Buying a property – some tips on buying your new home
Looking for a property can be a time consuming and frustrating task. Giving up all of your spare time each weekend to be herded through with scores of other potential buyers can be exhausting.
You probably have an idea of where you want to buy, how much you can afford to spend and what your mandatory requirements for the property are.
It is a good idea to have a check list of ‘must-haves’ and ‘would-likes’ so you don’t waste your time looking at properties that will not meet your needs.
Once you have found a property you will need to seek legal advice on the Contract and ensure your finances are in order. Some banks will not lend on certain properties, so you are best to ensure you have your banks approval before you consider making an offer.
It is likely you will be advised to obtain a Strata Inspection Report for Strata property or a Pest & Building Inspection for a house or possibly a Building defects report for any new development.
2. Offer & Acceptance
There are two (2) main ways to purchase a property. Either buy having the vendor accept your offer, this is by private treaty, or by making the winning bid at an auction.
“Auctions can be stressful and you should ensure that you stick to your guns.…”
When you buy through private treaty the real estate agent negotiates a deal between the vendor and purchaser. The agent will emphasise the best features of the property and encourage you to enter into price negotiations.
Before you make an offer on a property you should ensure a solicitor has advised you on the Contract, your bank will unconditionally approve your finance, if required, and you have your deposit ready.
Most auctions have a reserve price, being the lowest amount the vendor is prepared to accept. If the highest bid is not accepted and the reserve price is revealed, you may still be able to negotiate to purchase for the reserve price.
You have to keep in mind your financial limit and remember not to be tempted into bidding above your limit.
Auctions can be stressful and you should ensure that you stick to your guns. If you are not the successful bidder and your heart was set on the property, you may feel disappointed. Speak with the agent and explain what you liked about the property and they may have something similar coming onto the market.
3. Exchange, Deposit & Cool-off
Prior to exchange you need to ensure the contract is not defective or contain any unfair terms. If certain prescribed documents are not attached to the Contract, you may have the right to rescind the contract and recover any deposit paid.
There are several options in paying the deposit. You make be able to negotiate the use of a deposit bond or deposit guarantee (which is like an insurance policy) or payment of a lesser amount on exchange such as 5% instead of 10%. If you exchange with a cooling off period, usually 0.25% of the purchase price on exchange and the balance of the ten percent (10%) before the end of the cooling off period.
As a purchaser of residential property you usually have a cooling off period of five (5) working days following the exchange of contracts during which you can withdraw from the purchase.
The cooling off period can be waived, reduced or extended by negotiation. There is no cooling off period for Vendors.
There is no cooling off period when purchasing at auction. Once Contracts are exchanged and the cooling off period has expired, the parties are legally bound.
4. Due diligence
Following exchange, there is usually six (6) weeks for your solicitor to make enquiries with the government departments, send of requisitions on title to the vendors solicitors and prepare the necessary documentation to enable the transfer to occur following settlement.
This is also the period when you will need to pay stamp duty. The state government has introduced new identity verification requirements for any dutiable transactions. You may also be eligible for any relevant new home or first homeowner/new home grants from the government.
The bank will also prepare their mortgage documentation during this time. Make sure you have a full understanding of what you are signing before you sign it.
Purchasers are entitled to make a final inspection of the property prior to settlement to ensure the property is in the same condition as it was at the time of exchange.
Settlement is the final step. It is where the title is transferred into your name and the funds are handed over to the Vendor. Council rates, water rates and strata levies (if applicable) are adjusted and paid on settlement.
PEXA is an electronic platform for solicitors and financiers to undertake settlements online.
Traditionally settlements required exchange of physical documents at a specific time which leaves considerable opportunity for error to occur. Interruptions in the process such as these delay proceedings and typically result in increased workloads for all parties involved.
PEXA aims to provide an efficient and accessible tool for solicitors to conduct Settlements without being tied down with paper, and optimistically avoiding basic and preventable errors tied to pen and paper settlements.
Kreisson Legal offers PEXA as part of our services to improve security and simplicity to your property transactions.
If you would like any further information on this topic, please contact:
Phone: (02) 8239 6511
This communication has been prepared for the general information of clients and professional associates of Kreisson Legal. You should not rely on the contents. It is not legal advice and should not be regarded as a substitute for legal advice. The contents may contain copyright.