Paying the Deposit
Unlike retail shopping where you can stroll through the store, pick what you like and hand a credit card over at the counter, buying a property is a little more complex. Some houses will be sold at auction, some will be sold by Private Treaty (For Sale), and others will be sold privately by the owner. Either way, you will have to pay a deposit and the balance of the purchase price including stamp duty and other costs upon settlement.
If you buy at auction, you’ll need to pay the deposit immediately. Most serious bidders will bring their cheque book to an auction as the real estate agent selling the property may ask for a deposit of 10% of the property price it sold for. A private sale will require you to pay the deposit once the contracts have been exchanged so again – make sure you have it to avoid complications.
Choose An Experienced Solicitor
Once an offer or a bid for a property has been accepted, a contract of sale will be reviewed by your appointed solicitor. If you do not have a solicitor, ask your parents, friend or work colleague for a personal referral to a solicitor who is located in the suburb where you have purchased the property. An experienced local solicitor will most probably have dealt with the property vendor solicitor as well and understand any local land or council issues from previous property conveyancing. Be sure to ask for a fee proposal from the solicitor upfront before engaging them formally. As solicitors typically take their fee on the day of the property settlement, it is important to understand what their average fee range and hourly rate for extra work is in advance.
Understanding the Contract of Sale
The contract of sale is a long document that your solicitor will review on your behalf as most buyers are not trained to understand the legal implications. Your solicitor will ensure the details are accurate, review the property tile to ensure all property boundaries and measurements are correctly notated in the contract. Your solicitor will ensure that all land taxes, council rates and property utility bills are paid to ensure you are not liable for these as part of the property settlement.
Understanding the ‘Cooling Off Period’
Remember, if your bid is above the reserve price at auction, it is legally binding and there is no cooling off period, so be sure you understand the processes and your obligations at different stages before you commit to purchase. Private Treaty sales typically have the benefit of a cooling off period, which will be outlined by the Contract of Sale and which your solicitor can review prior to you making an offer on the property.
Although you are pre-approved for a home or property loan up to a certain amount, the bank or lending institution will carry out a property valuation. This typically involves a valuer physically inspecting the property (often from the outside) and looking at similar properties recently sold in the immediate area. Property buyers should be aware that banks can value the property at a lower price than what you purchased the property for. This means that you will have to put more money into the deposit than what you originally thought.
Your solicitor will ensure all the required documentation required by the government title bodies and mortgage financier is provided. They will ensure your name is on the property title certificate and make sure the tile transferring to you as the new owner is done according to the law. The solicitor will assist with preparing the list of disbursements required for property vendors and make payments from their trust account to related parties to the transaction on behalf of property buyers. Solicitors also attend the settlement meeting and exchange contracts and issue cheques to compete the settlement. This ensures you are not having to attend the meeting with solicitors representing the property vendor.
Time from Purchase to Settlement
The settlement process usually 60 days in most Australian states and territories. In New South Wales, settlement is 42 days. Buyers often propose a shorter settlement period to entice vendors to accept their offer over competing bids when buying property off-market and not at auction. There is often times where a property owner will request a longer settlement period of say 90 or 120 days from time of purchase. This maybe due to time another property transaction.
Once settlement has taken place, the balance of the purchase price will have been paid, and you are legally listed as the new owner on the property title. Your solicitor will typically ring you to advise property settlement has been successfully completed. At this stage you are able to pick up the keys from the vendors real estate agent or solicitors office and your home buying journey is completed.