Unconditional offers

Hi

We’ve been looking for our third investment property (apartment) in the outer Melbourne CBD and finally found one that we are happy with and called the agent yesterday to make an offer.

Although finance has been pre-approved we wanted to make the offer subject to finance just to be sure that if there were any problems with the funding, we’d be able to cancel the offer.

However the REA said that he was only prepared to accept an unconditional offer and drew our attention to the contract which says that the cooling off period is three days unless we’d received legal advice on the contract in which case there is no cooling off period.

We already have a couple of investment properties bought three years ago and remember that we had no problems inserting clauses ‘subject to finance’ and ‘subject to building and pest inspection’ and now wondering whether the market has changed so much that unconditional offers are the norm or whether it’s this particular REA?

We are confident that this is the apartment for us but we’ve been thrown a bit by the REA and concerned that there is something dodgy about the deal. We’ve decided to get someone to look over the contract this week and order a strata report but obviously risk losing the property because of the delay.

Are unconditional offers only usual in Melbourne now or should we just bite the bullet and go ahead with an unconditional offer?

Any advice gratefully received.

Thank you

RL
 
A little depends on the finance approval u have, and the apptment u are looking to buy

Your lender or mortgage insurer may have some issue with the place thats not obvious to you.

In general, I recommend people avoid the push push from REAs, remember they work for the sellers.

ta
rolf
 
We are confident that this is the apartment for us but we’ve been thrown a bit by the REA and concerned that there is something dodgy about the deal.

Which one are you.....confident or concerned ??

Nothing like having a pushy REA working for a Vendor to test the resolve of the potential Buyers.

At some point in the contract before settlement, it will have to be unconditional.....the only question is, are you going to get there now or later.

Vendor obviously wants you to be there now before you write to him and tell him you are serious. Nothing wrong with that. Only question is, are you serious enough ??

The REA sounds like he's doing a great job for his boss.
 
However the REA said that he was only prepared to accept an unconditional offer and drew our attention to the contract which says that the cooling off period is three days unless we’d received legal advice on the contract in which case there is no cooling off period.

Personally i believe if you're not comfortable with it, don't do it!

Then again if you really want it and are willing to "bite the bullet" go for it.

Anyway, talk to the agent. If the agent has been given instructions by the vendor to not accept conditional offers, then the agent is in the right. However, if the agent has said "I will not accept a conditional offer." Then the agent cannot do this, they must communicate the offer to the vendor and it is their choice to accept it or not.

A few questions though.

1. Has the agent said "No, I will not accept a conditional offer, you have the cooling off period for this." Or something similar?

OR

2. Has the agent said they think you're better off to put in an unconditional offer to better your chances as you already have finance pre-approved?

If the answer is question 2, then put in your conditional offer. If the answer is question 1, is it the vendor that will not accept the conditional offer or is it the agent?
 
At some point in the contract before settlement, it will have to be unconditional.....the only question is, are you going to get there now or later.

Vendor obviously wants you to be there now before you write to him and tell him you are serious. Nothing wrong with that. Only question is, are you serious enough ??

That's right. You can choose to make your offer subject to anything you want, but the vendor can choose to ignore it.

The cooling-off period provides time for the inspections and unconditional loan approval, although 3 days is too short, so you might have to ask for an extension.
 
Are unconditional offers only usual in Melbourne now or should we just bite the bullet and go ahead with an unconditional offer?

I had the same thing happen to me when I bought my apartment in Melbourne about 18 months ago. It was a new listing and I really wanted the apartment, however would never do a contract without the finance clause. The agent insisted the vendors probably wouldn't accept it as they didn't want to take it off the market for two weeks with a conditional offer when it was still a new listing. Agent ended up giving me until the end of the week (about 4 days) to get my finanace approved. Thankfully my bank worked fast for me and had it within 2 days.

So no, it's not necessarily something dodgy. A contract with a finance clause is always a risk to the vendor so if they can get another offer without it, they'd prefer not to have that risk. However, if you are not 100% sure of your finance, then definately put it in. If it's not accepted walk away, there will be another one. I ALWAYS use finance clause to cover myself, even though it's never been an issue.
 
General advice: Always have a finance clause.

The downside is that it it makes the offer less attractive to the vendor.

It comes down to a few things on your part.
1. How much confidnece do you have in the pre-approval. Some are worthwhile, others are worthless. Do you have it in writting? Has someone from the lenders credit department actually signed off on it?
2. How much confidence do you have in the property you're purchasing? Are you paying a fair and reasonable value? Does the property comply with the lenders policies? You can speak with your financier to determine this.

If the loan you're applying for is a 90% or higher loan, definitely have a finance clause. If the agent has a problem, ask them is there something about the property that might cause a problem with the finance.
 
Hi everyone

Thank you all very much for your advice and observations. We have been fans of Somersoft for a few years now and constantly amazed a people’s generosity in given advice.

I’ve arranged for a solicitor to check over the contract and we are satisfied that we can meet the loan conditions so if all goes well, we’ll go ahead and make an unconditional offer in the next few days.

Finger crossed!

Regards

RL
 
I’ve arranged for a solicitor to check over the contract and we are satisfied that we can meet the loan conditions so if all goes well, we’ll go ahead and make an unconditional offer in the next few days.

My question would be, what's plan B if, for whatever reason, the bank says no? It might be as simple as the valuation comes in low?

I really think you should be careful when you starting thinking "this is the apartment for us".
 
I’ve arranged for a solicitor to check over the contract and we are satisfied that we can meet the loan conditions so if all goes well, we’ll go ahead and make an unconditional offer in the next few days.

In my view, before any contract is signed or offer made, a solicitor or legally qualified and trusted family member/friend should check the contract. It's no use taking a bad contract to a solicitor after it's already been signed and you're stuck with it regardless of the legal advice!
 
I did do an unconditional offer couple months back to secure a cheaper price. Freaked out that the banks rejected my loan application at 80% ... so had to go to RAMS instead to get it sorted out. Stressful experience.
 
Ask the REA if he/she was specifically instructed to only present unconditional offers. If yes, then say that he won't mind if you phone the vendor and confirm. I have no issues going direct to the vendor when idiot REAs forget their station in life.

There's lots of ways to find out how to contact the vendor.
 
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