Buying Property
Buying Property
PURCHASE
There are two essential things you should deal with before you enter the property market:
1.Ensure that you can afford it.
Take into consideration the cost of Stamp duty on your purchase and loan, pre-purchase inspection reports, legal costs, bank fees and other charges associated with your loan, household insurance, removalist charges and future repairs to the property.
2. Have your loan pre approved
It will reduce a great amount of stress if you have your loan “pre approved” prior to entering the property market, having provided to your nominated lender all required financials to verify your income and satisfied the 100 point identification check. That way, when you are ready to buy, the only matter your lender will need to attend to is the property valuation.
PURCHASE PRE-EXCHANGE
Offer and Acceptance:- Once your offer has been accepted by the vendor, the Agent will send a Sales Advice out to our office and the vendor’s Conveyancer. We will then be in touch with you to obtain your instructions, information and advise the next step.
Pre-exchange reports:- Before you purchase a property it is important to arrange inspections on the property. The Contract for Sale of Land does not cover the quality of the buildings on the property; it is “Buyer Beware”. After exchange of Contracts there is no recourse if the buildings are defective in some way. Depending on the type of property you are purchasing we recommend the following reports:
Building Report: If you are purchasing a dwelling then it is important to know that the building is structurally sound. You should expect that any building that is not brand new will have some minor defects. A building report will show these matters and most importantly advise on any structural problems that may not be obvious to the untrained eye.
Pest Report: A pest report will report on any structural pests that may be present or advice on any pest activity affecting the property, past or present. The report is for the activity of structural pests, it will not normally advice on the presence of cockroaches, mice etc.
Strata Report: If you are purchasing a unit, townhouse or villa then you will most likely be purchasing into a Strata Scheme. In this case it is important to obtain a Strata Report which will inspect the books and records of the Owners Corporation. The report will advise on such things as: the insurance policies in place, the quarterly levies, the financial position of the scheme, if there are any ongoing maintenance problems, if there are any special levies struck for the costs of works to be done, if there are any issues between other owners.
Septic Tank Inspection: If the property is not connected to town sewer then it will most likely be on a septic system. Once the property has settled the new owner must apply to Council for approval to use the septic system. It is important to be sure that the septic system is in working order and up to Council’s standards. An inspection of the septic system is usually carried out by a Council officer or a plumber experienced in this area. A report will then be provided to you detailing the condition of the disposal system and any defective areas. Any defects found after exchange of Contracts do not have to be rectified by the vendor and can provide quite costly.
Finance:- It is important to ensure that finance is approved before Contracts are exchanged, even if there is a long settlement period, to avoid the risk of defaulting and losing the deposit and perhaps being sued for damages.
EXCHANGE
Deposit:- The deposit paid is 10% of the purchase price unless otherwise negotiated with the vendor. The deposit is paid on or before exchange of Contracts in one of the following ways: transfer into the Agent’s Trust Account, providing the Agent with a cheque, providing our office with a cheque. The deposit will then be held in the Agent’s Trust Account as stakeholder pending settlement.
Exchanging Contracts:- Once you have satisfied yourself with all your searches and enquiries, have finance approval in place and have signed the Contract we will then obtain your approval to exchange Contracts. Contracts are drawn up in duplicate and one copy is signed by the vendor and one copy is signed by you, the purchaser. The Contracts are then checked to ensure they are identical and they are dated. The Contracts are then swapped so that each party ends up holding the copy signed by the other party.
Cooling Off Period:- Each Contract has a cooling off period of 5 business days from the date of exchange, however this only applies to purchasers. If a purchaser “cools off” they must pay a penalty of 0.25% of the purchase price to the vendor. It is common practice for the cooling off period to be waived so that the Contract is binding on both parties after exchange of Contracts. Most vendors will request that I sign a Section 66W Certificate which will waive the purchaser’s cooling off rights. It is for this reason that it is important to obtain all reports, searches and finance approval prior to exchange of Contracts. There is no cooling off period if the property is sold at Auction.
Stamp Duty:- Stamp duty is payable on the Contract within 3 months of the date of exchange or on settlement, whichever is first. Stamp duty depends upon the purchase price, the higher the price, the higher the stamp duty. Please do not hesitate to ask if you would like a quote on stamp duty.
Searches:- After exchange of Contracts we will carry out various relevant searches on the property such as: council rates, water rates, strata levies, land tax, roads and traffic authority, council outstanding notices. We will advise you on the outcome of these searches.
BUYING AT AUCTION
Should you intend to purchase a property at auction, be aware that if you are the successful bidder you will be required on the day of auction to sign an unconditional contract (no cooling off period) and pay the required deposit, usually 10% of the price. As you will be immediately bound to the contract, it is important that prior to the auction you carry out pre purchase inspections, have your loan formally approved and have your Conveyancer explain the terms of the contract to you.
SETTLEMENT
Adjustments:- We will draft a Settlement Statement which adjusts on council rates, water/sewer access rates, water usage, strata levies and anything relevant to the property. This statement will then be approved by the vendor’s Conveyancer who will also request a cheque at settlement to pay any outstanding rates and levies. The outcome is that each party only pays for rates and levies for when they own the property.
Pre-Settlement Inspection:- A Purchaser is entitled to a final inspection of the property prior to settlement. We recommend conducting the final inspection on the morning of settlement. This inspection is to ensure that all the inclusions are in the property and no damage has been done to the property in between exchange and settlement. The property should be left in a similar condition to as it was on exchange of Contracts. Once settlement takes place you will have no recourse on the vendor should you find something wrong with the property.
Attending Settlement:- Settlement is usually attended by four parties: the Vendor’s Conveyancer, the Purchaser’s Conveyancer, the incoming mortgagee and the discharging mortgagee. You are not required to attend settlement as it takes place online.
AFTER SETTLEMENT
Immediately after settlement we will notify you and the Agent that settlement has taken place. We will forward an “Order on Agent” to the real estate agent which authorises him to release the keys to you and the deposit to the vendor. Your lender will then attend to registering your Certificate of Title at the Department of Lands, or alternatively if you are a cash buyer then we will attend to this on your behalf. We will also advise the local council, water authority and strata manager of the change in ownership. However, often the local council will not update their records until advised by the Department of Lands.