Buying your first property is one of life’s most significant milestones but can be stressful and overwhelming, especially if you are unfamiliar with the process. As a new home purchaser, you may have questions such as ‘what happens first’ and ‘what’s next’?
We thought it was worth compiling an outline and checklist of the purchase process to help you better understand what to expect when purchasing your first property.
- Obtain Finance Pre-Approval – understand your budget and know how much you can borrow before you commence your property hunt! Nothing is more disappointing than finding the house of your dreams that you can’t afford. You will also need to consider what stamp duty may be payable and whether any duty concessions or exemptions apply. Your real estate agent, broker or conveyancer can help with this information.
We have also prepared a handy one-page explanation of Stamp Duty Concessions.
- Finding the right property and doing your due diligence. It’s easy to become romanced about a property and it sounds simple but conducting a property inspection is critical before making your decision to purchase. Inspect the condition of the property and ask the agents if there are any material facts about the property that you should be aware of. Make your own enquiries with council on future proposed developments that may affect the use of your property. Make a note of items that are not in working order and bring it to the attention of the agent such as appliances, air conditioners and heaters (you may need to engage a licensed tradesperson to assist). Driving around and inspecting the neighbourhood is also important. We would also recommend inspecting the property on different days of the week and different times of the day.
- Once you have short listed the property, speak with the respective agents and submit your offer to the Vendor. If the price is accepted by the Vendor, request for a copy of the Contract of Sale and Vendor’s Statement.
- Before you sign the Contract of Sale, have your solicitor review the Contract of Sale and Vendor’s Statement for any terms and conditions that may be unreasonable or unfair to you or any disclosures that should be drawn to your attention.
An example of an unreasonable term of a contract could be where the Owners Corporations Manager (OC) proposes combustible cladding works be undertaken. Cladding removal and replacement works are often significant cost to lot owners. If the OC strike a special levy to collect funds for the purpose of carrying out the work after the Contract is signed by the Purchaser, the Purchaser would be liable for paying the levy.
It is important to have the Contract of Sale and Vendor’s Statement reviewed as they can often contain vague, ambiguous, or complicated terms that a professional can uncover. They can advise on how to deal with some of these terms legally and on any other special conditions that can be included to protect your interests.
- Request for amendment to Contract of Sale (if required). For example, requesting the penalty interest rate to be reduced from 20% per annum to 12% per annum which is the current norm. This type of request is again managed on your behalf legally typically by your conveyancing partner.
- Sign the sale documents. We would recommend making the contract subject to a few important components to protect your position. Namely:
- formal loan approval
- building and pest reports (which may identify structural damage or any pest infestation concerns).
- Cooling off period. A cooling-off period of three clear business days applies to private sales of residential and small rural property sales. The cooling-off period gives you time to consider the offer. It begins from the date you sign the contract, not from the date the vendor signs it. There is no cooling off period if the sale is by publicly advertised auction, if the sale is on the auction day, if the sale is within 3 clear business days before the auction, if the sale is within 3 clear business days after the auction, if the purchaser is an estate agent or a corporate body (a company) or if the parties have previously entered into a contract for the sale of the same property in similar circumstances.
A purchaser who exercises the right to cool off is liable to pay a penalty of $100 or 0.2% of the purchase price to the vendor.
- Inform your solicitor/conveyancer and broker immediately. Organise your finances to obtain unconditional loan approval and sign your loan documents. If your lender permits, also create a shortfall account with your lender so that shortfall funds can be parked in this account and the lender can easily withdraw the shortfall funds for settlement.
- Complete the Purchaser’s Questionnaire, any paperwork and verification of identity as requested by your solicitor and conveyancer.
- Sign the digital duties form which allows the State Revenue Office to assess stamp duty.
- Obtain insurances for the property. These are generally home and contents insurance, landlord insurance, title insurance.
- Your solicitor/conveyancer would then prepare a Statement of Adjustments which apportion outgoings (such as council rates, water rates, land tax and owner’s corporation fees) between the parties and advise you on the total funds required at settlement.
IN THE WEEK PRIOR TO SETTLEMENT
- Transfer shortfall funds to your solicitor/conveyancer’s trust account or park the funds in your shortfall account.
- Organise connection of utilities to ensure you are ready to move into the property as soon as it settles.
- Attend to final inspection to ensure the Property is in the same condition as it was on the day of sale. If you notice any defects, you should take pictures/videos and inform the selling agent and your conveyancer immediately.
- You’ve made it to the end, congratulations! It’s time to pop a champagne and celebrate owning a home.
- Your conveyancer will now send the Notice of Acquisition to various authorities notifying them of the change of ownership.
If you are looking to purchase your home, please contact us or complete the Purchaser’s questionnaire here and one of our team will be in contact with you.
Burke & Associates Property Division
At Burke & Associates Lawyers, we have a depth of experience in dealing with property purchasers including purchasing off the plan. The lawyers in our Property Division are very experienced in all elements of property law covering both residential and commercial property.
Please contact our Property Division legal team for to discuss how we can assist you please reach out via phone on +61 3 9822 8588 or online at firstname.lastname@example.org
Insight written by Wendy Toura and Sandra Le.