FROM THE BLOG

Buying a house is a significant milestone, and negotiating the terms of the purchase contract is an essential part of the process. While the purchase price is a central negotiation point, there are several other aspects of the contract that buyers and sellers can negotiate to achieve a mutually beneficial agreement. In this blog post, we’ll explore what can be negotiated in a contract to buy a house, empowering you to navigate the negotiation process with confidence.

1. Purchase Price

The purchase price is often the primary negotiation point in a real estate transaction. Buyers may make an initial offer below the asking price, while sellers may counter with a higher price. In a buyer’s market, negotiations can involve back-and-forth offers until both parties agree on a final purchase price.

2. Settlement Date

The settlement date, is negotiable and can be adjusted to accommodate the needs of both parties. Buyers may request a longer or shorter settlement periods based on factors such as finance approval, moving logistics, or lease expiration dates. Knowledge of the vendor’s circumstances, such as whether they’ve already purchased or need a longer settlement to find their next home can be a powerful negotiation tool if you’re able to accommodate their needs.

3. Contingencies

Contingencies are conditions that must be met for the contract to proceed to settlement. Common contingencies include:

• Financing contingency: The purchase is contingent upon the buyer securing a mortgage loan.
• Inspection contingency: The buyer has the right to conduct a building and/or pest inspection and terminate the contract based on the findings.
• Valuation contingency: The purchase is contingent upon the bank’s valuation meeting or exceeding the agreed-upon purchase price.

Buyers and sellers can negotiate the terms and deadlines of these contingencies to best suit their interests.

4. Inclusions and Exclusions

The contract should specify which items are included or excluded from the sale. Inclusions generally include built-in appliances, fixtures, and window furnishings, while personal belongings are generally excluded from the sale. Negotiations can occur regarding which items will remain with the property and their respective values.

5. Repairs

If a building inspection identifies a minor issue that should receive prompt attention, such as a leaking sink or gutter cleaning, buyers may request repairs be carried out by the vendor in exchange for not terminating a contract pursuant to a contingent condition. Sellers may agree to make repairs, offer or adjust the purchase price to account for needed repairs.

6. Deposit

The deposit, is a sum of money provided by the buyer to demonstrate their commitment to the purchase. The amount of the deposit is typically 10%, but with new first home buyer schemes being made available, 5% deposits are becoming more common. Deposit amounts are negotiable and can vary based on market conditions.

7. Leaseback Arrangements

In some cases, sellers may need extra time to vacate the property after settlement. Buyers and sellers can negotiate a leaseback agreement, allowing the seller to remain in the property for a specified period after settlement in exchange for rent paid to the buyer.

Conclusion

Negotiating the terms of a contract to buy a house involves more than just agreeing on a purchase price. Buyers and sellers have the opportunity to negotiate various aspects of the contract, including the settlement date, contingencies, inclusions and repairs. By understanding what can be negotiated and working collaboratively with the other party, both buyers and sellers can achieve a favorable outcome that meets their respective needs and objectives.

Further information on buying or selling property can be obtained from the State Revenue Office website here: https://www.consumer.vic.gov.au/housing/buying-and-selling-property or by contacting ConveyancingX.