March 18, 2016
So you’ve found the property you love, and have agreed on a price with the seller - you’re almost ready to move in! Let’s see what’s left of the home buying process!
Neither you nor the seller is legally bound to go ahead with the sale until a written contract is exchanged. An exception to this is when you are the highest bidder on a property sold at auction.
This contract usually details the:
- Property address
- Names of the parties (you and the seller)
- Selling price
- Terms and conditions
- Special inclusions in the sale like a dishwasher or blinds
- Date of settlement (the day you become the owner)
Exchanging contracts is pretty much what it sounds like – both you and the seller sign a copy of the document then swap them. You also have to pay the deposit at this time.
Have the contract reviewed
It is imperative to have the contract of sale reviewed by your conveyancer or solicitor before you sign it. While the contract is usually prepared by the seller’s solicitor, your legal representative should check the details and make sure zoning, heritage or title restrictions don’t clash with your intended use of the property. Any special conditions should also be clearly explained to you.
The cooling off period
If you have purchased through private treaty rather than at auction you may have a cooling off period after the contract is exchanged depending on where you purchased.
The table below shows the cooling off periods that apply for each state and territory. Where a cooling period is available, you may be asked to pay a small penalty for cancelling the contract – usually 0.25% of the property’s sale value. If you decide to rescind the contract, you must formally notify the agent in writing.
State/Territory Cooling off period (N/A to sale by auction)
ACT: 5 business days
NSW: 5 business days
NT: 4 business days
QLD: 5 business days
SA: 2 business days
TAS: No cooling off
VIC: 3 business days
Do note cooling-off periods are not applicable to properties sold at auction, commercial properties or farms.
For more information about cooling-off periods and to better understand your rights as a buyer visit the Fair Trading or Consumer affairs website for your state or territory.
Preparing for settlement
The day you take ownership of your home is referred to as ‘settlement’ and from the time between exchange of contracts and settlement – usually six weeks (though this may be negotiable), your solicitor or conveyancer will be busy organising the transfer of ownership of the property into your name.
Your mortgage broker will also be working behind the scenes, ensuring that your home loan will settle on the same day as your property purchase. This just means that the lender is able to pay the balance of the purchase price on the date specified by the vendor.
There are a number of steps you can also take in the period leading up to settlement to make the changeover more streamlined.
- Have funds available for stamp duty – this will be due for payment at settlement
- Shop around for, and organise, competitively priced building insurance. Once you’ve paid a deposit you have a financial interest in the property so building insurance is a must-have and it’s something your lender will ask for also
- Arrange the balance of the purchase price – that is finalise the finance and sign the mortgage documents
- Contact utility providers (phone, power, gas) to arrange connection of services on the day you plan to move in
- Arrange for furniture removal and mail redirection to your new home
- Advise your landlord of intention to vacate (if renting)
For you as a buyer, the period between exchange and settlement should be smooth sailing as your professional support team – your conveyancer/solicitor and your mortgage broker will do most of the work on your behalf!
Conveyancing – A key part of the buying process
Conveyancing is the legal process you go through when buying a property. Aside from legally transferring ownership, conveyancers may help you identify and avoid potential problems with a property.
The role of the conveyancer can include:
- Giving advice on the property contract
- Facilitating searches on strata reports
- Arranging for the exchange of contracts for sale
- Negotiating with the vendors solicitor on the buyer’s behalf
- Arranging the settlement process and dealing with any difficulties that arise during the settlement period
When choosing a conveyancer – either a solicitor or a specialist conveyancing company – make sure you know exactly what service they are offering, and what their qualifications are. A low price can mean that the service is just the legal minimum of ‘filling in the forms’. Whereas a more expensive quote could cover advice throughout the process.
Contact either Owun, Suzanne or Costa on 02 9517 1818 or firstname.lastname@example.org to discuss your options. Or, if you feel like dropping in at our office, we are located at Suite 106, Flourmill Studios, 3 Gladstone Street, Newtown 2042. Be sure to share our blog on Facebook and Twitter and let others join the conversation!