When a property is 'under offer', it means a wishful buyer has submitted an offer that the seller has accepted. But, while both parties have agreed on a price and terms and conditions, the contract isn't finalised and the sale hasn't been completed. Thus, the house is technically still for sale.
What does 'under offer' actually mean?
If property marked as 'under offer' has an active contract of sale in progress, but that doesn't guarantee a sale.
The actual transfer of ownership can sometimes occur weeks later and there's a lot that can derail it in that time.
Marking a property's online advertisement as 'under offer' can serve as a final warning to interested parties that it's likely to be snapped up for good.
In the time between a property going under offer and settlement, conditions within a contract, such as building and pest reports or finance approval, need to be satisfied.
Under offer, unconditional, and sold: What's the difference?
There's no shortage of real estate jargon out there - like 'under offer' and 'conditional', both of which can mean the same thing. At least 'sold' is straightforward, signaling one buyer has snapped up a property while other hopeful buyers have missed out.
If you're an inexperienced buyer, it might be sensible to seek out schooling on what it all means so you don't miss out on any upcoming real estate deals.
Under offer
As already discussed, under offer - like 'under contract' or 'conditional' - means an offer on a property has been accepted and a contract has been signed, but not all the terms and conditions have been satisfied.Whether it's awaiting something simple, like finance approval, or something a little more complicated, like a subject to settlement clause, it's essentially time for the buyer and seller to do their due diligence. If any of the conditions on the contract aren't met, the contract will 'fall over' and the deal will be off.
Unconditional
Unconditional is the limbo stage between a property being 'under offer' and 'sold'. When a property is unconditional, all of the terms and conditions of the contract have been satisfied, which basically means the contract can no longer fall over.
If you purchased a property and the contract is unconditional, the property is not quite yours yet, but it is going to be. Barring some unforeseen event, all you need to do is wait for the settlement date to roll around.
Sold
When a property is officially 'sold', it means the property has settled and transferred into the buyers' name or names.
Once settlement day has passed, the new owner can pick up their keys. They're then set to move into their new home or do whatever they have planned.
Can you put an offer on a property that's under offer?
While submitting an offer on a property that's already under contract could seem like a waste of time, it's often what seals the deal for Aussies on their house-hunt. If the original contract falls over, your offer will be there waiting.
If you put an offer on a property that's already under offer, yours will become what's called the 'backup offer'.
For a more informed understanding of how to go about this, Hugo Alexander Property Group principal Adam Nobel gave his advice on submitting an offer on a property that's already under contract.
Adam Nobel, Principal of Hugo Alexander Property Group. Image: Supplied
According to Mr Nobel, backup offers are common due to a high volume of buyers attending inspections.
In fact, there are cases in which a backup offer comes in handy for both real estate agents and buyers keen to get their hands on a property. One is when an existing contract on a property falls over.
"When this happens, the property goes back on the market, so to speak, and the agent has to wait for another offer to come through. But if someone had spoken to the agent beforehand and said that they wanted to make a backup offer, it would have taken the agent five minutes to reach out," Mr Nobel told Savings.com.au.
"It does happen in some cases, and then the property will be under contract again, straight away."
Another situation in which a backup offer is useful is when a seller becomes unhappy with their original buyer.
"Let's say that the buyer asked for one extension, which was granted, but then they asked for another. If there was a viable backup option there, and perhaps the backup was unconditional or a higher offer, the owners might decline the extension and go with the backup offer instead", Mr Nobel said.
How to make the right offer on a property
Knowing how much to offer for a property is part-art, part-science. It's important you:
- Know the value of similar properties in the market you're buying in, and
- put forward an offer as soon as you know you're seriously interested.
Regardless of whether a property is under contract or not, properly making an offer can be tricky, especially if you're a first-time buyer. That's particularly true if the house is listed as 'for sale' or 'contact agent'. In such cases, you might not know what offer to go in with.
You probably don't want to low-ball the agent too much as that could see them discarding your offer altogether, according to real estate experts. But if you offer too much over the asking price, you could end up paying more than what a property is worth.
To make the first time a little less scary, we've compiled some expert advice on how to make the right offer on a property.
1. Do your research
It never hurts to be extra prepared, and researching recently sold houses in the area, how much they sold for, and how similarly these properties compare to the one you're looking at can give you a leg up when putting in an offer.
"Just go on realestate.com.au and have a look in the 'sold' section," Mr Nobel told Savings.com.au.
This should give you a somewhat accurate ballpark figure and an extra edge when you first approach the sales agent. Plus, this could indicate whether or not you can realistically afford the property.
2. Get in with the agent quickly
If you find a property you're particularly keen on in a hot market, it's wise to get in contact with the agent as soon as possible. That way, you can hope to get ahead of the crowd and begin the process of making an offer before anyone else has the chance.
It could also better position you to put forward a fantastic offer before someone else comes in and, potentially, starts a bidding war. Bidding wars can hike up the purchase price and decrease your chances of securing the property, particularly if your initial offer is near the top of your budget.
3. Figure out how much you're going to offer
Here's where things can get a little complicated. Ultimately, the dollar amount you put forward is what's really going to make or break your offer.
- If you offer too little, you're out of the game. If you offer too much, you're playing it wrong.
In most cases, the amount you offer should be based on the demand for the property at the time you're house hunting. For example, if a particular property is popular or in high-demand, going in with a low offer probably won't cut it.
"If you're at a property inspection with 40 to 50 other people, you're better off just offering the asking price", Mr Nobel told Savings.com.au.
Additionally, the market itself will dictate the value of the property, according to experts.
"If we're in a rising market, going in with a lowball offer isn't the right time or place to do so," Mr Nobel said.
That isn't to say you should always offer the asking price or that you can never offer less than what's being advertised - just that you might want to consider the market before you do. Though, there are ways to negotiate a lower house price.
"If you're in a buyers market, and there's little demand (for property), that's when you can start lowballing", he said.
4. Get it in writing
Verbal offers mean very little to agents. Until they have something in writing, they can't take your offer to the seller and begin the negotiation process. It's important to put your offer to paper, ensuring that you detail all of the important information needed for the contract, such as:
- Your full legal name (middle names included)
- Your official offer (even if it changes down the line)
- Your deposit amount (and balance deposit, if applicable)
- All required terms and conditions (finance, building and pest, and settlement dates)
- Any other additional clauses (subject to sale, sunset clause, any other relevant clauses)
While there will be more details required for the contract, like any included chattels and solicitor details, having this information ready should help to get you on the path to submitting an official offer.
5. Figure out your finances
If you've got the house and the offer sorted, another thing you'll need to consider is how you're going to pay for it. In most cases, you'll need to take out a home loan to cover the cost of your new pad, especially if it's your first time purchasing.
To avoid your offer going to waste, it could be worth looking into home loan pre-approval. This minimises the chances of the contract falling over due to finance.
- Home loan pre-approval (also known as conditional approval or mortgage pre-approval) is essentially proof that a lender has agreed to allow you to lend a certain amount of money to purchase a property. While it's not an absolute guarantee of finance approval, it can save the stress of putting an offer on a property without knowing if you can borrow the cash needed to secure it.
Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.
| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Extra Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5.94% p.a. | 5.98% p.a. | $2,978 | Principal & Interest | Variable | $0 | $530 | 90% |
| Promoted | Disclosure | ||||||||||
5.89% p.a. | 5.80% p.a. | $2,962 | Principal & Interest | Variable | $0 | $0 | 80% |
| Promoted | Disclosure | ||||||||||
5.99% p.a. | 6.02% p.a. | $2,995 | Principal & Interest | Fixed | $0 | $0 | 60% |
| Promoted | Disclosure | ||||||||||
5.93% p.a. | 5.93% p.a. | $2,975 | Principal & Interest | Variable | $0 | $395 | 70% | Disclosure |
