Buying a property with Allen & Sheppard:
When it is time to start
Looking for a property can be an exciting and yet stressful experience for many buyers especially in a busy market. Below are a few tips to help you navigate the minefield of different properties, sales people and purchasing methods. If at any time you would like some more specific advice please feel free to contact Allen & Sheppard anytime and have a chat to one of our experienced sales agents. Remember buying a property is a large and long term commitment, make sure you get it right the first time.
Be prepared and arrange pre-approval for your loan to ensure you have the best loan to suit your financial needs. Contact a mortgage broker and or a loan specialist from a financial institution to ensure you are receiving the best long term deal. Pre-approval only lasts a few months, so keep your broker up to date. This is not full approval, however means you can be confident you can act quickly and know how much you can borrow.
Before obtaining a loan, it is advisable to have calculated your loan repayments into your budget. Ensure you leave some room for unforseen costs or expenses such as take away on a Friday night.
Decide on your preferred location and research the area. Take into account the location of schools, transport, shopping centres and general amenities. Buying real estate should be a 5 plus year plan, so think of the future families, stairs, parking, etc. You may not be able to afford ‘the dream home’ in the dream location with everything on your wish list. Decide the ‘must haves’ vs the ‘must nots’, and be flexible with your wish list.
Visit as many properties as you can, old and new listings – our agency is available to arrange private inspections in liaison with the vendors. Alternatively you can attend our Open Homes. When you find a property that suits make a move quickly, confirm your finances and register your interest with the agent, do not wait for the agent to contact you it might be too late.
The sale contract
By law, a residential property cannot be put on the market until a sale contract has been drawn up. You have the right to examine the contract at any time once a property is on the market. If a particular property interests you, request a copy of the sale contract as soon as possible so it can be reviewed by your solicitor or conveyancer.
Making an offer for a private treaty sale
Making an offer on a residential property is a significant step. Research the market and be confident with your decision, Do not offer on a property unless you are committed to the property and ready to buy. You may decide to arrange a building and pest inspection to determine if there are any building defects or pest problems before or after making the offer. With this information and the advice from your solicitor or conveyancer and confirmation of your finance you are prepared to make an informed decision to proceed with negotiating on the property.
Offer accepted, but it’s not yours yet
If your offer is accepted, be ready to sign the sale contract and proceed through with the exchange process. Prior to the exchange of the contracts, the vendor is free to negotiate with other purchasers for a higher offer. In fact, if an agent receives an offer, by law it has to be submitted to the vendor. If the vendor accepts another offer and exchanges contracts with that party, any other purchaser loses rights to purchase the property.
Contracts and conveyancing
If you interested in purchasing a home, land or investment property it is necessary to sign a sale contract. The legal work involved in preparing the sale contract, mortgage and other related documents, is called conveyancing. It’s possible to do your own conveyancing; however, most people use a licensed conveyancer or solicitor for this process.
Exchanging contracts and paying a deposit
Exchanging sale contracts is the legal process of purchasing a home. Before exchange, the agreement is usually just verbal and not binding. Up until you exchange contracts, either you or the vendor have the right to change your minds. At the time of the exchange you will be required to pay a deposit. While it is usual for a vendor to ask for a 10% deposit, any agreed amount of deposit is sufficient to make the contract binding on both parties. The amount must be agreed to by both parties and recorded on the contract.
When you purchase a residential property in NSW there can be a five business-day cooling-off period after contracts are exchanged. The cooling-off period starts as soon as you exchange and ends at 5pm on the fifth business day at which point the balance of the deposit is due and the contracts are formally exchanged. During this period the purchaser has the option to withdraw from the contract with written notice however the vendor is committed to sell the property to that purchaser. For the right to have a cooling off period a purchaser must put down a un refundable 0.025% deposit.
A cooling-off period does not apply if you:
- Purchase a property at auction
- Exchange contracts on the same day as the auction after it is passed in
- Unconditionally exchange with a 66w certificate from your solicitor or conveyancer.
Some purchasers arrange a building inspection during the cooling–off period. Ensure you use recommended building inspector as this is an unregistered industry. Ask your conveyancer or Allen and Sheppard for suggestions. If you can, speak to the inspector in person at the end of the inspection or over the phone as the reports can be full of disclaimers and sounds much worse than it may be. The balance of the agreed deposit is due
Pest inspection reports
While the building inspection report should identify any visual damage caused by termite activity, it will not include the detection of whether termites and other timber destroying pests still exist.
You may consider organising both a pest and building inspection, especially if the property is located in an area where termites are known to be a problem.
Buying at Auction
Buying at Auction is sure to be a stressful and adrenalin pumping experience. The buying process is similar, however, it will all come to a quick close at the fall of the hammer with the successful bidder signing and exchanging on the property directly after the Auction. If you are the successful bidder there is no turning back. You will be asked to provide a 10% deposit (unless negotiated before the auction) and asked to sign the contract on the spot with NO COOLING OFF PERIOD. Due to this you need to confirm all finance, inspections and have your solicitor review the contract before the day of Auction. The 10% deposit can be made by personal cheque made out to Allen & Sheppard or cash on the spot or if you do not have a cheque book, ask your bank for a counter cheque you can fill out on the day.
For more information you can review the Bidders Guide from the NSW Government Office of Fair Trading http://www.fairtrading.nsw.gov.au/ftw/Tenants_and_home_owners/Buying_property/Bidders_guide.page
Settlement usually takes place approximately six weeks after contracts are exchanged and this can change by negotiation. You are allowed one inspection during this time however most vendors and agents are happy to accommodate any reasonable requests. Settlement is when you become the legal owner of the property. The balance of the purchase price and other adjustments are paid on this date and you can pick up the keys.