Things To Check When Buying A House Or Apartment And Final Steps To Buying
If you’ve found a property you’re keen to buy, you need to complete a thorough due diligence check before you sign the contract or pay a holding fee. Taking a business-like approach, using qualified experts where needed and checking the facts carefully can ensure you understand the advantages and risks of the proposed transaction.
Here is a look at the key due diligence steps to take before buying a house or an apartment.
- Review the Contract of Sale - The whole process of buying your home is governed by the Contract of Sale. This is a legal document that dictates exactly what you get, when you get it and how much you have to pay. With so much of your money at stake, it’s imperative you get your conveyancer or solicitor to review the contract before committing yourself to anything.
- Building and pest inspections - A qualified building and pest inspector can inspect the property for structural or foundation issues, pest of rodent infestations and other issues not visible to the naked eye.
- Get a survey report - If a recent report has not been completed, you may need to get one done. This will show you the details of the block boundaries, easements etc. Your conveyancer or solicitor can help you here.
- Recent sales data review - Collate recent sales data to help you determine the value of the property you are looking at. If you have done your research carefully, you should have a good idea of a home’s value.
For an in-depth look at this step read our article buying a house or unit how to do your due diligence.
Sign contracts and pay the deposit
If you have successfully negotiated the purchase of a property, or you are the successful bidder at the auction, you will be required to sign the Contract of Sale and pay a deposit to legalise the transaction.
There will be two copies of the sale contract, one for you and one for the buyer. You each sign one copy before they are swapped or as it is called in a few states ‘exchanged’. This process can be facilitated by your real estate agent, your solicitor or conveyancer. At the time the contracts are exchanged, the buyer will be required to pay a deposit, which is normally 10%, and this will be held in trust by the real estate agent or your conveyancer.
This step is important for a number of reasons:
- The buyer and seller are not legally bound until signed copies of the contract are exchange
- If you bought a property at auction, there is no cooling off period and you are legally bound to buy the property once the contract is exchanged
- If you bought by private treaty, there is normally a five-day cooling off period during which time you can withdraw from the sale. This may have been waived, extended or reduced in your contract so it’s important to be aware of this
- Generally, a seller does not have a cooling off period, once the contracts are exchanged, they are normally bound to complete the agreement.
As settlement day approaches, the new buyer will have the opportunity to inspect the property to check nothing untoward has happened since they signed the contract. It also enables the buyer to check all outstanding jobs stipulated in the contract have been completed.
On the agreed settlement day, the respective settlement teams will ensure all conditions of the contract have been fulfilled. The buyer’s lender will authorise to pay the balance of the purchase amount and the conveyancer, solicitor or sales agent will transfer the deposit that has been held in trust.
The seller’s legal team will make sure that all necessary property taxes, land transfer duty and water rates are paid. Once everything is settled, the transfer documents will be completed and lodged with the land registration office in the relevant state or territory. Assuming all goes to plan, you assume legal ownership of the property and the keys can be handed over.
A final word
Buying a house or an apartment is one of life’s biggest and most rewarding decisions. As it is undoubtedly one of your largest investment, it is a process filled with emotion and excitement. However, the vision of owning your own four walls is still the ultimate Australian dream. We hope that this guide has helped clarify the process of buying a house or apartment and helps you on your home buying journey.
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