties as often buyers pay a little more and a vendor accepts a little less,,,easy to have buyers/ vendors remorse if loose numbers are discussed, the contract has 2 elements ,nore totally an verbal the price and the conditions, all need to be explained in full with no ambiguity--this problem has been solved by the use of ( u guessed it !) a legally binding contract (speaking for Qld only ) Always Always Always only respond to a contract of sale I ignore any verbal offers? , letters of would be if could bes....and then have unique but effective ways of negotiating when i am buying and more importantly when i am selling. the agent will take the easy road( generally ) the buyer wants a counter offer so they know where u are at , the very moment -the very moment u respond with a verbal counter offer iu are a shot duck and have given away a massive advantage that u didnt know u had ,,,anyway thats my view ,
 
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