For some time now, real estate agents have been crying out for properties to list for sale, leading to a shortage of available stock and leading to us experiencing a “seller’s market”. This has also meant that some of the selling methods to attract the best offer for vendors have been adapted to suit the increased interest from those wishing to purchase.
One of these methods has involved offers on properties having a specific date attached to them, meaning that multiple purchasers present their best offer on a designated day, hoping that theirs will be the best offer with the least conditions to be able to win the home. To help minimise the number of conditions on any offer, a loan pre-approval can be obtained prior to putting a bid together as this can often allow the purchaser to address issues that may otherwise delay their purchase plans.
However, due to a tightening of lenders credit policies since the latest introduction of Reserve Bank regulations, we are also aware that many sale & purchase contracts have a more frustrating and often nail-biting wait attached. On a number of occasions recently, Sale & Purchase contracts have been put together with the requirement that an existing house sells prior to the next purchase being able to proceed. This “chain” scenario means that a purchaser may have to wait for a suitable offer to come in on their own home before they are able to calculate the funds available to go unconditional on their own purchase. Recently, I heard for the first time in a long time, of a situation where a couple obtained finance for their purchase, and then received an offer on their own place, only for that contract to also be reliant on the sale of the buyers existing property. Both contracts were set up with a finance date in place, ahead of a date by which the existing homes need to be sold. If no offer is received by the purchaser at the end of the chain in the time allocated, then all contracts in place can potentially fall over. Obviously, this condition can be risky to have on any offer being made as vendors may not want to wait for other sales, but if the price offered with the condition attached is the most lucrative it may be worth the seller waiting in order to realise a higher price.
If the sale of an existing property is going to be necessary in order to make your next purchase, then a chat with your mortgage adviser to obtain loan pre-approval may help to establish what level of sale funds are required in order for you to accept an offer, without having to delay your own purchase any longer than you need to.
