Clever use of conditions when making an offer on a property can ensure you are in the best position as a buyer.

There is a lot to think about when it comes to making an offer on a property. The conditions related to the offer are often the most important factors, but many buyers tend to overlook these finer details in the pressure of the moment.

When negotiating with the seller, you will have the opportunity to make the offer subject to various conditions. Some conditions may include subject to finance, subject to pest and/or building inspection, or even subject to repairs on the property. But remember, offers and conditions need to be kept as simple as possible for the vendor. If they are too complicated, vendors could reject your offer, causing you to miss out on the property.

The common conditions you need to be aware of before making an offer are as follows.

Unconditional offer

An unconditional offer is when you don’t place any conditions on your offer. This is often preferred by sellers as it is an easier option and the sale can proceed quickly.

While an unconditional offer may put you ahead of the rest of the buyers, if your offer is accepted and you exchange contracts, you are usually only given a short amount of time to change your mind. Referred to as the cooling off period, this is usually five days after you exchange contracts.

Some buyers make an unconditional offer to get the property off the market quickly, and then get all the checks done before the cooling off period expires. However, pest and building inspections, full finance approval and getting your solicitor to check the contract are a lot to get done in just five days. Finance approval in particular can take longer.

If your approval is not finalised in the five-day cooling off period, you have two options – pull out of the purchase or go ahead and risk finance approval not coming through. This can be a very stressful situation to be in.

Subject to finance

The subject to finance condition is there to protect you as a buyer. It can allow you to pull out of the purchase if your loan is not approved, enabling you to end the contract without penalty.

This condition can help ease the stress of purchasing a property, but it is important that the wording of the condition is 100% correct. It is best to get your solicitor or conveyancer to assist you with the wording of the finance clause. They will have the knowledge and experience to create the clause you want and also negotiate with the vendor's solicitor if need be.

Subject to pest inspection

Just because you do not see any bugs or pests around the property when you walk through, it doesn't mean they are not there. A pest inspection will check to see whether there are any termites or other problems. Termites can cause a great deal of structural damage to a building, and can eat through structural timbers, under floors and even in the roof cavity. This can cause great problems for you down the track if you buy the property, as you will be responsible for paying for the extermination. Alternatively, failing to have them exterminated means you may have trouble selling the house.

Subject to building inspection

If you are looking at an older property, you may want to make your offer subject to a building inspection. This is when a professional comes in to inspect the integrity of the building and produce a structural report. Both the pest and building inspections can be carried out during the cooling off period.

What’s the most important thing before making an offer?

It is extremely important to have finance pre-approval before making an offer on a property. Often, real estate agents will ask if you have pre-approval to demonstrate that you are a serious buyer.

To get a quick indication of whether the property you are looking at is affordable, try the homeloans.com.au instant online pre-approval. It only takes a few minutes and gives you an instant result on-screen and an email confirmation of the details.

Full approval will require you to complete a full application and provide documents like payslips and bank statements.

At homeloans.com.au, we understand how important it is to move quickly in the property market and aim to make the home loan process as easy as possible so that you can focus on finding your dream property. To discuss your lending options, give our Lending Specialists a call today on 1800 111 001 or leave your details here and they will contact you.

The opinions expressed in this article are the opinions of the author(s) and not necessarily those of homeloans.com.au. The above is general commentary only and is not advice tailored to any individual's financial situation. We recommend seeking advice from a finance professional before implementing changes relating to your finances.