Offer to Settlement
Spring into Action: Navigating the Journey from Offer to Settlement
In the final installment of our Spring selling series, we outline the essential steps for a seamless transition from offer acceptance to settlement.
Congratulations on accepting an offer on your home! But what happens next?
The process can differ based on the conditions of the offer and other factors. While many transactions progress smoothly, unforeseen challenges can occur. You’ll need to collaborate closely with your REIWA agent to guide the sale through successfully.
Understanding the offer conditions
When you receive an offer on your home, it’s essential to understand any conditions attached to it. Common offer conditions include:
Cash Unconditional : This is the simplest type of offer, where the buyer has the full funds available and can pay by the settlement date.
Subject to Sale : The offer depends on the buyer successfully selling their current property. This adds some uncertainty since their sale is beyond your control.
Subject to Finance : The buyer needs time to secure a mortgage, and there’s a chance their loan application could be declined.
If you have a subject-to-sale offer, you might want to include a “ 48-hour clause ” in the contract. This allows you to accept another offer if it comes in while the buyer is still finalizing their sale. The original buyer then has 48 hours to make their offer unconditional or forfeit the purchase, freeing you to move forward with the new offer.
What happens if an offer falls through?
It’s not uncommon for a buyer’s mortgage application to be declined, even if they were initially approved in principle. If this happens and the sale falls through, your agent will move quickly to find another buyer.
Your agent will reach out to potential buyers who showed interest during the original campaign, informing them that the property is back on the market. They’ll also update marketing materials and may schedule another home open to attract new leads and generate fresh interest.
Building and pest inspections:
Typically, it’s the buyer’s responsibility to arrange and pay for pest and building inspections. These inspections are important for uncovering any structural or pest-related issues with the property.
If problems are identified, it could lead to negotiations over price adjustments or necessary repairs.
Alternatively, you might want to be proactive by organizing your own building and pest inspection. Services like Before You Bid offer inspections with reports ready for potential buyers to view (for a small fee) before they make an offer. This can give buyers peace of mind, potentially speeding up the process and minimizing disputes during settlement. The successful buyer can then purchase the report, transferring it into their name for insurance purposes.
Settlement conditions:
In today’s market, sellers often have greater flexibility when negotiating settlement conditions.
The typical settlement period ranges from 30 to 90 days, but it’s important to consider your own moving plans, financial requirements, and the current market conditions when deciding on a timeline. Opting for a longer settlement could provide you with additional time to secure a new home if you haven’t found one yet.
What happens on settlement day?
Settlement day is the final and most important step in the sale process, marking the official transfer of ownership to the buyer. It involves several key actions:
Transfer of funds: The buyer’s settlement agent will securely transfer funds to your settlement agent. Given the rise in cyber threats across industries, it’s important to be cautious and inquire about your settlement agent’s cybersecurity protocols. Agents must also comply with Verification of Identity (VOI) regulations to safeguard all parties.
Finalising legal documents: All legal documents relating to the transfer of ownership will be signed, and the title deeds will be transferred to the buyer’s name.
Final walkthrough: Some buyers may request a final inspection to ensure the property is in the condition agreed upon in the contract.
Vacating the property: It’s crucial to vacate the property by the agreed settlement time, as delays could lead to penalties.
Utilities and services: Ensure utilities and services are disconnected or transferred to the new owner.
Once these steps are completed, your agent will hand over the keys to the new owner – and you can celebrate with a well-deserved glass of champagne!