For many who spot their dream home, the process to actually getting the keys and moving in can be a daunting prospect, particularly when buying your first home. But it doesn’t have to be overwhelming with this brief overview.
Make sure you have finance
Equilaw’s licensed conveyancer, Renee Allen, recommends the first and most important element when purchasing a house is to get pre-approval for finance from the bank or lending institution before putting an offer to the real estate agent or bidding to win at auction.
“Make sure you’ve got enough cash.”
Once your finance is arranged, an offer can be made to the real estate agent. Following its acceptance you would then engage a licenced conveyancer or solicitor to act for you and pass these details onto the real estate agent so they can send your conveyancer a sales advice.
A sales advice sets out the Vendor and Vendor’s solicitor, the Purchaser and Purchaser’s solicitor, a list of inclusions in the sale, an outline of any special conditions on the sale and the sale price.
“We would then write to the Vendor’s solicitor and advise we’re acting for the Purchaser and to send us the contract,” Ms Allen says.
“Once the contract comes in we usually write you a letter or telephone you to say we’ve got the contract, make an appointment to come in and go through its contents.
“When you come in we would go through the contract together, page by page discussing the terms and conditions.
“Once you are clear on the contents of the contract you can sign it.”
Inspections and searches
Ms Allen says it is the Purchaser’s representative’s responsibility to order any pest and building inspections and all other searches including a title search to make sure the titles matched the contract.
Title searches could reveal a caveat where a third party has claimed an interest on the property, or there has been refinance made and the mortgage has changed between banks.
Other relevant searches include a rates search with the local council to determine what rates were payable and a meter reading to ensure the water was paid up-to-date. For rural properties, livestock and pest authority searches should also be undertaken.
“Some people don’t do a title search but I really like to check there’s nothing that’s going to stop registration at the end,” Ms Allen says.
“Once we get the reports back and make sure they are all okay, and you’ve paid your deposit [to the real estate agent] we can send it to the other side to exchange the contract.”
Cooling-off and settlement
In most property transactions, contracts are settled 42 days from the exchange date. Buyers are granted a five-day cooling off period where they can pull out of buying the property, however, they will be penalised by having to pay 0.25% of the sale price. Rural properties are an exception to the rule, or if you have chosen to waive your right to the cooling off period on exchange of the contract.
Even greater penalties apply should you choose to withdraw from buying a property after the cooling-off period when you will be required to pay 10% of the purchase price.
“So it’s expensive if you went in spontaneously and then you couldn’t get your finance. You’ve got to pay that money.
“On a $500,000 sale price that is $50,000 you would need to come up with to back out of a contract,” Ms Allen says.
The Purchaser initiates settlement by providing the figures however the Vendor may dictate the date and time of settlement. Settlement is simply the exchange of money for the Deeds of the property.