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How does a sale by tender work?

It is the process of offer and negotiation.

The tender process can give you time to think. You can incorporate conditions in an offer that give you time to check aspects of the house or the land. 

First, talk things over with your lawyer.


The buyer makes an offer

Begin by making the vendor an offer which is usually recorded in writing on an agreement for sale and purchase. Verbal offers and counter offers are common and, when an agreement has been reached, this is recorded in writing on an agreement for sale and purchase.


Buyer and vendor negotiate to reach an agreement

The vendor may either,

  • accept your initial offer, or

  • reject it, or

  • the vendor could counter sign it.

This means they cross out and change the bits they don’t like (such as the price), then initial the change and sign the offer. When the offer comes back to you - you can do the same. If you want to, you can cross out and change the price again, initial your changes and send the offer back. This negotiation can go on until you and the vendor agree, or one of you decides to stop.

During all this the agent will go back and forth between you and the vendor with the contract and help the negotiation process, in the hope that you and the vendor will reach an agreement. Offers from other buyers may also be considered or negotiated by the vendor at the same time.

When you and the vendor have signed the offer and initialed all the changes, the agreement becomes binding. Before this, you can stop negotiations at any time.

You can take your time if you want to think something over or get more information.


Buyer pays a deposit

A deposit is really a down payment on the house and the rest is paid on settlement day (usually the day you take possession). When your lawyer tells you that all conditions of your offer are satisfied and the contract is confirmed or is unconditional, you pay a deposit to the real estate agent.

If you are buying a property by private treaty (i.e. not via a real estate company), it is important to consult your lawyer at each step. If you buy privately, pay your deposit to your lawyer so it can be held in a safe trust account and paid to the vendor at the correct time.


Buyer pays the balance of the purchase price

The deposit you have paid to the real estate agent is generally split between the vendor and the real estate agent. The agent's commission is taken from the deposit and the agent pays the balance to the vendor. This normally occurs when the contract is confirmed or is unconditional.


See also our Step By Step Guide to buying a house.