Buying or selling by tender is when prospective buyers prepare and submit confidential written offers for a property to the agent for the seller’s consideration. There is no reserve price (the lowest price the seller is willing to accept) but there may be a price guide. Buyers can offer less than this.
If you wish to submit a tender
Ask the agent for a copy of the tender documents. Read them carefully, including conditions or amended clauses. You will be asked to fill in a sale and purchase agreement and submit it before the close of the tender. Get your lawyer to check it before you sign. It’s a legally binding contract and you cannot simply change your mind after it has been signed. There will be a deadline for tenders to be submitted, usually to the real estate agency offices.
The sale and purchase agreement will include…
- Your offer
- A deposit cheque (usually five to ten per cent of the offer price) – the cheque will be returned if your tender is not successful
- Settlement dates
- Any conditions you are attaching to the offer
Marketing materials must make it clear if the property can be sold before the tender
Prospective buyers can register interest with the agent and ask to be informed if someone else makes an offer before the tender date. They then have the option of making an offer too.
Following the tender deadline
The agent will provide all tenders to the seller who can weigh up offers and conditions and decide which, if any, they want to accept. The seller can reject all tenders.
Once a tender is accepted
The buyer is now in contract with the seller and can work through any conditions towards settlement.
If a tender is rejected
The prospective buyer (the tenderer) is under no legal obligation and free to pursue other purchase options.
The seller can seek, through the agent, to negotiate with any unsuccessful tenderer with the aim of reaching agreement on a sale/purchase. It is up to the tenderer if they wish to do this.