When buying or selling a property online, there is often a lot of confusion around what it means when a property is displayed as being” under offer”.
When browsing through the houses listed for sales online, you are likely to notice that many of them are displayed as being “under offer”, yet they still appear in the “for sale” section. This might look very confusing to you.
A property that is “under offer” simply means that an offer has been placed on a property by a potential buyer, the seller has accepted it, and a contract has been signed. It also does not reflect the number of properties sold.
However, it is not an unconditional offer and there are conditions attached when a property is under offer. Only when these terms and conditions have been satisfied will the property be sold.
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Does under offer mean it’s sold?
The answer is No! While no offer should be made or accepted during this time, a property under offer is not yet sold.
A property is under offer when an offer has been made and accepted. The seller, real estate agent and buyer will go-ahead to sign the contract, but the deal is still awaiting the terms and conditions before it can be finalised.
If a contract condition isn’t met, the contract will end, and the property will no longer be under offer.
Some of these terms and conditions are:
1. Offer subject to finance
In this sale condition, a buyer’s offer on properties listed is subject to a finance clause to buy that particular property.
In other words, if the buyer makes an offer on the property and signs the contract but fails to secure the funds via a credit provider, that is, home loans, or gets finance approval, he will lose the house.
Also, a property valued at less than the sale price will no longer be under offer and will automatically be available to other potential buyers.
2. Offer subject to building and pest inspections
This sale condition is where the buyer gets a report from qualified inspectors during a building and pest inspection of the property on the existence of pest and termites problems in the home.
Problems such as this and others realised on further inspections may cause the buyer to pull off the sale.
3. Offer subject to sale of an old property
In this case, the buyer must sell his old property before he can get finance approval or afford to pay for the new home.
Once a contract of sale is signed, many states provide a “cooling-off period”.
The cooling-off period is provided to allow the buyer to complete the sale. Otherwise, they are bound by the contract of sale after that period. This condition can be tricky. It may take a longer time for the buyer’s property to sell, and the seller may get impatient.
Also, the buyer might not be able to raise the exact price expected from the sale and may not be eligible for home loans.
He will eventually be short of what the seller wants for their home. The contract will automatically fall over, and the deal will be off if any of these conditions aren’t satisfied.
Remember, you can only say properties sold when all conditions have been met, and the property has been transferred into the buyer’s name. Property is also said to be sold when all the unconditional offers are accepted.
Once settlement day has passed, the contract has officially been settled, and the new owner can pick up their keys and can be set to move into their new home.
Stages of finalising the sale of a property
However, before a property can be completely sold, there are some stages it must undergo.
- Offer acceptance: when all the conditions of the sale have been met, the offer is officially accepted, and all parties can move to the next stage, where they will exchange contracts.
- Exchange of contract: after a vendor officially accepts an offer for their home, the buyer may then pay a small deposit and both the buyer and seller exchange and sign a legally binding contract on the property. This, however, doesn’t mean that the sale has been completed yet.
- Cooling-off period: this follows immediately after the exchange of contract stage. The cooling-off stage is the only time the buyer is allowed to change their mind. After this period, they are bound to the sale by law. The cooling-off period usually varies from state to state and can be extended depending on negotiation. Western Australia, however, has no mandatory cooling-off period.
Can an offer be made on a house that is already under offer?
Have you ever wondered if you can still make an offer on a property already under offer? Well, the answer is yes!
If you are still interested in the property, you can get in touch with the real estate agent. Ensure you read the relevant product disclosure statement and the target market determination before putting in an offer on any property you see online.
At the initial stage, it might look like a complete waste of time but in Australia, placing a backup offer on a property is what seals the deal on a house hunt.
Many real estate agents stop all viewings on an under-offer property, but it does not necessarily mean it’s off the market, and it’s not illegal to make an offer with or without a viewing.
What is gazumping?
When a seller accepts an offer on a property from one potential buyer but also accepts a higher offer from someone else, it is referred to as gazumping.
In other words, Gazumping is when a new buyer comes along with a better offer than the existing one, and the seller accepts it.
It’s usually a bit of an issue, but it’s not common now, and many real estate agents have policies to help prevent it.
When a property is under offer, it’s essentially still on the market until contracts have been exchanged.
For more understanding of how to make an offer on a real estate property that is already under offer, Adam, the principal of Hugo Alexander property group, shared his skilled advice. He believed it is worth making an offer even though a property is under offer.
This is because there are a few cases in which a backup offer comes in handy for a real estate agent and keen buyers ready 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, and the agent has to wait for other buyers to make an offer.
But if someone has already made a backup offer, it will only take a few minutes to reach out to them. It often happens in some cases, but the property will be under offer again.
Like our guide on the under offer definition?
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