Signing an Offer to Purchase – Buyer
Signing an Offer to Purchase
In these days of electronic communication, there are times when an agent will send you an offer form for signature. You may notice when you receive it that the form is named ‘Contract for Sale’ and the form is actually a legal contract once all parties have signed, so it is important to complete (‘execute’ in legal parlance) the form properly. Hopefully, this little guide will help.
The first page starts with the name of the real estate agent as it is the agent who will be administering the contract. Underneath that we write the full legal name(s) of the buyer(s). You must use your full legal name in any contract, so if your name is William Henry Smith but your mates call you Jack, you must use William Henry Smith. As most offers are typed up by the real estate office for you to sign, it is important to tell the real estate agent before they start working on your offer document. Your address must also go on the form. The real estate agent and the settlement agent will use this when sending correspondence and generating the other forms required to complete the sale.
You will need to specify the amount of your offer. Before the form is generated, you will have discussed this with the real estate agent, and there may even have been some verbal negotiations. You must also decide if you are borrowing money and if so, how much. If you know the name of your lender, you can put this in as well. If you are not certain, you can ask your agent to put ‘To be Advised’ in the lender field.
You will be asked to pay a deposit as a gesture of good faith. The deposit can be any amount, but is usually at least $1,000 and more often $10,000. The deposit is held in Trust, and if the purchase does not proceed, the deposit is fully refundable once the dealing has been concluded. No interest is payable on deposits because Trust accounts do not accrue interest. Trust accounts earn interest, but this interest is appropriated by the WA State Government and put toward the cost of administering the Real Estate and Business Agents Act (1978.) There are fees payable on Trust accounts but these are met by the Agent and not passed on to you. If the sale goes through, the deposit is put toward the purchase, so for example if you are purchasing a block of land for $125,000 and you have paid $10,000 deposit, the balance of $115,000 is payable at settlement.
If this purchase is subject to the sale of another property, your agent will organise an additional form.
On the second page you will find some legal information – please read it and if you are not sure about anything, ask your agent what it means. You will need your signature witnessed by someone who is not a party to the sale (ie – neither the buyer nor the seller.) There are no qualifications required for witnessing a signature on an Offer – you can ask a friend, neighbour or workmate to witness your signature.
You will be given a copy of the Joint Form of General Conditions for the Sale of Land. This rather lengthy document sets out the rules for the sales and transfer process. It’s a bit of a dry read, but it is important. If you aren’t sure of anything, please ask your agent and we will be more than happy to discuss it with you.
At this point you will also be asked to nominate a Conveyancer or Settlement Agent. A Settlement Agent acts on your behalf during the sale and sorts out all the legal requirements for transferring the land from the seller’s name into yours. They will charge a fee for their services. If you have a Settlement Agent you like and/or have worked with before, you can nominate them here. If you aren’t sure, we can recommend a few firms with whom we have good working relationships. Please be aware that we never, ever receive finder’s fees for referring clients to Conveyancers.
Page 2 of a Contract – click on the image to enlarge
Offer signing instructions buyer page2
If the seller agrees with the price you have offered, they will sign the form and it becomes a legally binding Contract for Sale. Any changes must be intialled by all parties, so you may get the Contract back and have to initial where indicated at some point during the process. If the seller does not agree with the price, they may counter with a higher price in which case they will write a new figure next to the purchase price and initial it. If you agree, you will then intial the new price. The date of the Contract becomes the latest date at which the parties agree to the price.
Once the Offer is accepted and becomes a Contract, your deposit will fall due, usually within 7 days of the date of acceptance. The easiest way to pay your deposit is by transfer directly into the Trust Account (ask your agent for details.)
If you have any queries or concerns about your Contract, you should contact your agent as soon as possible to discuss it.