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Buying a property requires a considerable amount of research, time, commitment and planning. The process outlined below suggests simple steps to consider before you start your property search.
First, determine how much you can afford and the area in which you wish to buy. Do not set your heart on something you can’t afford. Establish how much you can borrow and afford to repay to get a realistic idea of what you can buy. Researching recent sales and the price of properties currently on the market should give you a good indication of property values and an understanding of the market.
Select the location
Choosing the right location to buy is vital because you may be able to add value to the property over your ownership time. If you can’t afford the street you desire, consider neighbouring areas and be aware of any future development plans, which could affect the property’s value or your quality of life. It is important to consider proximity to transport, schools, local shopping, recreation, local facilities and other amenities important to you.
Type of property
A house is likely to be the most expensive type of property but for good reason. You are typically distanced from your neighbours and will generally have a garden. Semi-detached houses, terraces and townhouses usually have an outdoor area and a degree of privacy but they are likely to be noisier than a house due to their proximity to neighbours. Apartments are generally smaller and more likely to be noisier than houses but they tend to be more affordable and easier to maintain. Put together a shortlist of things that are important to you.
When buying a property to occupy, extreme care is needed to ensure your purchasing experience is stress free and risks are minimised.
Before you buy
If you want to buy a home or land, you will have to sign a contract. The legal work involved in preparing the sale contract, mortgage and other related documents, is called conveyancing.
Most people employ a conveyancer/settlement agent or solicitor to do legal work involved in purchasing a property such as preparing documents, giving legal advice on contracts and explaining the implications. The conveyancing process can involve the following steps:
Your agent can explain this process as it applies in your state or territory.
Inspections
Before you commit to purchasing a property, several reports should be completed. The cost of a professional property inspection is minimal in comparison to the cost of buying a property requiring extensive and unforeseen repairs. The most common reports requested are building inspections and pest inspections. A strata or company title report is important for people purchasing home units, as is a copy of the most recent body corporate minutes.
Building inspection
A building inspection will give you an expert’s opinion on the property’s condition and detect and identify any significant building defects or problems. The consultant will inspect:
If problems are identified you can get specialist advice, ask the vendor to have the problems repaired, or try to negotiate a lower price.
Pest inspection reports
A pest inspection will detect whether there is any termite activity, any other pests, old damage caused by pests and wood rot.
Strata and company title searches
If you are buying an apartment, townhouse, villa or any property managed by a company or body corporate it is important to arrange a strata or company title search. This search will show you the history of the property, identify any problems, list past repairs and proposed repairs to other units and common areas. This information is important as the cost of repairs to common property can be substantial and owners normally share the cost.
Buying at auction
Before you bid at auction you must understand the process and satisfy yourself about all the details relating to the property. If you are the highest bidder and your bid is accepted, you are obliged to purchase the property.
If buying at auction you should have:
As conditions of sale by auction might differ between state and territories our agent can explain the conditions applicable in our local area.
Bidding at auction
In NSW, prospective purchasers wanting to bid at an auction for residential and rural property must register by giving their particulars to the selling agent before they are permitted to bid. Bidders are issued with a bidder’s number, which must be displayed when making a bid.
The vendor or the auctioneer on the vendor’s behalf may make one bid which, must be accounted for during the auction. This is called a ‘vendor bid’.
If the property fails to reach the reserve price it is passed in. As a courtesy, the highest bidder is usually given the first opportunity after the auction to negotiate further with the vendor through the selling agent. If the highest bidder does not purchase at the reserve price the property will typically be put back on the market for sale by private treaty.
Bidding tips
Reserve price
Before the auction the seller will nominate a reserve, which is the lowest they are willing to accept. The reserve price is not revealed to buyers.
Passed in
If a property fails to reach the reserve price the property can be ‘passed in’ or withdrawn from auction. The agent will then negotiate with the highest bidder on behalf of the vendor. This may result in a sale.
Purchase at auction
If you are the successful bidder, you must sign the sale contract and pay the deposit immediately (usually 10%). A cooling-off period does not apply if you buy at auction so it is imperative you arrange finance prior to auction. Conditions of sale by auction differ from state to state. Our agent can explain the sale by auction conditions in our area.
Contract of Sale
A residential property cannot be sold until a contract has been drawn up. A contract for sale sets out the terms and conditions of the sale. A buyer can examine the contract at any time during the buying process, even before an offer is made.
Making an Offer
Deciding how much to offer can be difficult. You might wish to make your best offer up front or start with a lower offer and be prepared to negotiate up. However, other purchasers who make higher offers might secure the property without giving you the opportunity to increase yours.
Contract Exchange
Once your offer has been accepted or you have purchased your new home at auction, contracts must be signed between you and the vendor. There will be two contracts – one for you and one for the vendor – that both parties must sign.
Exchange of contracts can be done in person or by post and is usually arranged by your solicitor or conveyancer. Our agent will explain how the process works in NSW.
The Deposit
When contracts are signed by both parties you will have to pay a deposit, usually 10% of the purchase price. This is paid to the seller’s real estate agent or solicitor who will put the money into a trust account ( non-interest earning ) until settlement when the balance is paid.
Cooling Off Period
In some states in Australia there is a cooling off period of 2-5 working days after the exchange of contracts during which you can withdraw from the sale. During the cooling off period it is common and permitted for buyers to organise inspections, e.g. pest or building inspections.
There may be a cost incurred for buyers who withdraw from the sale within the cooling off period. It is possible to waive, reduce or extend the cooling off period with the consent of the seller.
There is no cooling off period for sellers or buyers who have purchased at auction.
Our agent will explain the process and legal requirements applicable in NSW.
Insurance
In some states the property is at the risk of the purchaser from the date of signing the contract. If this is the case in your state you should immediately arrange insurance. Your agent can explain this requirement to you.
Settlement
The sale is finalised when the balance of the purchase price and other adjustments have been paid and the title and transfer documents have been exchanged. Settlement usually occurs five to six weeks after contracts have been signed by both parties. At settlement you become the legal owner.
Stamp Duty
Stamp Duty is a government tax that must be paid prior to settlement. It is calculated as a percentage of the sale price or the market value. Stamp duty exemptions may apply for first home owners or concession card holders. Our agent can explain the Stamp Duty payable in your NSW.
Organisation the Key to a Smooth Move
Before the Move
Last Week Before the Move
Moving Day