1. Determine Borrowing Power
Ideally, you should save the highest possible deposit before deciding to buy property to minimize the amount you need to borrow. This will also minimizethe amount of interest that will eventually be paid, and means you
may avoid extra charges such as mortgage insurance. Other elements to consider are:
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Interest rates (would a fixed or variable loan work best for you?)
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Additional costs of buying (such as bank fees, stamp duty and legal fees etc)
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Consider speaking to a mortgage broker or other finance professional
2. Research the Market
When buying a home, it’s important to consider its future value. There are a number of factors influencing a property’s price potential, but location stands out as the key to future capital growth. Elements to consider are the safety of the neighborhood, and whether it is close to:
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Schools
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Medical services
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Shops or
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Reliable public transport
3. Inspecting a Property
An agent will often provide a buyer with a brochure or some form of marketing material when they show a buyer through a property. This is a great way for a buyer to remember a property and also for them to be able to take any notes while inspecting the property.
Taking notes will make it easier for a buyer to compare properties through details such as the date the property was inspected, the address, the listed priceor price range, and any key features of the property that caught interest.
Remember to ask the agent if there are any special conditions the vendor wants to place on the sale, such as an extended settlement due to their next residence not being available.
Inspection Checklist
Some things to consider and look for when inspecting a property are:
Inside the Property
· Check for signs of rising damp, such as rotting carpet or mould on the walls and ceiling;
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Check the walls and ceilings for warps, cracks and any obvious damage;
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Test all light switches; and
· Test the water pressure in hot and cold taps and check to see that water drains well - slow flowing water may indicate blocked drains.
Outside the Property
· When attending an open house, a buyer will often be asked by the agent to provide their contact details. Agents are required under the National Privacy Actto have available for perusal a copy of their privacy disclosure, outlining how they collect, use and store any personal information that is obtained through such registers. Inspect fences for stability and any obvious faults;
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Large trees around the house may have large root systems that can cause structural problems;
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Check that the land’s water run-off is adequate and drains away from the dwelling;
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Water staining on the eaves may indicate damaged or blocked gutters;
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Look at the roof for any broken tiles or capping; and
· If the property has a pool, check the legality of its fencing via the Pool Safety Council. Pools in a Community Titles Scheme (body corporate) are the responsibility of the body corporate.
Most agents will ask a potential buyer if they would like to be contacted at a later date if similar properties become available. If a buyer does not wish to be contacted for anything other than the attendance at the open house, they can clearly outline this to the agent at the time of the inspection.
5. Deciding on Your Offer
Deciding the price and conditions of your offer is a critical step that requires careful thought. Make an informed decision by researching how much the property last sold for and when, plus recent sale prices of comparable properties in the area (using a service such as Corelogic RP Data, for example). Getting an independent valuation by a professional valuer should also be considered (please note, real estate agents are not registered valuers). Keep in mind that sellers may consider conditions (or lack of) as well as price.
6. Making an Offer
Putting your offer in writing shows the seller that you are serious, and avoids confusion that can occur with verbal negotiations. The real estate agent will present a buyer with a number of documents and is obliged to go through these documents to avoid any confusion. If a buyer still has queries at this stage, they are encouraged to seek independent legal advice.
Conditions：subject to finance, a building inspection and/or a pest inspection if these are required.
Pay a Deposit
A buyer will be encouraged to pay a deposit when signing the offer. If the deposit is greater than 10 per cent of the price, the contract becomes an ‘Installment Contract’. Whilst paying a deposit is not something that is legally required, by doing so buyers show the seller that they are making a serious offer and showing their goodwill. Deposits can be paid by way of cash, cheque or electronic transfer of funds. They can also be paid using deposit bonds or bank guarantees. Buyers should seek advice from their financier as to any associated costs with deposit bonds or bank guarantees before paying a deposit in this form.Conditions
If a buyer terminates the contract under the cooling-off period or another legitimate way, the deposit is refundable (excluding the termination penalty of the cooling-off if the seller elects to charge it).
It is important for a buyer to ensure building and pest inspections (if applicable) are carried out within the time frame set out in the condition. With regards to finance, if an independent valuation is required as part of the finance process, buyers should ensure their financer has this arranged within the time frame of the condition.
If a buyer feels that any conditions may not be finalised by the applicable end date, they should seek legal advice from their solicitor as soon as possible. Commonly, a solicitor may suggest a buyer requests from the seller an extension to the condition date. It is the seller’s discretion to grant, or not grant, the request.
7. Conveyancing
What is Conveyancing?
Conveyancing is the legal transfer of a property’s title from the seller to the buyer. It is important that buyers research who they wish to use for conveyancing when they have a contract of sale.
Use a Solicitor
Using a solicitor often saves timeon paperwork such as title searches and stamp duty, and can often provide peace of mind when making what may be the largest single financial transaction of one’s life.
Conveyancing Costs
Conveyancing will incur costs such as searches of the:
· Titles Office,
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Certificate of Rates,
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Zoning
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Transfer duty
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Registration fees
· Standard professional services costs
Council and property searches can identify any planning issues or problems, and highlight what the area might look like in five to 10 years. They ensure major changes like new freeways and major road upgrades are not planned for a property’s backyard.
Searches for zoning and titles will determine whether the property has any restrictions such as adverse planning, demolition orders, outstanding taxes or encumbrances on the title (for example, easements or caveats).
Most of these searches are standard in the conveyancing processbut are often overlooked when buyers elect to do the conveyancing themselves.
8. Settlement
Once a contract has become unconditionalit is time to start packing! It is important for a buyer to keep in touch with their solicitorthrough this time with regards to any issues that may arise approaching the settlement date.
Buyers are encouraged to arrange a pre-settlement inspection with the agent to ensure that everything is per the contract conditions, noting any included chattelsor excluded fittings. Pre-settlement inspections should be conducted once the property has been vacated by the seller or its occupants.
Commonly, the solicitor will attend the actual settlementon the buyer’s behalf and both the seller’s and buyer’s solicitors will notify the agent once settlement has occurred. Only after an agent has received notification from both parties, can keys be released to the new property owner.