Brisbane's sales market

Saving thousands when you buy a home: The finance clause

Here’s a tip agents forget to tell home buyers. Almost every real estate contract includes a finance clause, designed to protect a buyer in the event their lender won’t come to the party. The most common contract (authored by the Real Estate Institute and the Law Society) asks the buyer to nominate their finance amount, lender of choice and the time needed to confirm an approval.

Most buyers, and plenty of agents, will simply write “sufficient to complete the purchase” for the finance amount. In other words, “however much I think I might need I want the contract conditional on me getting that.”

So when the agent sits in front of their seller client they’re asking them to take the place off the market pending you getting approval for a completely unknown amount.

Maybe you’re only going to borrow 60-70% of the price and the banks will fight for your business. But maybe you have a car loan that needs paying out first and you’d need to be able to borrow 120% of the price. A good agent will ask some discrete questions to get a feel for how likely your approval will be.

You don’t have to hand over your tax return and bank statement to the agent – but if you want your best chance of negotiating a good price it really is in your interests to share a little. Explain who you’ve spoken to, what feedback you’ve had and if you have a pre-approval letter show it to them (even though they’re full of bank backside-coverings they do prove you’re a fair way down the track).

Good negotiating is about overcoming the other sides’ fears. Reduce a seller’s sense of risk and they may just surprise you with their price flexibility. This is a buyers’ market and there is some good buying about. You can make it even better for yourself by adding some detail to your offers.