Handy Hints For Buyers

When people buy a home it is usually based on pure emotion. You love the house, you love the Street, it's what you've been looking for. Sign me up!!!!!!!!

BEWARE!!!!!!!

Take your time, buying a home whether your first, second or tenth is a huge decision.

When you buy a second hand car you will most certainly get a vehicle inspection and yet people buy a home that is worth 10 to 20 times more than the car and never undertake anywhere near the research they undertake when buying a second hand car.

Before you buy, not only should you establish the total cost, but you should also establish what the process involves and the time each process takes.

To establish the total cost, see th What does it cost section on this page for more information or Contact us and we will email you a complete quote.

Finance considerations

Be aware that whilst banks and finance companies may offer very quick approval times, this is not end of the process.

Initially you will be "qualified" for the loan, ie the Bank indicates that you appear to meet their requirements for a loan.

From here you will need to make a formal application which will be considered by the Bank. This could take anywhere from a week to three weeks.

The Bank will then make you an offer of finance that details the terms and conditions upon which they will lend you the money. Until you accept the Bank's offer, the loan is not really "approved".

After accepting the Bank's offer you will then be required to sign mortgage documents and pay any costs associated with the mortgage.

Some banks will get you sign the letter of offer at the same time as the mortgage documents, however, other banks will not proceed with mortgage documentation until you have signed the letter of offer.

Once mortgage documents are signed and costs are paid there may be a mandatory period before Settlement can occur.

Finance Brokers often make representations on time frames which are just not possible, so beware of this.

It is considered prudent that your finance approval period should be for no less than 21 days with Settlement being a further 21 to 28 days after that.

If you need to obtain finance to assist with your purchase do not under any circumstances make a cash offer. A cash offer is exactly that, it is representing to the seller that you have sufficient funds to purchase the property. If for whatever reason your Bank withdrew their approval for finance you could lose the deposit you have paid and the Seller might exercise their rights and remedies under the Contract. Don't take that risk.

If you are considering putting in a cash offer based on a pre-approval we recommend you allow at least seven to eight weeks from the date of your Offer for the Settlement Date.

For more information on this, please refer to the submenu on the Banks/Brokers page "Pre approval is not finance approval"

Setting a settlement date

When setting a settlement date have a look at a Calendar and make sure the Settlement date falls on a business day.

Settlement should be at least 21 days from finance approval (finance approval should be 21 days from acceptance of the Contract) or 21 days from acceptance if the Contract is truly a cash contract.

This is a minimum 42 day period which may seem like a lifetime, but from experience we can assure you it's not.

This allows everyone time to do what they need to do eg:

• You have to move!
• The seller may have to find new accommodation and move out prior to the Settlement date.
• The bank has to prepare mortgage documents
• Your settlement agent has to make certain enquiries but most importantly needs to receive replies back PRIOR to settlement.
• Conditions needs to be fulfilled eg Termite Inspection Reports
• You need to sign a mountain of paperwork at which point you will wonder as we do how the hell this process is ever going to become paperless!

42 days isn't that long is it?!

When you've considered all of the above and you have read Formulating special conditions, Types of Special Conditions and Items to check before signing a contract and you have decided on your settlement agent then, and only then, should you start looking for a property.

In our Latest News we will keep you informed of problems that have arisen due to clients not following this process and the triumphs our clients have had because they did follow the correct process.

Looking for a property

A lot of variables need to be considered when looking for a property eg location, availability of services (schools/shops/doctors etc), price range and type of property.

When inspecting a property, particularly one you may put on offer on you should be checking the items we have listed under Items to check before signing a contract.

Look closely at the property, switch on every light, flush every toilet, try every tap, check out the reticulation etc etc.

If you discover any matters that may need repair you have a number of choices which are listed as follows:

• You accept the property as is and make your offer taking into account the cost of the repairs you will have to do at a later date. A special condition should be put on the contract stating that the Buyer is aware that eg the airconditioner does not work.
• You make your contract conditional upon the item being fixed at least three days prior to Settlement at the Seller's expense.
• You could make your offer subject to quotes being obtained to effect the repairs and the amount of the quote is to be allowed to you on Settlement.

Do anything but ask your settlement agent to hold monies as this creates aggravation and stress for everyone.

The Offer and Acceptance Contract

When completing an Offer and Acceptance Contract you need to pay close attention so that the Contract accurately reflects your offer.

Consider what name you wish to purchase the property in.

You must use your full legal name, ie the one you were born with. Even if you didn't like having Boris as a middle name, if it is on your birth certificate it must go on the Contract.

Prior to entering into an Offer and Acceptance Contract we recommend you seek legal and accounting advice to determine which name the property should be purchased in. It is imperative that the Contract clearly show who the Buyer will be. The use of nominee clauses should be avoided as this may result in you incurring double stamp duty unless evidence is provided to the Office of State Revenue that there is an “agency agreement” between you and the nominee. Buyers should be aware that it is illegal to make any amendments to the Contract or destroy it after it has been fully executed. Every Contract is dutiable unless evidence is provided that the Contract was brought to an end due to a non fulfilment of a condition. Please also remember that there are only certain conditions which if not satisfied will result in the contract being brought to an end. When in doubt, please contact us.

For more information on this issue, please refer to the Nominee/Agency sub menu on the Contracts page.

If you are purchasing the property for your Superannuation Fund or as Trustee for a Family Trust, special care needs to be paid to ensure that the Contract is prepared correctly.

Eg :
John Smith as Trustee for the John Smith Family Trust
Or
Smith Pty Ltd as Trustee for the Smith Superannuation Fund

After a Seller has accepted your Offer the Contract cannot be changed, just another reason to ensure that it is prepared correctly the first time.

If you are purchasing the property with another person you will need to consider whether to hold the property as Joint Tenants or Tenants in Common:

Joint Tenants - The ownership of land by two or more persons where there is a right of survivorship ie on the death of one joint tenant, the surviving owner becomes the sole proprietor.

Tenants in Common - Where there is a desire for two or more persons to hold the land in undivided shares. On the death of one party their share forms part of their Estate and is distributed in accordance with the terms of the Will.

Complete the Purchase price and deposit sections.

Complete the Settlement date bearing in mind the time frames for finance approval etc

Complete the finance clause section

On the front of the contract you should insert any special conditions and we again refer you to Formulating Special Conditions and Types of Special Conditions for guidance in this regard.

Real Estate Agents will have their own preprinted standard conditions however we recommend that you read these very carefully. If the preprinted conditions do not suit you, you are entitled to draft your own.

Nominate your Settlement Agent and sign and initial the Contract where required.

The Contract will then be presented to the Seller for acceptance or counteroffer. Each counteroffer should be initialled and dated.

Once the terms and conditions have been agreed between you and the seller, the original Contract will be sent to your nominated Settlement agent. A copy will also be sent to you.

You will then need to ensure that you satisfy special conditions by the latest date and communicate all pertinent information to your settlement agent.

Once the contract is unconditional the settlement agent will undertake the settlement process on your behalf, see What do we do - Buyer.