Offer with no contract

Discussion in 'The Buying/Selling Process' started by jackbak, 15th May, 2013.

  1. jackbak

    jackbak Member

    Joined:
    27th Feb, 2012
    Messages:
    847
    Location:
    Melbourne, VIC
    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
     
  2. MRO

    MRO Member

    Joined:
    24th Apr, 2013
    Messages:
    488
    Location:
    Perth Hills
    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?
     
  3. jackbak

    jackbak Member

    Joined:
    27th Feb, 2012
    Messages:
    847
    Location:
    Melbourne, VIC
    Yeah it's a joke. No residential.
     
  4. cu@thetop

    cu@thetop Member

    Joined:
    27th Feb, 2008
    Messages:
    1,824
    Location:
    Brisbane
    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.
     
  5. Scott No Mates

    Scott No Mates ...and people wonder why?

    Joined:
    25th Jun, 2011
    Messages:
    5,391
    Media:
    144
    Location:
    Sydney - LNS
    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.
     
  6. Ausprop

    Ausprop Member

    Joined:
    20th Jun, 2004
    Messages:
    10,497
    Media:
    7
    Location:
    PERTH, WA
    how will you make an offer without a contract?
     
  7. chilliblue

    chilliblue Member

    Joined:
    29th Jul, 2010
    Messages:
    1,685
    Location:
    AUstralia
    Offer subject to an acceptable contract?
     
  8. Jake Milne

    Jake Milne Buyer's Agent (Vic)

    Joined:
    26th Jun, 2012
    Messages:
    1,037
    Location:
    Australia
    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.
     
  9. jackbak

    jackbak Member

    Joined:
    27th Feb, 2012
    Messages:
    847
    Location:
    Melbourne, VIC
    Great response! Thanks everyone
     
  10. alaninbrisbane

    alaninbrisbane Member

    Joined:
    8th Jan, 2004
    Messages:
    34
    Location:
    Brisbane
    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 ,
     
  11. jackbak

    jackbak Member

    Joined:
    27th Feb, 2012
    Messages:
    847
    Location:
    Melbourne, VIC
    Contract came in at about 3:30 today so we've just made the offer with the contract in hand.
    Cheers
     
  12. alaninbrisbane

    alaninbrisbane Member

    Joined:
    8th Jan, 2004
    Messages:
    34
    Location:
    Brisbane
    well done good luck
     
  13. Jake Milne

    Jake Milne Buyer's Agent (Vic)

    Joined:
    26th Jun, 2012
    Messages:
    1,037
    Location:
    Australia
    Make sure you've included a dead line.
     
  14. jackbak

    jackbak Member

    Joined:
    27th Feb, 2012
    Messages:
    847
    Location:
    Melbourne, VIC
    Offer accepted, we are the very proud new owners of a new home!! Thanks for your help everyone.
     
  15. S.T

    S.T Member

    Joined:
    27th Jun, 2011
    Messages:
    1,183
    Media:
    4
    Location:
    Melbourne
    Congrats Jackbak! That worked out very well!
     
  16. jackbak

    jackbak Member

    Joined:
    27th Feb, 2012
    Messages:
    847
    Location:
    Melbourne, VIC
    Thanks simtr, there was quite a bit of back and forth on Friday arvo/night so very happy to be done with it. We've been looking for a home for about 6 months so it's a big relief!
     
  17. Jake Milne

    Jake Milne Buyer's Agent (Vic)

    Joined:
    26th Jun, 2012
    Messages:
    1,037
    Location:
    Australia
    Great work, congratulations!