How to make an offer on a house: a first home buyer guide

Making an offer on a house is the moment your search turns into a real commitment, and as a first home buyer it can feel daunting. The good news is the process follows a clear path. You work out your price, confirm your finance, choose how to buy, and put your offer in writing with the right conditions attached. This guide walks through each step so you can move with confidence rather than guesswork.

If you want the finance side sorted before you start, our first home buyer home loans page covers your options. The rest of this guide focuses on the offer itself.

Get your finance ready before you make an offer

The strongest position to negotiate from is one where your borrowing is already confirmed. Pre-approval is the tool that gets you there. According to Moneysmart, pre-approval lasts for 3 to 6 months and shows you are eligible to apply for a loan up to a certain amount, though it does not commit you to a loan.

Pre-approval does two useful things. It lets you set an affordable price range so you do not fall for a property you cannot fund, and it signals to sellers that you are serious. A seller weighing two similar offers may favour the buyer who can clearly fund the purchase.

How much deposit you bring also shapes your offer. Moneysmart suggests a savings goal of 20% of the purchase price, plus enough to cover buying costs. A 20% deposit will also avoid you needing to pay lenders mortgage insurance (LMI), which is a one-off cost charged by your lender when your deposit is smaller. Whether a smaller deposit works for you depends on your circumstances and lender criteria, so it is worth talking through your numbers early.

Work out what to offer

Before you name a figure, do your homework on the property and the local market. Look at recent sale prices for similar homes nearby, note how long the listing has been live, and factor in any work the property needs. A calculator helps here too. The Moneysmart mortgage calculator lets you test how a given purchase price translates into repayments, so you can check an offer fits your budget before you commit. You can also try our borrowing power calculator to see how a purchase price sits against what you may be able to borrow.

Remember to budget for the costs that sit on top of the purchase price. Stamp duty is a one-off state government property-transfer tax, and Moneysmart notes you typically need to pay it within 30 days of settlement. You may also need a conveyancer or solicitor, building and pest inspections, and home and contents insurance, which may be a condition of your home loan. Build these into your maximum number so the offer you make is one you can actually afford.

Offer vs auction: which path are you on?

How you make your offer depends on how the property is being sold. The two main paths behave very differently, and knowing which one you are on is the heart of the offer vs auction first home decision.

Buying by private sale

With a private sale, you put your offer to the agent and it can be conditional or unconditional. Moneysmart describes a conditional offer as one that becomes a binding contract only if certain conditions are met, such as a satisfactory valuation, finance approval, or inspections. An unconditional offer, by contrast, is a binding contract to buy the property outright and suits a buyer who has confirmed finance and is certain about the property.

Private sales usually come with a short cooling-off period in most states and territories. During this window you can generally get out of the contract and get most of your deposit back if you give written notice. The cooling-off period also gives you time to act on your conditions, for example to get a building and pest report done by a professional.

Buying at auction

Auction is far less forgiving. Moneysmart is clear that there is no cooling-off period if you buy at auction, which means the sale is final. There are no conditions either, so your finance and inspections need to be sorted before you raise your hand. If you win, expect to pay a deposit immediately, for example 10% of the purchase price.

This is why making an offer first home buyer style at auction takes real preparation. You set your absolute limit in advance and you stick to it, because once the hammer falls there is no path back.

Put your offer in writing with the right conditions

Once you and the agent have a figure, the offer is captured in the contract of sale. The contract sets out the deposit amount and when you need to pay it, so read it carefully. This is the point where conditions matter most.

Common conditions a first home buyer may include are:

• Subject to finance so the contract only binds you once your lender formally approves the loan.
• Subject to a satisfactory building and pest inspection so you can withdraw or renegotiate if the report uncovers problems.
• Subject to a satisfactory valuation so the price holds up against what a valuer says the property is worth.

Whether each condition is available and how it is worded depends on the state and the sale type, so getting a solicitor or conveyancer to review the contract before you sign is the best way to avoid costly mistakes. A small fee here can save you from a binding commitment you did not fully understand.

A simple offer process from start to finish

Frequently asked questions

Talk it through before you offer

Every offer is different, and the right structure depends on the property, the sale type, and your own finances. The team at Finance Lab can help you get pre-approval in place and understand what your deposit and conditions mean for the offer you make.

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