Buying a Property: Your Pre-purchase Guide

Purchase price

We are all naturally inclined to start perusing the internet and realestate.com for our dream homes, however what needs to be considered first is just how much you can spend on your home. You can ascertain this, by getting in touch with a mortgage broker or bank, who will be able to guide you as to how much you can borrow, and how much you can spend.

Talk to a Real Estate Agent

Once you have established what your limits are in terms of the purchase price, the next step is to talk to an agent about what you are looking for, and what your budget is. This will often provide you off market opportunities that you might not find online.

Choosing your Lawyer

Often times one of the primary considerations in choosing a Lawyer or Conveyancer is price. While price is an important consideration for anything, it is vital that you make this decision based on quality of service and advice provided. While this can be tough to ascertain from a phone call, a great starting point would be to ask your mortgage broker or real estate agent for recommendations. At the end of the day, communication is key, and you need a Lawyer who you can communicate well with.

When you have found your Property

When you have found your ideal property, it is important to act fast. Get in touch with your Lawyer either before making an offer on the property, or as soon as practicable. This will enable your Lawyer to review the contract, as well as undertake the necessary due diligence, including:

-       Negotiate the terms of the contract including settlement period, deposit to be paid, and any other nasty terms that might be contained in the contract

-       Carry out a pest and building inspection

-       Obtain unconditional finance approval for your mortgage

-       Obtain a Strata Report if purchasing a unit or townhouse

Exchange of Contracts

Exchange of contracts occurs when both the Purchaser and Vendor have signed duplicate contracts, a deposit has been paid and these contracts are formally dated and exchanged, binding the parties to the contract.

There are two forms of exchange:

-exchange with a cooling off period

-exchange without a cooling off period

If contracts are exchanged with a cooling off period, the purchaser is only required to pay a 0.25% deposit, with the balance (being either 5% or 10% of the purchase price) being due and payable at the end of the cooling off period, which is usually a period of 5 business days. The purchaser may rescind the contract during this time, for whatever reason, but would forfeit the 0.25% deposit paid.

If contracts are exchanged without a cooling off period, the vendor and purchaser are bound by that contract, and cannot rescind the contract. As such, it is vital that a Lawyer reviews the contract first, and that all due diligence is undertaken prior to exchange, if a purchaser intends to forego their cooling off rights.

Once contracts have exchanged, and the cooling off period has expired (if applicable) you are bound by that contract.