By using Rateseeker, you agree to our Cookie Policy.

  • New Loan
  • Refinance
  • Resources
    • Refer a friend
    • Calculators
    • Blog
  • About Us
  • FAQs
  • Talk to an expert

How to negotiate your first purchase with a Real Estate Agent: Everything you need to know

anne-vo-lawyer
by Anne Vo
18/09/2019 in Guides

How to negotiate your first purchase with a Real Estate Agent: Everything you need to know

Buying your first property can be both confusing and daunting at the same time which can make the experience unbearable. Whilst this is general advice, there are a couple of things you can do to potentially strike a better deal if you understand what it takes before negotiating with the agent.

There are 3 conditions a buyer should satisfy before putting down your 10% deposit to exchange the contract unconditionally:

  1. Finance;
  2. Quality checks e.g. building and pest report or strata report; and
  3. Seek legal advice regarding the contract for sale.

The method of purchase will determine how the three conditions should be conducted.

What are the different ways of buying a property?

There are generally three ways to buy your first property:

  1. Private treaty
  2. Auction
  3. Expression of interest – not common for first home buyers

PRIVATE TREATY

Under a private treaty sale, the vendor sets a price and prospective buyers will negotiate a price with the vendor, generally through their selling agent, until an offer has been accepted. Once an offer has been accepted, the parties will exchange contracts with 5 business days cooling-off period (in NSW and can vary depending on the State and territories).

AUCTION

Auction is a sale by way of competition in the open market. A reserve price is set, which is the minimum price the owner will accept, the property is then sold to the highest bidder on the fall of the hammer, unconditionally. This means the purchaser will exchange contracts with no cooling-off period, under auction conditions.

Should you wish to attend an auction, we generally recommend as a minimum, you obtain appropriate finance, seek legal advice for the contract and conduct your due diligence before the auction.

“The property is sold by way of private treaty. I really like the property and I have inspected it twice. The agent has advised me another buyer is willing to make a higher offer. I don’t want to lose the property. What do I do?”

If you genuinely believe the agent’s representation, we recommend you contact a property lawyer to seek legal advice first before entering into the contract. You may elect to enter into the contract with a cooling-off period, by signing the contract and paying your deposit (0.25% of the price is payable on exchange and the remainder of the 10% deposit is payable on the expiration of the cooling-off period).

On the exchange of contracts, the vendor is prevented from selling the property to another buyer. You can use this cooling-off period to do your quality checks, seek legal advice regarding the contract and obtain finance. Should you wish to cool off, you must do so during the cooling-off period and you will agree to forfeit 0.25% of the price paid on exchange.

Please note, if you enter into the contract without having first sought legal advice or negotiated the contract, you enter into the contract on an ‘as is’ basis. In our experience, what this means for you as a buyer is that you have less bargaining power as contracts have exchanged, you have paid the 0.25% deposit and are at risk of losing same if you cool off. For this reason, we recommend you at least speak to a property lawyer first before signing the contract.

If you are sceptical of the agent’s representation, do not sign the contract and seek legal advice.

“I don’t want to risk forfeiting my 0.25% deposit if I sign contracts. I want to do all my checks before I sign the contract… but the agent has advised me there is another buyer. What now?”

If you believe there is another buyer and contracts have not yet exchanged, the vendor is at liberty to sell the property to another buyer. Some buyers prefer to do their checks before signing the contract however they are at risk of the vendor selling it to another buyer as there is no exchange of contracts and therefore, no legal relationship between the vendor and the purchaser.

Ultimately, this is a commercial assessment you will need to make and be comfortable with. Do not feel pressured into entering into the contract. Seek legal advice.

“I have inspected the property, obtained my reports and am satisfied with the outcome and have negotiated the contract. I also have the finance. I want to take the property of the market before it goes to auction?”

If the vendor is accepting offers before the auction, you may make an offer. If your offer is accepted, the agent will generally request that you waive the cooling-off period. In NSW, a buyer can only waive their cooling off through their solicitor or conveyancer.

Should you have further queries or require legal advice, please feel free to contact Anne Vo, Principal of Anne & Benjamin Lawyers.

Anne & Benjamin Lawyers
Level 35, International Tower One, 100 Barangaroo Ave, Sydney, NSW 2000
Anne Vo
0447 977 777
Email: avo@ab-law.com.au

Share this article:

** General Advice Warning

The information provided on this website is general in nature only and it does not take into account your personal needs or circumstances into consideration. Before acting on any advice, you should consider whether the information is appropriate to your needs and where appropriate, seek professional advice in relation to legal, financial, taxation, mortgage or other advice.

Share this article:

Search the blog

Browse categories

  • Comparisons
  • Definitions
  • Guides
  • News
  • Tips & Hacks

More articles

  • Rateseeker Business News Round-up October 2023

  • Rateseeker Property News Round-up October – 2023

  • Rateseeker Property News Round-up September – 2023

Ready to seek the right loan for you?

New Home Refinance

More articles

  • Rateseeker Business News Round-up October 2023

  • Rateseeker Property News Round-up October – 2023

  • Rateseeker Property News Round-up September – 2023

Ready to seek the right loan for you?

New Home Refinance
X
Rateseeker Logo

Home Loans

  • Buy a New Home
  • Investment Home Loan
  • Refinance a Home Loan

Calculators

  • Loan Repayment Calculator
  • Borrowing Power Calculator
  • Budget Planner Calculator
  • Extra Repayment Calculator
  • Home Loan Offset Calculator
  • How Long To Repay Calculator
  • Income Tax Calculator
  • Loan Comparison Calculator
  • Property Buying Cost Calculator
  • Property Selling Cost Calculator
  • Savings Calculator
  • Stamp Duty Calculator

Frequently Asked Questions

  • Why is using Rateseeker free?
  • What to consider when buying?
  • What Is the FHOG?
  • How do I apply for the FHOG?
  • How much will I need for a deposit?
  • How much can I borrow?
  • Is fixed or variable interest better?
  • What is a pre-approval?
  • What is Refinancing?
  • Why do people refinance?
  • How much does it cost to refinance?
  • What is a Mortgage Registration Fee?
  • Do I need a lawyer or conveyancer?

Rateseeker

  • Refer a friend
  • Our Story
  • Industry Insights
  • Meet The Team
  • Careers
  • Contact Us

Connect with us

  • Email: info@rateseeker.com.au
  • Phone: (02) 8006 8184
  • Address: Level 3, 120 Sussex St., Sydney NSW 2000
  • Facebook
  • Instagram
  • LinkedIn
  • Twitter
  • Credit Guide
  • Terms & Conditions
  • Disclaimer
  • Privacy Policy
  • Sitemap

Any calculations or estimated savings do not constitute an offer of credit or a credit quote and are only an estimate of what you may be able to achieve based on the accuracy of the information provided. It doesn’t take into account any product features or any applicable fees.

*5.64% Interest rate based on an Owner-Occupied, Principal and Interest, standard variable, minimum loan size of $250,000, maximum LVR of 80%, over a 25-year term. Eligibility is subject to servicing requirements, contact one of our specialised mortgage brokers for more information.

^5.64% Comparison rate based on a loan of $250,000 over a 25-year term. WARNING: The comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Costs such as redraw fees or early repayment fees and cost savings such as fee waivers are not included in the comparison rate but may influence the cost of the loan.

© 2023 Rateseeker Pty Ltd. All Rights Reserved ABN: 91 616 470 930 Australian Credit License: 501531

Made by AdVisible