Congratulations you bought it.... (or did you?)

Congratulations you bought it....    (or did you?)

Jim and Kelly rang me up on Friday.    "After lots of looking, we found a place we love.   It's a bit under the loan pre-approval we arranged a few weeks ago."    Great.    We confirmed our earlier discussions about offer, acceptance, negotiable terms, holding deposit, exchange, cool off, approval stages, unconditional loan and property transaction - and how it might all unfold  ....   off to open home on Saturday.

They talked to the agent at the open home.   Sought her confidence in offer strategy, and given the level of interest and their extensive research, they made an offer at full price.   The agent said "I'll take it to the vendor".    A few hours later they got told "someone else has made a much higher offer", so Jim and Kelly made one $20,000 over the asking price.

"Congratulations, the vendor accepted your offer" was the call they received.  So Jim and Kelly asked to come in straight away and sign the contract.    "Oh, there might be someone else who wants to make an offer".      

"OK, so have they accepted our offer or not?."     The agent replied "Well yes, but someone else might want to make another offer, so I can't confirm if it's ready to exchange right now."

So early the next day (Sunday) the message changes to "another offer has blown yours out of the water".   

Jim was told by the agent "sorry, but we act for the vendor, so we have to take all offers to them, and you don't have the highest offer any more.   To be fair to all parties we are now going to hold a dutch auction, where you all get to write your best price on paper and you will get one go, and we will take it to the vendor and tell you if you are successful".  

As it happened, the other party fell away, so there was no dutch auction, and Jim and Kelly's last offer was accepted.

Then they were told "come in to sign and pay the holding deposit".    They did this promptly, yesterday (Monday).    Again, the agent said "congratulations, well done, it's yours".   Jim called me up after and I said "has it exchanged?" and he hadn't been told that.   He called the agent again, and was told "oh, the vendor is coming in later".   

As it happened, it did exchange and he received confirmation (only when he asked for a vendor signed front page to be sent to him) this morning.

So the moral of the story is "your offer is accepted" means nothing.   Paying a holding deposit means nothing.   You have rights (and protections) as a buyer when you have signed a contract, the other party has signed a contract, and an authorised person (agent, conveyancer, solicitor) has exchanged the contracts.   The "exchange of contracts" is an actual event and point in time.    From that point, you have the right to get a copy of the contract with the other parties signature.   

Everything else is fluff and bluster.

NOTE: clients names withheld, scenario is real (and common), especially in less professional agencies.   This was with a smaller 'boutique' agency I don't know very well, but the way that conversation plays out is sadly quite common..