Making an Offer and Negotiating

Offers are where preparation meets adrenaline. Everything in this chapter rests on one idea: the decisions that protect you, price limits, conditions, inspections, finance, are best made calmly before the emotional moment arrives, because in the moment itself, your judgement will be at its worst. Professional negotiators plan their walk away point in advance for exactly this reason.

Before you make any offer

A ready-to-offer buyer has, at minimum: finance pre-approval that's still current, a conveyancer chosen and sent the Section 32 for the specific property, building and pest reports done (or booked with a deadline that the offer's conditions protect), a set of comparable sold prices, and one private number: the most you'd pay, which you decide at home, sober, with the people who matter in the room.

That last one is the entire ball game. Deciding your limit at the kitchen table on Wednesday protects you from deciding it at the auction on Saturday with an agent's hand hovering and your heart rate at 130. The limit can still be revised later with new information, but only deliberately, never in the room.

Private treaty offers

In a private treaty sale you make an offer in writing through the agent, usually on a form or by email, stating price, deposit, settlement period and any conditions. The vendor accepts, rejects, or counters, and the agent is required to pass offers to the vendor, though the timing and framing are the agent's craft. Victoria has laws against underquoting, and they matter, but the practical reality is the same everywhere: the sold prices in your research file are your anchor, and the agent's words are the weather.

A few things commonly surprise first time offerers. Deadlines and "offers over" language are designed to create competition; sometimes the competition is real, sometimes it's a mirror. Expressions of interest campaigns ask for your best and final by a date, which removes your ability to respond to a counter. And the agent asking "what's your budget?" is doing their job; a useful answer names the property's worth, not your ceiling.

Auction day

In Melbourne especially, auction is a common sale method and first home buyers bid at them all the time. The mechanics: you register as a bidder before the auction (photo ID, and registration is on the day at the property), the auctioneer reads out the terms, bidding opens, and if the reserve is reached the property is declared on the market and sold to the highest bidder, whose bid is final and unconditional.

The rules that matter to you: a vendor bid can only be made by or on behalf of the auctioneer's side, must be announced, and can't be above the reserve. Dummy bidding by third parties is illegal. There is no cooling off, and generally no cooling off for offers made in the days immediately around the auction either. If the property passes in below reserve, the highest bidder usually gets first right to negotiate, which is a strong position, and that negotiation can include conditions, unlike bidding on the day.

Tactics are personal, but a few patterns hold up: starting later than earlier, bidding confidently and in unexpected increments, and projecting that you'll be there all day (even when you won't). Knowing the comparable sales matters more than any theatre, and your registered limit is the invisible hand on your paddle.

The deposit

When a contract is signed, a deposit is paid to the agent's trust account. It's commonly around 10 percent of the price, but the amount is negotiable, and 5 percent, or a smaller initial deposit with the balance later, is sometimes agreed, which matters to buyers whose deposit is spread across accounts or releasing from superannuation. The deposit is not the agent's money, it sits in trust and forms part of the price at settlement, and there's no scenario where paying a deposit obliges a vendor to return it casually, so never sign until you mean it.

Conditions on your offer

Conditions are the clauses that let you exit or renegotiate if something you needed doesn't hold. The common ones for first home buyers:

The tension to understand: in a competitive field, vendors prefer clean offers, so every condition has a price. At auction there are effectively none. The buyers who do best on conditions make them specific and short (a 14 day finance clause inspires more confidence than a 21 day vague one), and have a conveyancer drafting rather than downloading.

Cooling off, what it really means

For most private treaty purchases in Victoria, the buyer has three business days from signing the contract to cool off, by written notice to the vendor. The catch: the vendor may keep the greater of $100 or 0.2 percent of the purchase price, and there are exceptions, including purchases at auction, and offers made within the days around an auction for that same property. The details are worth confirming with Consumer Affairs Victoria or your conveyancer for your situation, because cooling off is a genuine escape hatch, but it costs money and doesn't apply when it's most needed. The best use of cooling off is as a last resort, not a plan.

Negotiation psychology

A few honest observations about how these conversations actually work. Agents negotiate daily; you do it once every several years, so bring structure to replace the missing reps. Silence is a tool: saying a number and then not filling the pause transfers pressure to the other side. Fall in love privately: the buyer who tells the agent "we've been looking for a place like this for two years" has handed over information that will be used. And walking away is a real move: the buyers who can genuinely afford to lose a property negotiate best, and sometimes the right outcome from an offer is a no.

It's also worth naming the emotional reality: offers are stressful, and the stress is a feature of the situation, not a sign you're doing it wrong. The remedy is the boring stuff from the top of this chapter, the research, the pre-approval, the conveyancer, the pre-decided limit. Do those, and the adrenaline becomes a visitor instead of a tenant.