To buy a residential property, one must be aware of the rights as a buyer, and the working of the buying process. If you are buying a property for the first time and you need updated information regarding the property market, this article might just be the refresher you need.
The process of buying a house will differ depending on whether the house is sold by a private treaty or at an auction for which the rules may also vary in each State or Territory. For anyone purchasing a home or investment property, consulting an experienced property lawyer like Sydney's Owen Hodge team is an important step to take.
The buying process includes the following steps:
- Organise your finances: Organise your financial structure, decide on how much you can afford for owning a property and determine your borrowing capacity.
- Find a property: Determine the kind of house that will meet your requirement, and attend open inspections and auctions to get an idea about the properties available for sale.
- Engage a Conveyancer: Engage the services of a professional Conveyancer who will help you with the legal documentation and the settlement process.
- Research on the property: After finding the property, do some background research, so as to identify any issues involved in that property.
- Making an offer: Once the background research is done, make a signed, written offer directly to the property owner(s) or to their agent, if buying through a private treaty. You can make an offer in the form of a Contract of Sale which will become legally binding if the Vendor signs it.
- The auction: If the property is available in an auction, you can attend and register as a bidder. Being successful, you will be expected to sign the Contract of Sale and pay the deposit as soon as the auction finishes. You should organise for building inspections or engage your financial institution to conduct a property valuation before the auction day, as you will not be able to make the Contract of Sale subject to any conditions, which is not entitled to a cooling off period.
- Contract of sale: This is the legal contract which will become binding once the Vendor and you have signed it.
- The deposit: The deposit is payable after the Contract of Sale has been signed. You will need to transfer the money to the Vendor or to the Vendor’s agent organised by the Conveyancer, engaged by you for yourself. If you are buying a property at auction you will be expected to pay the deposit as soon as the auction finishes.
- Cooling off: Specific time is given to every buyer to re-think about the deal, while buying a property through a private treaty. This period is usually for two business days from the date, the Contract of Sale is signed by both the parties. If you have decided to withdraw from the purchase and if you have paid a token amount as the security deposit, then that will be forfeited to the Vendor; but if you have paid a big amount as the security deposit then that will be returned to you. There are no other consequences from withdrawing, during the cooling off period. Property buying at auction or on the day of auction is not entitled to a cooling off period.
- Settlement: This is the date on which all legal documentation is transferred from the Vendor’s name into yours. The adjustment of rates and taxes are calculated, and the balance of the price of the property is paid to the Vendor. If you were using a Conveyancer, such person will attend to the settlement and represent you throughout the process.