Wording for my written offer.

Below is how i intend to word my written offer( Not buying just yet). Does it seem ok. Do you see any issues that i should change. I am open to critics.I have never submitted a written offer so i want to get it right.

Cheers




LETTER OF OFFER
Property details:

Agency:

Purchasers name:

Address:

Phone:

Offer:

Other conditions:
Deposit of $2000.00 payable after 3 days of acceptance of offer.
Subject to satisfactory building and pest inspection within 10 business days.
Subject to independent and bank valuation within 10 business days
Subject to finance approval within 15 business days
Subject to due diligence with local council within 10 business days.
Subject to satisfactory survey report within 10 business days.
If I am not personally satisfied with the outcome of the above points .The Deposit is to be refunded
Required times to settle to be negotiated when above points have been met.

Note:
I currently have offers on other properties and in the event that I receive an acceptance on one of them. All other offers including this one are immediately retracted.

Signed:


Name:

Date:
 
I can only presume that the number written in the "Offer" box will be about 50 to 100K over and above the asking price to attempt to induce any sane minded Vendor to even go near an Offer to Purchase with that many get out clauses.

The intention of a Sales Contract is to be legally binding and enforceable between two parties. That's about as binding as Florence's fishnet stockings.

May I suggest you perform the appropriate due diligence prior to offering, and then you'll only need the one fin. clause.
 
First of all thankyou for your suggestions.

Mary-Sue
I really dont see what is so bad about my offer.

The building and pest inspection is standard for all i would say.
the finance clause is standard and as suggested the valuation can be covered by this also.
The council due diligence is because it is a standard house split into units. There is little to say this was done legally. The vendor understands my requirement already to take it further with council if i was to make an offer.
The survey report is because i am interested in subdividing the block and once again the council supplied plans are rubbish. I would have to get a survey $$$. Something i am not doing unless i have an accepted offer.
And my note saying i have other properties i am chasing i feel is totaly acceptable as im sure other people do this.

I have learnt the hard way not to take anything on face value. Get it in writing then everything will go smoother.

PS. I intend to offer $50,000 under asking price.
 
Also from a legal point of view when would this offer become binding. Is it when they verbally accept the offer or must they return something in writing.

I should add also that this property has been on the market for well over a year and has had no offers for over 6 months. That i believe puts me in a position to be more assertive in what i want.
 
Mary-Sue does raise a good point - I don't think I would be tempted by this offer unless the price was quite good. There's so many clauses in it that it just wouldn't feel right.

The council due diligence probably isn't necessary as if it's a previously sub-divided property, then your conveyancers title search will run the required checks for you. If there's something wrong with the title, the contract will become unenforceable anyway.

The surveyors report could also be avoided. Can you take a copy of the vendors statement to the local council and get a quick opinion. This will give you a high level of certainty of what you can do with the block.

The one regarding other properties can be stated verbally and enforced with a sunset clause. If you really do have other offers in and another one is accepted, you can easily withdraw any existing offers before the sunset clause expires.

If you're looking for an easy way out of a contract, a finance clause can cover it if you've used a sympathetic broker. It's really easy to get a finance rejection and I've written plenty of letters stating that suitable finance is not available for clients.

It's very reasonable to make an offer that covers your interests thoroughly, but you also need to make it straight forward enough to be taken seriously. If you present an offer with too many special conditions the agent will take it to the vendor with the advice to wait for a better offer. Your offer will then be the one where the agent tells the next person, "We've already had offers of $xxxk, but we expect better".

Standard cooling off period (available under certain conditions, check with your conveyancer).
Finance clause (10 working days from vendors acceptance)
Building and pest inspection (5 working days from vendors acceptance)
Sunset clause (accept within 24-48 hours or the offer expires)

These clauses will protect your interests without too many problems and are common enough that agents will take the offer seriously.
 
I'd have to agree with Mary-Sue. Unless I was desperate for a buyer I'd be laughing at an offer like this and telling the agent to move on to the next buyer.

Statements like this

*If I am not personally satisfied with the outcome of the above points .The Deposit is to be refunded.

*Note:I currently have offers on other properties and in the event that I receive an acceptance on one of them. All other offers including this one are immediately retracted.


Just say to me, "I reserve the right to change my mind for any reason at anytime.

The council due diligence is because it is a standard house split into units. There is little to say this was done legally.

A quick 5 minute trip to council will tell you whether its approved or not.


The survey report is because i am interested in subdividing the block and once again the council supplied plans are rubbish. I would have to get a survey $$$. Something i am not doing unless i have an accepted offer.

I dare say the vendors are not claiming the property as subdividable so that would be a risk you take, not them.

Deposit of $2000.00 payable after 3 days of acceptance of offer.
Subject to satisfactory building and pest inspection within 10 business days.
Subject to independent and bank valuation within 10 business days
Subject to finance approval within 15 business days

All this stuff is pretty normal and should be catered for somewhere in the sales contract. You might get stuck on paying the dep 3 days after signing rather than at signing. You also might get stuck on the 15 day finance.

Also from a legal point of view when would this offer become binding. Is it when they verbally accept the offer or must they return something in writing.
Cant remember that far back to contract law (offer/acceptance) usually a verbal offer is enough but in some circumstances a written one is needed, not sure if property is one of those circumstances. But anyway who cares what contract law says...GET IT IN WRITTING.


I should add also that this property has been on the market for well over a year and has had no offers for over 6 months. That I believe puts me in a position to be more assertive in what i want.
Thats the only thing you have going for you then but I think you would have a much better chance of a favourable outcome removing half of those 'clauses' and wording it much more in their favour.

Do you know why its been on the market for over a year? might pay to find out.

Forget about all those clauses, just ask for an extended cooling off period. 10, 15 or maybe even 20 days.That will give you plenty of time to get your approvals and inspections done and even give you time to get a surveyor on site.

Just put an expirey date and time on the offer, forget about all that I reserve the right blablabla.

Give them something too. Offer more of a deposit, maybe short/extended settlement, find out what they want, you might be surprised what can get the deal over the line.

hope that helps a bit
 
Devo

Remember that this is an offer and not a contract and you want to make your offer as attractive as possible so by putting in all those clauses you are making things difficult for yourself.

You should also put a time limit to your offer or the REA will be using it as a negotiating tool against other buyers.

I am attaching a form which you can change to suit your requirements

cheers
 

Attachments

  • Offer to Purchase residential property.doc
    28 KB · Views: 237
Thanks everyone. You have given me some excellent information.I will give it another go.

Cheers

PS. Can someone explain the sunset clause to me ?
 
What can you possibly need a surveyor for? The council supplied plans will be fine, they'll just match the title, and then you take a trundle wheel or long measuring tape *yourself* for *free* to work out roughly how big the house is and where it sits on the block. Save yourself several $100.

We had a surveyor out to do a preliminary report and guess what? They used measuring tapes not the fancy formal surveying gear and sent us a nice bill to draw it all up pretty and submit it to council, subject to doing it properly later to get the measurements and fence locations etc exact.
 
Hi there
a sunset clause is something which will end arrangements if specified conditions are not met.
I have used sunset clauses when I purchased a property from a deceased estate and wanted to ensure that an application for probate was expedited.
I have also used it when buying a property subject to the sale of another property.
It just prevents things from dragging on without resolution
thanks
 
There are a couple of issues with the block.

One being that it was originally a house but was changed into 3 single bed units some time before 1960( Apparently many plans where lost/destroyed around this time, this property included). So council having lost all its plans means there is no on paper confirmation that the units are approved. I would need to convince council that it has been this way( 3 units) for sometime.Not as straight foward as you would think.Simply pointing out how old it is is not sufficient.The RE agent said it would be fine. I ask for on paper evidence of this but he has none.I do not want a single complaint from a neighbour forcing me to return it to a normal dwelling and therefore a reduced rental income.

As far as the subdivision goes it is borderline subdividable. I need exact plans on the buildings layout on the block. Once again the councils plans for this block are very rough.There is no side fence and no visible survey marks. I plan to battle axe the block but side axcess is borderline.

The property has been advertised as a possible subdividable block but when i ask for answers i only get more questions. I am not going to go do all this research until i am confident that my offer will be excepted. I have done much reasearch but it is not a straight forward property. There are many issues that would make or break the deal.
 
Hi there
a sunset clause is something which will end arrangements if specified conditions are not met.
I have used sunset clauses when I purchased a property from a deceased estate and wanted to ensure that an application for probate was expedited.
I have also used it when buying a property subject to the sale of another property.
It just prevents things from dragging on without resolution
thanks

So how would you word a sunset clause into the written offer ?
 
No wonder its been for sale for so long then.


Yes you are right bit is this not what we are trying to find in investing. Find a property with a problem. Find an answer and move foward. most would put this in the too hard basket. But if i can find an answer i may get it at a good price with heaps of add value potential.
 
The example of a sunset clause I was refering to is to state in the offer:

"This offer is expires at 5:00pm on <insert date>."

This gives the vendor a specific time frame in which to accept the offer, which puts some pressure on the vendor and gives the agent a limited amount of time to get counter offers. I've seen cases where the vendor delayed over a week to try get better offers, in the meantime the purchaser was getting very stressed.
 
Of course, the downside to a 'sunset clause' used as a hustle up tactic against the Vendor, is that they call your bluff and let time pass and the sunset clause comes into affect, thereby making your offer invalid.

No problem if you didn't really want the property, but then if that's the case why did you offer ? A huge problem however, if you are still keen on it and it still represents the number 1 opportunity on your research sheet.

Plenty of fish in the sea is the common cry....but of course when you have completed the majority of your DD and finally get to the stage where you are ready to make a serious offer on the "top of the heap", it's a bit embarrassing, not to mention costly, to then go back to the Vendor again and say look I know that sunset clause lapsed, but I'm still interested. Ouch.
 
it's a bit embarrassing, not to mention costly, to then go back to the Vendor again and say look I know that sunset clause lapsed, but I'm still interested. Ouch.

Sue

Good point, but it depends on the situation

I'd put a time limit to an offer because I don't want the REA to use it in his favour and because I could also be making offers on other properties and I don't want all of them to be accepted.

In any case, even if my offer expires the REA has my details and can always call me back to see if I am still interested.
Otherwise I can touch base with him in a day or so and find out what happened.

cheers
 
Back
Top