How to make an offer Part Two: Conditions!
Do you need to put conditions on your offer letter? What conditions do you put on your offer letter?
Before you sign a sale and purchase agreement, you’ll want to make sure you put all of the conditions that you want to have on the agreement. Putting these conditions on the sale and purchase agreement means that you can walk away from the contract based on any of these conditions being unfavourable.
Finance Condition: Even if you’ve got a pre-approval, you’ll still want to put a finance clause on the sale and purchase agreement. The bank needs to accept the property you want to purchase as security, this will also give you time to “tick off” any more finance conditions that you have on your offer letter – such as a Registered Valuation. If you have questions about the finance condition – let me know, this is my area of expertise. This is often the last condition to be met.
Build Report: If you are about to purchase your first home, you’ll want to know its structurally, sound, right? The build report is going to give you a good indication if the property has any issues. If the build report shows up with any issues (such as mould) this is your opportunity to negotiate. Your lawyer can negotiate with the vendor on your behalf and ask that they fix the issue (to a satisfactory level) or reduce the purchase price. Either way, this is going to make you more aware of what you are actually buying.
LIM: Report A LIM is a Land Information Memorandum which is prepared by the council and holds lots of valuable information about the property you are purchasing and is a common clause that buyers can put in the sale and purchase agreement.
A LIM will provide you lots of really important details on the property, Rates, town planning matters, code of compliance etc. Once you have a LIM it is best to get your lawyer to take a look over the report - they do this day in, day out and can probably pick up issues within the report that you might not pick up on.
If any issues do arise and you have the LIM as a condition in your sale and purchase agreement, you have the ability to negotiate. You can ask the vendor to fix the problem/s before settlement OR negotiate the purchase price (so long as you keep the bank happy too)
If you do have a LIM report as a condition, you are best to get onto this as soon as you have a signed a contract. Most reports take about 10 days to prepare and can be ordered online or by your solicitor.