The Home Buying Process

Once you’ve worked out how much you can borrow, have your deposit and know the home loan that’s right for you, Lets look at the actual steps involved in buying a home.

There are three main ways to buy a home in Australia – auction, private treaty and to a lessor extent tender.

Auction

There is no price set at an auction, you need to have an understanding of what the property is worth and what your willing to pay for it. Get all your inspections and valuations done before the auction as you can’t put conditions on the contract – talk to your solicitor about checking the terms and conditions of sale also. Arrange to have pre-approved finance with your lender – you’ll also need to be ready to go with your deposit if you win the auction usually 10% of the purchase price. The seller will set a reserve price before the auction. Then once the bidding reaches the reserve price, the property is ‘on the market’ and must be sold to the highest bidder.

Private Treaty

You make an offer in writing normally on the contract of sale and then negotiate with the seller until you agree on a price and conditions.

Tips for making an offer on a property.

• Don’t go with your highest offer first.
• Play your cards close to your chest, try not to give away how much you love the place.
• Find out from the agent as much as possible about the sellers requirements/intentions. Price is not the only thing that is negotiable. But remember the agent is acting for the seller, not you.

Tender

You'll see the tender process used more in larger sales or commercial deals. In a tender, no price is set. If you’re interested, you’ll submit an offer in writing. The seller picks the offer they like the most which may not always be the highest offer. They can either accept the offer – in which case it becomes legally binding – or they can negotiate with the bidder. You won’t be able to find out what anyone else offered.

After the exchange of contracts in a private treaty sale there may be a cooling off period during which time you may be able to change your mind and withdraw from the contract to buy the property. You should check with your solicitor/conveyancer about whether a cooling off period applies to your contract before exchange of contracts takes place. Generally speaking, there is no cooling off period for contracts exchanged following a successful auction bid.

Insurance

You’ll need to arrange for Home/Buildings insurance upon exchange of contracts and contents insurance from the time you move in. If you’re purchasing a home unit you’ll need to obtain a Certificate of Currency from the body corporate’s insurer to make sure the property is adequately covered. (Your solicitor/conveyancer/broker may obtain this for you.)

Settlement

This is when the buyer pays the balance of the purchase price and takes ownership of the property. Final settlement varies between States and Territories but normally takes place up to six weeks after the exchange of contracts. The title deeds (if any) will be handed over to your lender, or to you if you purchased the property without borrowing. Finally, the keys are handed over to you.

1. Your solicitor/conveyancer will prepare and arrange for you to sign a Transfer of Land document. You should ensure that this is done at least two weeks prior to the settlement date. This document will be handed to your lender at settlement. Your lender will register it at the State/Territory Title’s Office on your behalf. Upon registration the property will be changed over to your name.
2. Your solicitor/conveyancer will contact your lender, the seller’s solicitor/conveyancer, and any other interested parties to arrange the date, place and time of settlement.
3. Your solicitor/conveyancer should advise you one week prior to the settlement, of the exact date, time of settlement and the amount of funds that you are required to provide prior to settlement (if applicable). This amount is usually required to be paid by bank cheque one day before settlement.
4. After settlement has taken place, the vendor’s solicitor will contact the real estate agent and advise them to hand over the keys to you.
5. Your solicitor should contact you and confirm settlement has taken place. They will also send you a Statement of Adjustment to show you how the funds have been disbursed to the parties involved.