Buyers

BUYERS GUIDE

• Elders real estate agent network has now grown to over 320 offices operating in all capital cities, major regional and rural centres across the country. In FY2010 our network sold 8338 properties for a combined total value of $3.23 billion.

• Elders has serviced the Australian Real Estate industry for over 177 years.

• Our service goes beyond just Real Estate… We are consultants, educators, and partners to the client.

Buyer Checklist

• Evaluate your budget – know what you want to spend for a deposit, purchase costs as well as monthly expenditures (i.e.; maintenance, insurance, stamp duty, taxes, monthly mortgage payment, utilities,parking, etc). Initial deposit payments can range from $1000 which is usually payable when you make an “offer” on the property and is fully refundable if purchase doesn’t progress due to conditions not being met. The deposit is usually 5-10% maximum of purchase price and purchase costs can range from 2.5% to 5% of your final loan amount.

• Obtain mortgage pre-approval by using one of Jenny’s “trusted business partners” found at the bottom of the homepage, or from your lender and/or bank.

• Identify your timeline for moving & explore different neighbourhoods to identify your preferred needs such as location, space, schools, amenities, features, restrictions etc…

Purchasing Process

1. If you are financing you must 1st seek pre-approval for a mortgage: Typical time frame 2 to 7 days. You must know how much you can spend before you spend it. A pre-approval will require your credit to be checked and for you to verbally supply details about your income and assets so that a Mortgage Broker can determine how much you can qualify for and provide you with a pre-approval letter.

2. If you are buying CASH you can easily bypass step #1 but must be prepared to provide Proof of Funds to show you have enough liquid assets to purchase w/o obtaining a mortgage.

3. Find a property: Typical time frame 1 week to 2 months. Depending on what you are looking for, the length of your search will vary. The average person sees 10-15 properties before deciding on one. Internet-savvy buyers save time by doing their ‘homework’ before their search. The average number of properties viewed before buying by our internet buyers is 4-5.

4. Contract of sale / Making an Offer

a. Once a buyer has decided what they would like to submit by way of offer, an agent will encourage them to put the offer in writing. This recommendation is for the benefit of the buyer as it shows the seller that the buyer is serious and also alleviates discrepancies that can occur with verbal negotiations.

b. An agent will present a buyer with a number of documents and is obliged to go through these documents to avoid any confusion. If a buyer still has queries at this stage, they are encouraged to seek independent legal advice.

c. The contract sets out:

i.  Attached to the Contract of Sale will be a copy of the registered plan. You need to check that the property on the title is the same as the one you inspected. If you suspect something is amiss on the plan you receive hire a surveyor to inspect and independently prepare a plan for comparison.

ii. It’s also crucial to carefully review what is considered a permanent chattel or fixture in the contract so you’re clear on what items will be sold to you along with the property. Items such as curtains and blinds, the stove, pool equipment, carpeting, light fittings and the dishwasher are usually specifically referred to so there is no doubt as to whether they’re included or not.

iii. the price you are offering for the property.

iv. Any ‘special conditions’ you want on the contract.

See if there are any ‘Special Conditions’ that have been inserted into the contract on behalf of the vendor. These are the ones to read and re-read. Special conditions could include penalties for a delay in settlement or that the sale is subject to a tenancy. You could also insert your own Special Conditions like the sale is subject to finance being obtained, the sale of your own home or a pest and building inspection being satisfactory.

v. details of when you will pay your deposit.

The deposit amount will appear in the contract, which is a maximum of 10 per cent of the purchase price. You should always check with your financial institution or adviser about the best method to pay the deposit, whether that may be a lump sum by cheque or in instalments by electronic transfer.

vi. Any easements

You also need to be on the lookout for registered and unregistered easements on the plan. If there are easements on the property (like electrical mains or sewers) you may be restricted in how you can use that part of the land. For example, if you were planning to rebuild or extend the property down the track the cost to build over the easement may be increased or not possible for building approval which may put you off purchasing altogether.

vii. the time and date of settlement.

If you’re currently renting or selling your own home and want to move in by a certain date, you’ll need to negotiate an appropriate settlement period with the sellers. Check the contract to see what the proposed settlement date is, which is usually 30, 45, 60 or 90 days.

Some sellers may be highly motivated and desire a shorter settlement, while others may still be looking to buy their next home and need a longer settlement. Check with the agent what the seller’s motivation is and when they ideally want to settle. If you’re able to agree on a shorter or longer settlement period that suits the vendor, you may sweeten the deal for them substantially.

d. The contract only becomes binding when you and the seller have both signed it.

e. A cooling-off period of 5 days applies to contracts for residential property. You are free to change your mind during this time. This does not apply if you buy at auction. For example, in Queensland if you cancel the contract during the typical five day cooling off period you have to pay a penalty of 0.25 per cent of the purchase price to the seller in order to cancel the contract.

It’s important to note here, there is no cooling-off period when buying at auction. So you have to do all your contractual negotiations, financial arrangements and building inspections prior to the auction date.

f. The REIQ Contract of Sale (approved by the Queensland Law Society) has provision in the schedule for the contract to be subject to finance, a building inspection and/or a pest inspection if these are required.

g. Buyers are encouraged to employ the services of a registered building inspector and registered pest inspector should they include these conditions as part of the contract of sale.

5. MULTIPLE OFFERS

a. When deciding to buy a house or other property and submitting an offer, a buyer may be informed by the agent that multiple offers exist for one particular property. Multiple offers occur generally in a ‘sellers market’ where competition for residential.

property is greatest and there are more buyers than there are properties for sale. However, it can occur in any market and especially for properties within the more affordable price range.

b. An agent has an obligation to let a buyer know if their offer is part of a multiple offer situation and will encourage a buyer to put their best possible offer forward (taking into consideration that the offered purchase price is only one of the terms of the offer). To read more on multiple offers, see REIQ Insights.

6. Paying the deposit

a. A buyer will be encouraged to pay a deposit when signing the offer. By doing so buyers show the seller that they are making a serious offer and showing their goodwill. Deposits can be paid by way of cash, cheque or electronic transfer of funds. They can also be paid using deposit bonds or bank guarantees. Buyers should seek advice from their financier as to any associated costs with deposit bonds or bank guarantees before paying a deposit in this form.

7. CONDITIONS

a. If a buyer terminates the contract under the cooling-off period or another legitimate way, the deposit is refundable (excluding the termination penalty of the cooling-off if the seller elects to charge it).

b. It is important for a buyer to ensure building and pest inspections (if applicable) are carried out within the time frame set out in the condition. With regards to finance, if an independent valuation is required as part of the finance process, buyers should ensure their financer has this arranged within the time frame of the condition.

c. If a buyer feels that any conditions may not be finalised by the applicable end date, they should seek legal advice from their solicitor as soon as possible. Commonly, a solicitor may suggest a buyer requests from the seller an extension to the condition date. It is the seller’s discretion to grant, or not grant, the request.

Legal

What is Conveyancing?

Conveyancing is the legal transfer of a property’s title from the seller to the buyer. It is important that buyers research who they wish to use for conveyancing when they have a contract of sale.

USE A SOLICITOR

• The Real Estate Institute of Queensland recommends the use of a qualified solicitor for any property matter, including conveyancing.

• Using a solicitor often saves time on paperwork such as title searches and stamp duty, and can often provide peace of mind when making what may be the largest single financial transaction of one’s life.

CONVEYANCING COSTS

• Conveyancing will incur costs such as searches of the:

o Titles Office,

o Certificate of Rates,

o Zoning

o Transfer duty

o Registration fees

o Standard professional services costs

• Local government searches have become vital in the conveyancing process to determine how an area will develop in the next five to 10 years. They ensure major changes like new freeways and major road upgrades are not planned for a property’s backyard.

• Searches for zoning and titles will determine whether the property has any restrictions such as adverse planning, demolition orders, outstanding taxes or encumbrances on the title (for example, easements or caveats)

• Most of these searches are standard in the conveyancing process but are often overlooked when buyers elect to do the conveyancing themselves.

Settlement

• Once a contract has become unconditional it is time to start packing! It is important for a buyer to keep in touch with their solicitor and their agent through this time with regards to any issues that may arise approaching the settlement date.

• Buyers are encouraged to arrange a pre-settlement inspection with the agent to ensure that everything is per the contract conditions, noting any included chattels or excluded fittings. Pre-settlement inspections should be conducted once the property has been vacated by the seller or its occupants.

• Commonly, the solicitor will attend the actual settlement on the buyer’s behalf and both the seller’s and buyer’s solicitors will notify the agent once settlement has occurred. Only after an agent has received notification from both parties, can keys be released to the new property owner.

Your quest of buying a house, unit, townhouse or any other property is now complete – enjoy!

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