TIPS FOR BUYING YOUR FIRST HOUSE OR LAND
TIP #1 – GET ADVICE BEFORE YOU SIGN THE CONTRACT
- This is often overlooked by enthusiastic buyers, too quick to put pen to paper.
- Contracts are important and legally binding documents, and once signed they are difficult to change
- Dates are important – make sure they are achievable and be prepared to stick to them
- Consider your future plans for the property – don’t assume it can be done
- We do not charge any extra to review your Contract!
- Good advice can save you time, money and stress
TIP #2 – OBTAIN INSURANCE
- Standard residential (i.e. house or vacant land) Contracts – Risk passes to the BUYER from 5pm on the first business day after the Contract is dated
- Buyers should obtain an insurance policy or cover note insuring the property for public liability and replacement value of all improvements
- Don’t rely on seller maintaining their insurance (they may not have any)
TIP #3 – UNDERSTAND THE COOLING OFF PERIOD
- “Cooling off” – an implied term in every residential Contract which gives the Buyer the right to simply change their mind about a purchase within a specified time
- Lasts for five business days from the date the signed Contract is delivered to the Buyer or their solicitor, including that day
- Is not always “get out of jail free” – the seller can impose a termination penalty of up to 0.25% of the purchase price
TIP #4 – CALCULATE TRANSFER DUTY
- There are strict eligibility requirements for first home concessions
- Prior ownership of land anywhere in the world (in any share, even 1%) will rule you out from being eligible, even if you didn’t build on land
- Provided all buyers are eligible, nil duty is payable on first home or vacant land purchase
- If purchase price is over $549,999 the first home concession cuts out, but a Buyer may be eligible for a home concession
TIP #5 – UNDERSTAND WHAT “FINANCE APPROVAL” MEANS
- Finance approval date – the date by which you must have acquired a letter confirming satisfactory finance has been approved by your financier
- Requires effort from the buyer to actually apply for finance – i.e. you cannot state that you did not get finance approval if you’ve never applied
- It does not mean the money has to be available by that date. There is still a period of time for the lender to organise funds between the approval date, and settlement
TIP #6 – BUILDING & PEST REPORTS
- Buyers are responsible for organising these reports at their own cost
- Inspection date – the date by which you must have obtained pest and building reports and communicate whether they are satisfactory or whether you wish to terminate
- Standard Contract terms are often amended by agents to restrict a buyer’s right to terminate – you don’t have to agree to this
- Seller may be entitled to ask for a copy of the reports if you are relying on them to terminate your Contract
TIP #7 – ACCESS RIGHTS
- Access rights (following signing of Contract) are limited by way of standard Contract terms
- Upon reasonable notice, the buyer or its consultants may enter the property:
- once to read any meter;
- once to value the property (bank’s valuer);
- enable building and pest inspector; and
- once to conduct a pre-settlement inspection by buyer.
TIP #8 – WHAT IS SETTLEMENT?
- The date agreed in the Contract for exchange of purchase price and transfer paperwork
- Buyers and sellers don’t need to personally attend settlement
- We work with your financier to arrange settlement, advise cheques required
- We calculate any necessary adjustments to the purchase price (e.g. if rates are paid in advance)
- We collect keys or alternatively they are made available for collection from the agent
TIP #9 – CONSIDER COSTS
- “Legal fees” – Include:
- Professional fees (i.e. our charge for the conveyancing service provided, usually a fixed amount plus GST)
- Disbursements (i.e. costs of obtaining searches, government registration fees, courier fees etc. – charged at cost)
- Transfer Duty (if not eligible for full concession)
- Conveyancing is a very competitive area of the law, and not all services are the same! Make sure you are comparing apples with apples when obtaining quotes
- Some conveyancing services impose extra fees whenever there is a extension of time requested or granted under the Contract
- Obtaining legal advice on mortgage and loan documents is not usually part of a conveyancing service, and will incur a separate charge
- “Legal fees” – Include:
TIP #10 – IS YOUR PROPERTY OR CONTRACT UNIQUE?
Other matters to consider:
- Council approvals – the Contract does not provide any warranty that the improvements have been built pursuant to building laws. You should consider including a special condition to make your Contract subject to confirming all required approvals are in place.
- Is there a pool on the property?
- Are there overhanging trees, poor fences?
- Should you have a due diligence period to conduct further enquiries?
- Are there access issues?
- Electricity & water supply – don’t assume
- Is the property affected by an easement or other right?
- Does the “deal” come with other assets?
- Does GST apply?