Why a verbal offer is not worth the paper it is written on
Why a verbal offer is not worth the paper it is written on
Selling a home is a big step and it is fraught with many nail-biting decisions and anxious moments. However, it all seems worth it when you hear those sweet words from the agent: “We have an offer!”.
But, do you *really* have an offer?
Firstly, some advice for sellers. The goal is to attract firm offers from committed buyers. A buyer who is only willing to give a verbal offer, without putting it in writing, may not be the buyer you are looking for. This buyer is potentially looking at a few properties, hasn’t yet committed to one and is hedging their bets to see which vendor is likely to move on price the most. Plenty of agents have shared stories of buyers who claimed to be 100 percent committed to the offer they were making, only to pull out after the agent or vendor had rejected another offer leaving both the agent and the vendor high and dry.
Now, some advice for buyers. Depending on the market you’re in, you’re not always the one in the driver’s seat. As listings continue to fall throughout the state, buyers are competing for fewer properties. Sellers are hanging on for another six months to year, waiting to see if the market uptick continues. Even in our weaker regional markets, well-priced homes are attracting multiple offers. So, if you put forward a verbal only offer, it is unlikely to be considered seriously by a vendor who is keen to sell.
In Queensland, the law requires contracts for the sale of property to be in writing. Although verbal offers can be made and negotiations can be conducted verbally between the parties, the process will lack certainty and legal enforceability until the offer is put in writing. It’s also important to remember that an offer to buy a property requires more than just an agreement on the price. A written contract will allow the parties to agree on other key matters such as the settlement date, deposit amount and any ‘subject to’ conditions such as finance and pest and building inspections.
In Queensland, a five-business day cooling-off period applies to most contracts for the sale of residential property. During that period, if a buyer changes their mind about the property, they can cancel the contract. Buyers should, however, be aware that they may face a penalty of 0.25% of the purchase price.
Whether you are a buyer or a seller, if you are motivated to negotiate for a property then it should be done in writing so that all parties have assurance that there is commitment to the process.
Sources:
Coast & Hinterland Property Magazine
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