1. Make an offer, don’t sign the contract
Any serious offer to buy a place should be in writing. But that doesn’t mean you have to sign the contract of sale just yet.
If the selling agent pushes you into signing the contract as soon as you’ve made an offer, be ready to hit the ‘pause’ button. There’s still a lot to do before you put your signature to a legally binding document.
If you have home loan pre-approval in place (smart move), speak to your Mortgage Choice broker straight away to them know you’ve found the property you want to buy. This will get the ball rolling with unconditional approval for your home loan.
If you haven’t taken any steps to arrange a home loan, it’s even more important to get in touch with a Mortgage Choice broker.
It is possible for your formal offer to include a ‘subject to finance’ clause, and it can be a wise move. Remember, it takes several weeks for a lender to process your loan application so don’t bow to pressure from the real estate agent to bypass the subject to finance clause or reduce the extra time required.
3. Send the contract of sale to your legal rep
Thank goodness for email! It means you can fast forward a copy of the sale contract to your conveyancer or solicitor.
This is an essential step. The contract should specify ‘chattels’ – in other words, those items that come with the place you are buying. Your legal rep can identify the ‘removable’ items such as the dishwasher, curtains, and even floor coverings. It’s an area where home buyers can easily be caught out.
Be sure too that the settlement date works for you before you sign a contract of sale. Vendors are often reasonably flexible if you need an extended settlement period beyond the traditional six weeks.
4. Your deposit
When you submit a written offer on a property, the real estate agent will expect some sort of holding payment – often a $1,000 deposit. This is not the same as a 10% deposit you may pay on the exchange of contracts or if you’re the highest bidder at auction. Rather, it’s a sign that your offer is genuine.
If you don’t want to, or can’t afford to pay a 10% deposit when your offer is accepted, don’t sign a document to say that you will.
If you’re struggling for a 10% deposit, which can be the case if you have funds tied up in a term deposit, talk to your Mortgage Choice broker, who can often suggest alternatives such as a deposit bond.
5. Building inspections
If you want to make your offer subject to a clean building and/or pest inspection, the real estate agent will usually have standard wording to be included on the contract.
Read the wording they provide to be sure you’re happy with it. If not, ask for it to be altered to your requirements.
6. Getting finance approved
At this stage, you’ve made your offer and handed over a small down payment – maybe $1,000. You've made your offer subject to finance, with a finance clause spanning a couple of weeks, and the balance of your deposit is due the same date.
Now’s the time to meet with your Mortgage Choice to get your home loan application underway and make the property your own.