Buyer's Guide - FAQ's

All Residential Real Estate’s step-by-step guide to the buying process

 

Making An Offer

It is best if you have pre-approval on your home loan before you start negotiating a price on a property. Pre-approval provides an excellent guide to how much you can afford to spend, so you know how high you can go with your offers. This gives you a better chance of securing the property you want. Most lenders offer home loan pre-approval which usually lasts three months. Where finance is required, all purchases are subject to formal approval of finance.
You can provide an offer to our sales agent verbally or in writing. We submit all offers in writing to the owner of the property, and then negotiate with you on their behalf.
Your offer should be credible, given the property market at the time. Don’t forget that you will be competing with other buyers, so to ensure that you have the best chance of buying the property, make an offer that is as close to the asking price as possible.
Every property that is sold has a contract for sale. This sets out any terms and conditions that form part of the sale. It includes items such as property inclusions and exclusions, terms of settlement, deposit due and any other particulars of the property.
Inclusions are items that come with the purchase of the property when you buy it. For example - fixed floor coverings, blinds or light fittings. Exclusions are items that don’t come with the purchase of the property. Examples include a dishwasher or gas heater.
In most cases the deposit required is 10% of the purchase price. You pay the deposit when contracts are exchanged, and it is held in the All Residential Real Estate Trust Account until settlement when it is transferred to the vendor's nominated account.
A real estate agency trust account is not allowed to earn any interest. Sometimes a solicitor will instruct our agency to pay the deposit into an interest bearing account until settlement takes place.
Yes, you need a solicitor or conveyancer as they will look after the legal aspects of purchasing a property.

 

Signing & Exchanging Contracts

By signing your copy of the contract for sale to purchase the property, you are simply indicating your interest in buying the property. So the property will still be on the market. Once the contracts have exchanged, the property will then be off the market. Under current legislation, the best way to secure a property is to exchange contracts as quickly as possible.
Though not a legal requirement, many purchasers find it beneficial to have their solicitor look over the contract.
Yes. Once we have two identical signed contracts, one signed by yourself, and one signed by the vendor, we can then exchange the contracts.
There are two identical copies of the contract - one for the purchaser and one for the vendor. An agreed price is negotiated between the vendor and the purchaser. This means that both parties agree on the sale price and what is in the contract. Both the vendor and the purchaser then each sign a copy of the contract. Once the deposit has been paid, the contracts are then dated and exchanged, so each party’s solicitor is given a copy of the signed contract. The vendor’s solicitor receives the purchasers signed copy, and the purchaser’s solicitor receives the vendors signed copy. Once the contracts are exchanged, both parties become legally bound by the terms of the contract.

 

Cooling-Off Period

A cooling-off period entitles the purchaser to withdraw from the property purchase within 5 business day after the contracts are exchanged. If the purchaser does not wish to continue with the purchase, a written notice called a ‘Rescission Notice’ must be provided, and the purchaser will forfeit 0.25% of the purchase price from the deposit paid. This 0.25% goes to the vendor.
A cooling-off period comes in effect immediately after the exchange of contracts. The 5 business days start on the next business day after the date of exchange. Public holidays and weekends are excluded.
The exchange becomes unconditional, and the contract becomes legally binding for both parties, after 5pm on the last day of the cooling-off period. If the purchaser does not change their mind during the cooling-off period, then plans can be made for settlement.
There is no cooling-off period with an auction, so the sale becomes unconditional as soon as contracts are exchanged on auction day.
The deposit is usually paid in two parts. The initial deposit 0.25% of the purchase price and then the balance of the deposit (usually 10% of the purchase price less the initial 0.25% deposit already paid) is payable prior to 5pm when the cooling-off period expires.

 

Section 66W Certificate- Exchange

A Section 66W is a certificate which is signed by the purchaser’s solicitor or conveyancer, which waives a purchaser’s right to the cooling-off period. It is usually requested by a vendor when they want a quick settlement or a firm sale.
When exchange is enabled by solicitors, it usually involves a Section 66W Certificate. When an exchange of contracts happens through our agency the standard cooling-off period usually applies.
Once the vendor’s solicitor receives the signed Section 66W Certificate and the 10% deposit from the purchaser’s solicitor, and contracts have been exchanged, the cooling-off period is effectively waived. The sale is then unconditional – meaning that both parties are legally bound to proceed with the sale.
Usually a 10% deposit is paid, unless otherwise negotiated with the vendor. The full deposit must be paid prior to contracts exchanging.

 

Property Inspections and Bank Valuations

Inspections are carried out by specialists to assess the property for any potential problems. These may include pests such as termites, structural problems, rot or damp, as well as the general condition of the property. Bank valuations may be required by the purchaser’s lender to check the property and its worth as a security against the loan.
Once a purchaser has found a property they like, and contracts have been exchanged, the purchaser’s solicitor will order them to be done during the cooling-off period, unless a request for them has been done prior to exchange of contracts.
We suggest you speak to your solicitor or conveyancer to organize the building and pest inspections. Once they are scheduled, we will liaise with the owner and provide prompt access to the property for any inspections you require.
Once the purchaser is happy there are no issues, the purchase can proceed. If anything arises from these inspections that does concern you, you should let us know straight away.
Once contracts have exchanged, 0.25% of the deposit will be forfeited if the purchaser pulls out of the contract within the cooling-off period. It is wise to get these inspections done as soon as possible.
If time permits, you can look to another finance lender to obtain finance or you can use the cooling-off period to withdraw from the sale. Alternatively, you may decide that the property is still a good buy. Either way, we recommend you discuss this with us if it should arise.
There will not be a lot happening until it gets closer to the settlement date. It is a good idea to arrange for building insurance and to plan for the final inspection and settlement.

 

Settlement

Settlement is the completion of the sale. Typically the purchase is finalized (this is known as "settlement") six weeks after the contract is exchanged. The purchaser pays the balance of the purchase price – usually (but not always) six weeks after the exchange of contracts. Adjustments will be made for water and council rates and strata levies if applicable (for units, villas, townhouses or duplexes), and the vendor pays out any outstanding mortgage. The purchaser then becomes the legal owner and takes possession of the property. Occasionally a shorter or a long settlement period can be negotiated as part of the contract if both parties are agreeable to this.
The purchaser carries out a final inspection to confirm that the property is in the exact condition agreed to in the contract of sale. The final inspection usually happens a few days or the day before settlement. It can happen earlier if the vendor agrees. This final inspection should be booked in with us at least 7 days in advance, to give the vendor enough notice.
Once we have received notification of settlement from the solicitors, we can release the keys to you and you can move in. Organising to move into a property on settlement day can sometimes be difficult, as there can be last minute issues which delay settlement by hours, or even days. The best plan, if possible, is not to move in on the actual day of settlement.
No, the purchaser does not get the keys to the property until settlement is completed. Very rarely, if both parties are agreeable, the purchaser may be permitted to have access prior to settlement as part of the negotiated contract. This is called "Occupation Under License".
If the property is currently leased, the rent becomes yours from the date of settlement. If it is vacant and you select us to manage it, we will negotiate with the vendor on your behalf to be able to advertise and show the property prior to settlement if possible. This will give us the best opportunity of finding a tenant to move in immediately after settlement, so you start receiving a rental income quickly.
The deposit will be held in a trust account by either our agency, or the vendors’ solicitor. If agreed, it may be released to the vendor for payment of a deposit when they are buying another property.
Gazumping is when a purchaser has negotiated a price for a property that is accepted by the vendor, but before contracts are exchanged, another buyer makes a higher offer or offers better terms, which the vendor accepts. Gazumping can also happen when a vendor has competing buyers and raises the price. Being ‘gazumped’ can be disappointing, especially if costs have been incurred for inspections etc. Gazumping is not illegal.

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