Purchaser Tips

Finding a property you like

Congratulations! After all your hard work and perseverance you have found a property that you want to make your home. There are still a few steps to go through before it finally becomes yours, so it’s important that you read this section to learn more about what is involved.

Get the contract of sale checked

You might want to consider utilising the services of a solicitor/conveyancer at this stage.

Once you have found the property you want to buy, ask the agent or owner for the contract of sale, and have your solicitor or conveyancer check the document. Your solicitor or conveyancer will explain the contract to you.

If you need to find a solicitor or conveyancer ask your agent and/or acquaintances/ colleagues if they can recommend someone.

Professional property inspections

Once the contract of sale is deemed acceptable, you may want to have a professional property inspector check the property and provide you with peace of mind. Don’t be tempted to skip the inspections if you’re worried about the cost.

Check that the companies you choose are fully licensed and insured. Depending on the type of property you are buying, consider making the following inspections:
  • building inspection
  • pest inspection
  • strata title inspection (if buying a unit, or townhouse)
  • land survey (the vendor may already have a copy of this and, if so, it is not essential for the purchaser to obtain this survey)
Your solicitor will usually be able to refer you to professionals who can do these property inspections. You will receive a detailed written report on each of these inspections, which are likely to cost between $200 and $600 each (although this may vary depending on the circumstances of your property transaction).

If you discover problems with the property (e.g. rising damp, white ants, sinking foundations) and you are still interested in buying the property you can ask for a reduced price, or ask that the problems be rectified. Alternatively, you may decide not to purchase the property because of the extra hassle and cost of fixing the problems.

Building inspections

A qualified building inspector will check the interior and exterior of the building, including the roof, subfloor (if accessible), fences and garages. Some of the things he/she will be looking for are:
  • cracks in interior and exterior walls
  • structural defects
  • presence of asbestos
  • electrical or plumbing faults
  • ventilation, damp
  • drainage problems
  • conditions of windows, carpets, walls, fittings etc.
But remember that a building inspector, no matter how good they are, won’t find all the potential faults with a property especially if they cannot access certain areas.

Pest inspections

A pest inspector will check the property for signs of damage by borers and termites, and assess the extent of the damage. There may be evidence of live termites/borers or past damage.

The inspector may be able to give you advice on how to get rid of the pests and the cost, as well as any other ongoing problems that it may present.

Strata title inspections (for body corporate properties)

A strata report will provide you with the following information:
  • whether or not the strata scheme is adequately insured
  • what the regular or special levies are
  • what renovations and maintenance has been done
  • whether or not there is any evidence of building or structural problems that may be expensive to fix
  • whether or not the strata scheme has an adequate reserve of funds
  • evidence of how well the owners work together to maintain the property
  • what the strata regulations are regarding items such as renovation, refurbishment or pet ownership.
The Strata titles are either managed by someone who lives on site in one of the other units/townhouses, or else a professional independent strata services organisation. You can ask your solicitor or conveyancer to do the strata inspection, or you could do it yourself if you feel comfortable doing this.

Land/property survey

This inspection will check such things as the size of the land, orientation, boundaries and compare it with what is in the contract. It will also check the gradient of the land, assess water drainage issues, and identify any easements etc.

Buying a house
  • What is the difference between a private treaty sale and an auction?
  • When should you pay a deposit?
  • How do you make an offer on a property that you’d like to buy?
This section focuses on some of the things you need to consider when you are ready to show a genuine expression of interest in a property. You’ll need to liaise with a few people at this stage, such as your home loan provider to make sure your finances are in order, the real estate agent selling the property and your solicitor/conveyancer.

Buying a house through private treaty

Private treaty sales are the most common way for property to change hands. This involves a real estate agent, or with property for sale by owner, the owner themselves, setting an asking price.

The property is put on the market and a buyer is sought. The price is often negotiable.

When you have found a house to buy or bid on, you may want to notify your bank/broker and solicitor or conveyancer first to make sure everything is in order and they are on hand to help you once you successfully make an offer.

How to make an offer

If you wish to buy a property, you make an offer to the real estate agent, who will then talk to the property owners. There is usually some negotiating of price, and if both parties are happy with a price, a contract of sale is signed by both the vendor and the purchaser.

This is called exchanging contracts and is when you put down a deposit.

With private treaty sales there is a legislative cooling-off period after the contracts have been exchanged (unless the period has been waived at the election of both parties). This means that the purchaser can change their mind and decide not to go ahead with the purchase.

The purchaser must inform the seller in writing, and the deposit will be returned. However, the vendor may be entitled to retain 0.25% of the purchaser’s deposit. This may vary depending on the type of purchase, the contract and the state/territory you are in.

Tip: Beware of gazumping – it is not until you have exchanged contracts that the property is yours.

Gazumping occurs when you have a verbal agreement with an agent or seller to buy a property at an agreed price but the property is not sold to you in the end. This usually happens when the vendor has decided to sell the property to someone else, usually for a higher amount.

Buying a house at auction

An auction is when prospective buyers come together and bid on a property, with the highest bidder being successful, subject to the bid exceeding the seller’s reserve price. Auctions can be very emotional, and it is important not to get swept away by the exciting atmosphere and offer more than you can afford.

Auction registration

In New South Wales, to bid at an auction you must first register with the selling agent and obtain a bidders number. You will need to show some form of identification e.g. a driver’s license.

When the auction begins, you must display your bidder number each time you make a bid.

How the auction starts

The auction will begin at the allocated time with the auctioneer welcoming people, and announcing that he or she will start the auction. Some details about the property will be read out such as the address and some of the key features of the property.

The auctioneer will then ask for an opening bid. The vendor may make a vendor bid to get the ball rolling.

How to bid at auction

Once the auction is in progress you can make a bid at any time, either verbally or non-verbally, by raising your hand or nodding your head and displaying your bidder number.

The auctioneer normally informs people of the increments that you can bid on. At the beginning it’s not unusual for bidding to be made in $10,000, or sometimes $20,000 increments.

When you feel like slowing the increments down, you can offer an increase of $5,000 or less (e.g. $1,000). However, the agent can ask that bids be kept at $5,000 increments, but if bidding stalls, they may accept $1,000 and even $500 increments.

What happens when bidding stalls?

When bidding stalls, the auctioneer consults with the vendor to ask if the reserve price has been reached. The auctioneer will then announce either that the property is now on the market or that it has not reached its reserve.

If it is on the market bidding continues until it stalls. The auctioneer will then solicit final bids, repeating the highest bid. If there are no further bids he or she will say “Going, going, gone”, or “Going once, going twice, going three times, sold!” and bring down his or her hammer (or hand) on the word “gone” or “sold”. The property is then sold to the highest bidder. When bidding does not reach the owner’s reserve price the property is not sold. The house is then considered to be “passed in.” If the house is passed in, the highest bidder usually has first opportunity to negotiate with the seller and the agent.

What happens if your bid is successful?

As the successful bidder, you will be required to sign the contract and pay a deposit on the spot, usually 10% (however, you can negotiate with the seller to put down a smaller deposit prior to the auction). So don’t forget to take along a cheque book, deposit bond or some other means of payment. Its best to check with the real estate agent before you attend an auction as to what form of payment is required on the day.

Auctions automatically waive any cooling-off period. So be aware that once you sign the contract, if you do not continue with the purchase, you will lose your deposit. You may also be liable to the vendor for the deficit realised on the sale of the property within 12 months of the auction and reasonable costs associated with that sale, or you may be sued by the vendor for breach of contract.

Legal matters

Once you have exchanged contracts you can breathe a sigh of relief, and congratulate yourself on your new purchase!

Conveyancing is the next step in the buying process – which is the process where a property is transferred from one party to another. This is usually done via one of three ways: a solicitor or a conveyancer or by the purchaser via a Do-It-Yourself (DIY) Conveyancing kit.

How long does settlement take?

The length of time between exchange of contracts and settlement varies. It normally ranges from four to six weeks. Settlement time is normally dictated by the seller and the banks providing the mortgages, but is negotiated with the buyer.

Final property inspection before settlement

Normally a day prior to settlement, the buyer should visit the property for a final property inspection to make sure that it is clean and that all fixtures and fittings that were sold as part of the sale are still there e.g. dishwasher, TV antenna etc.

If it’s not in the contract of sale, don’t assume it will be there when you move in! If there are any issues with the state of the house on final inspection, your solicitor or conveyancer may be able to help you resolve your issues.

What if there are problems?

If at any stage you experience problems with the buying process, you may want to contact your solicitor or conveyancer who might be able to answer your questions, or guide you in the right direction.

Your lender may require insurance

Some lenders won’t lend you money unless the building is insured. Depending on the arrangements with your lender, you may not have the loan monies advanced to you until the building is insured. You are not obliged to affect insurance until the date of settlement; however, your lender may require evidence of insurance prior to settlement.

Finally, settlement day will come, when you or your representative will discuss adjustments to rates and other payments involved in switching property ownership and will hand over a cheque (or series of cheques based on the required disbursements) in return for the title of ownership. Relevant authorities will be notified about the change in ownership by your solicitor or conveyancer.

Conveyancing options

Conveyancing is an important step in the buying process it is where a property is transferred from one party to another. This is usually done via one of three ways: a solicitor, a conveyancer or by the purchaser via a Do-It-Yourself (DIY) Conveyancing kit. Solicitors are usually the more expensive option, but can provide you with a wide range of legal advice in relation to property, wills etc. Expect to pay anything from $900 to upwards of $1,800, depending on the circumstances of your particular property transaction. Note that in Western Australia you can only use a solicitor for the purchase of a property if that solicitor is also licensed as a conveyancer.

Conveyancer’s are licensed to provide the same conveyancing services as solicitors, but can only give legal advice relating to property. Conveyances are usually cheaper than solicitors, with their charges ranging from $700 to $1,200 (although their costs will vary depending on the circumstances of your particular property transaction).

For those who like to be hands on there are DIY conveyancing kits on the market that are suitable for both buying and selling a home, and for auction and private treaty sales. These kits provide a step-by-step guide to conveyancing, and some offer a telephone support service to assist you. There are potential pitfalls of going the DIY path into which a solicitor or conveyancer is less likely to fall. The professionals indemnity and fidelity cover is also a factor that a buyer may wish to consider. DIY conveyancing kits range from about $100 to $250.

Planning your move

The contracts have been signed and the property you have purchased is about to become your home. Now you are ready to move. This section looks at how you can find a removalist, or what to consider if you decide to move yourself. You will also read about the option of insuring your possessions during your move and most importantly, letting people know your new address!

Moving home

Moving to a new home is a huge logistical exercise, but with proper planning you can reduce some of the stress involved. Once you have exchanged contracts you should start planning the logistics of the move.

Property removalist

The best way of finding a good removalist is to get a referral. Failing that, you can find a removalist via the internet or the Yellow Pages. Using the internet is a very quick and efficient way to research the range of services offered by each company. Most removalist's have a free online quote service, where all you have to do is enter all your details, and a quote will be emailed to you within 24 to 48 hours. You might want to get between three and four quotes before choosing a removalist.

Moving home on your own

If you have got some friends or relatives that are willing to help you move, you could hire a van or truck and do the move yourself. You`ll need to work out how many cubic feet of non-boxable and boxable possessions you need to move so you know what size truck to book. Don`t book open trucks, it`s bound to rain.

Hiring a truck is relatively simple. You might want to get three or four quotes from different truck hire companies and compare the benefits and costs. Source boxes as well - often truck rental companies can help here.

You will need to know how to manoeuvre and lift heavy items and have the right equipment e.g. trolleys, caster wheels, blankets, ropes etc.

If you need to hire moving equipment to help you move large items (e.g. trolleys, blankets, ropes and pads) you can find various companies listed on the internet (search for moving equipment). If you need to organise storage, source quotes and select a company.

Moving insurance

Consider whether you need to take out insurance for your furniture and other household items while they are in transit from your old property to your new property. If using a removalist, ask about the level of coverage that you will receive and the cost. Insurance normally covers the cost of any damage or destruction of your property during the moving process, although you should carefully read the insurance policy to find out exactly what is covered. You may also want to check that it covers theft.

Notifying services

Australia Post can redirect mail from your old address to your new address for a specified period of time.

Simply complete and lodge an application to redirect mail in person at any Australia Post outlet. Then when you receive your redirected mail you will be reminded as to which companies you still need to notify about your address change.