Under Contract / Under Offer

[lostis]

Hi Guys,

In a previous thread i'd asked what real estates mean when they have advised that a property is "Under Contract / Under Offer".

I've been informed that this means that someone has signed a Contract for the property and it is in its 5 day cooling off period.

Now from what i understand the 5 day cooling off period (for which, the length of the period can be negotiated) is to enable the buyer to get things such as pest inspections, building inspections, finance unconditional approvals etc organised.

During this period can no one come in and offer a higher price for the property?

 

[Propertunity]

During this period can no one come in and offer a higher price for the property?

During the cooling off period - a vendor is not permitted to accept a higher offer, a lower offer, a same offer or another purchaser of any kind.

That's why the law was changed - to prevent gazumping.

There is no problem however, saying to the REA, "if this contract falls over / cools off, then I will offer $x to buy it"

 

[Jacque]

Alan is right, though if a canny vendor gets wind of a second better offer he won't extend the cooling off period if requested by the original buyer, and take the other instead. The buyer forfeits 0.25% here in NSW as a compensation payment to the vendor for having the property "off the market" for those five days.

Gazumping only occurs when your offer has been accepted, but contracts not yet exchanged (one party signing means nothing), and another buyer comes in with a higher offer, which the vendor then accepts. Not common in a buyers market but expect it to increase in the immediate future, with perhaps the tables turning into a sellers market - particularly in the lower end.

I've been both gazumped and I've had success issuing a back up contract to a property that was in cool off mode and fell over due to finance problems. You need to be organised, in control and able to complete quickly in such situations to make your offer as attractive to the vendor as possible, even if it's for a lesser amount than what the property originally sold for (as in my case).

 

[marg4000]

Most properties sold that I have actual knowledge of seem to keep their "under offer/contract" status until settlement is finalised.
Marg