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The way a home is offered for sale will determine how you should prepare for the purchase.
Making an offer
You can make an offer if a property is advertised for sale. The vendor (seller) will set a minimum amount they will accept for the property. This price does not need to be disclosed to potential buyers.
The vendor negotiates (often through an agent) with potential buyers until an agreement is reached.
Consider if you will offer a lower price and negotiate up or offer your best price first. The vendor may accept another offer without giving you a chance to increase your offer. In some cases, the vendor will not negotiate at all.
Offers
Your offer must be in writing and signed, using the form the agent gives you.
The agent may tell you someone else has made an offer. You can ask them to confirm this in writing, but the agent is prohibited from telling you the details of another offer. All copies of signed offers must be kept by agents, for Consumer and Business Services (CBS) to inspect if there is a complaint.
You can include conditions in the contract for things such as finance approvals, building inspections and timeframes.
You can arrange for a solicitor, conveyancer or buyer’s advocate to negotiate on your behalf (usually for a fee) if you do not feel confident negotiating the sale price.
Your offer is not binding until a sale contract is signed.
The contract
The contract will include details such as:
- name and address of the vendor
- your name and address
- details of the land for sale
- chattels and fixtures included and excluded from the sale
- sale price (including GST if applicable)
- deposits
- settlement date
- exceptions
- tenancy details (if applicable)
- any conditions of the sale.
Read the contract carefully and make sure you understand it before signing. It's recommended you seek legal advice on the terms and conditions set out in the contract.
Conditions of sale
For sale by offer, you can negotiate with the vendor to make the sale subject to certain conditions – such as satisfactory finance, sale of an existing property, satisfactory building inspection or pre-settlement inspection. Seek advice from a solicitor or conveyancer about how to note conditions. For example, stating ‘subject to finance’ does not automatically mean a financial lender of your choice, or the amount you hope to borrow.
Cooling off periods
In a sale by offer, you have a cooling-off period where you can do further inspections or reconsider the purchase. Cooling-off means you can withdraw from the sale without being held legally responsible.
The cooling-off period (2 clear business days) begins when you receive the vendor’s statement (Form 1) or from the date the contract of sale was signed, whichever happens last. No reason for cooling off needs to be given.
The buyer will need to complete a cooling-off notice to withdraw. The vendor’s statement outlines:
- your cooling-off rights
- the exceptions that apply
- how to give the cooling-off notice to the vendor or their agent.
Depending on how the contract is worded, the contract may be binding as soon as cooling-off has expired. In some cases, the purchaser may only become liable to purchase the property if certain conditions are met.
If you change your mind after the cooling-off period has finished, you will potentially breach the contract and could lose your deposit. You may be required to pay compensation to the vendor unless they have breached the contract in some way. The amount is usually based on the costs paid by the vendor to re-sell the house, including any loss made by the vendor on the subsequent sale.
Read your contract carefully to understand what could happen if you break the contract. Seek legal advice if you want to withdraw from the sale after the cooling-off period expires.
You cannot cool-off once settlement has occurred.
Auctions
Buying at auction requires extensive preparation because auction sales are unconditional. Be prepared before the auction by:
- having your finance in place – a contract to purchase at auction is not able to be made subject to finance
- reading the vendor’s statement (Form 1) and buyer’s information notice (form R3) – see inspecting a property
- making sure any building inspections you have arranged are complete before auction day and you are aware of any issues found.
Register to bid
You'll need to register to bid by giving the agent your details and providing proof of identity. If you don’t feel comfortable bidding, you can arrange for someone else to bid on your behalf. They will need to register by providing their details, their proof of identity and a document (signed by you) authorising them to bid for you.
Some limited terms could be negotiated through the agent before the auction, such as deposit amount or settlement date.
Generally, auction conditions are 10% deposit payable, and 30-day settlement. The market conditions may impact your ability as a potential purchaser to negotiate any variations to this.
The buyer’s information notice (form R3) must be available at the auctioneer’s office or from the vendor’s agent at least 3 business days before the auction. It also needs to be at the auction site at least 30 minutes before the auction is due to start. It should be attached to the vendor’s statement (Form 1).
Bidding and sale
The vendor will set a reserve price – the lowest price they are prepared to accept – but the bidders determine the price they are willing to pay. The auction ends when the highest bid has been made.
It's illegal for the vendor, or a person acting on their behalf, to bid at the auction. This is called ‘dummy bidding’. However, the vendor is allowed up to 3 ‘vendor bids’ which are made by the auctioneer. They must be less than the reserve price and clearly announced by the auctioneer as a vendor bid.
If the bidding does not reach the reserve price, the vendor may decide:
- not sell the house
- to negotiate a sale with any of the bidders
- to place the home for sale on the open market.
The successful bidder will be expected to sign a contract and pay the deposit immediately following the auction. The deposit is usually a minimum of 10% of the purchase price bid.
There is no cooling-off period if you buy at an auction or after the auction and on the same day the auction was held.
However, if you make a successful offer before the auction, a cooling-off period does apply unless you waive that right. An independent legal practitioner is required to sign a prescribed form stating that you have been advised of your cooling-off rights before you can waive your right to cool-off.
Buying off the plan
Sometimes properties are advertised for sale before they are built. You may save money buying off the plan, but there are some risks. Read the contract terms carefully and get independent legal advice to make sure you understand the risks.
You should check:
- who owns the land
- who will build the property
- if development approval has not been granted, what happens if approval is not given, or if the plans need to change to get approval
- if the build will be completed on time, and your rights if it’s not
- if it’s a strata or community title, and if so, the by-laws, scheme description, minutes of strata or community corporation meetings and the plans
- any preconditions to the contract becoming binding
- your rights to change your mind and cancel the contract, and when those rights end
- if you or the developer can make changes after you have signed the contract
- when you need to pay the deposit and the balance
- if the price can change after you have signed the contract.
Rent-to-buy schemes or 'wrapping'
If you rent-to-buy a home, the property is purchased in instalments. You don’t legally own the property until all the instalments are paid and settlement occurs.
Very few vendors can legally offer rent-to-buy housing options in SA. These include the South Australian Housing Authority and the Urban Renewal Authority.
Seek independent legal and financial advice before signing a contract to make sure you understand all the risks involved. For example, you may lose the payments you have already paid if you can no longer afford the rental payments.
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Related information
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Assessing the suitability of a property - Consumer and Business Services
