Before you begin your search it's a good idea to shop around for your finance. It is in your interest to obtain a preliminary approval that will enable you to proceed as soon as possible once a sale has been negotiated. In some cases where more than one buyer is interested in the same property, time can be the determining factor in successfully securing the home you want. Budget for items such as stamp duty calculated on the purchase price, solicitor fees and charges, in many cases valuation cost and in some cases mortgage insurance. Your solicitor or conveyancer will arrange these once the property has been found. Check also if you are eligible for first home buyers, investors or relocation to regional area grants.
Research next. Look at newspapers, attend 'Open for Inspections', go to auctions and speak with real estate agents. Developing a relationship with real estate agents can be helpful. They are in regular contact with buyers and vendors and have knowledge of the local market.
When you've found the right home, submit your offer to the agent who will discuss this with the seller. Initial deposits are not usually accepted to secure the property as it is fully refundable and merely shows how interested you are in the property. Usually, the property remains on the market until contracts are exchanged and the full deposit is paid.
Gazumping occurs when the owner verbally agrees to a price and subsequently accepts another offer from a second buyer prior to committing to a contract with the first buyer. This is disappointing for buyers, particularly if they have paid money for reports and legal fees. To avoid being gazumped, you should be ready to sign the contract as soon as is feasible – so make sure your offer is not too low and that your finances are in order. Lengthy negotiations and waiting for finance approval create the opportunity for another keen buyer to offer the vendor more or a quicker exchange of contracts.
The contract sets out the terms and conditions of the sale including the fittings such as blinds, curtains etc and any items excluded from the sale. Your solicitor or conveyancer will examine the contract carefully. There are two copies of the Contract for Sale - one for you and one for the seller. You each sign one copy before they are swapped or "exchanged" and the deposit is handed over. Only when both the seller and the buyer have signed the contract and exchanged copies do you both become bound by the contract. The contract will stipulate the deposit amount and who will hold it.
There is a 5-business day cooling off period unless you have bought at an auction or you have waived the right to the cooling off period. You need to obtain legal advice regarding the benefits and also the obligations in waiving the cooling off period. The cooling off period follows the exchange of contracts allowing time for searches, obtaining reports, and confirming finance. If you do not continue with the sale, you will forfeit 0.25% of the purchase price from the deposit you have paid. Discuss with your legal adviser your rights and obligations during the cooling off period. Real estate agents can only exchange contracts in a private treaty sale with a cooling off period. Real estate agents can also exchange contracts under auction conditions and there is no cooling off period.
Settlement occurs when the buyer pays the balance of the selling price. Adjustments are made for water and council rates, strata levies for units and any outstanding mortgages are paid out by the seller from the purchase price. The buyer becomes the legal owner of the property after settlement. The period between the exchange of contracts and settlement is usually four to six weeks, although either party may ask for a longer or shorter settlement period prior to exchange. Feel free to call me if you would like to discuss any further queries you may have on purchasing your new home.