As a home buyer, and in particular a first home buyer, it’s important to surround yourself with the right team of professionals to guide you through the process. Having a loan pre-approved for a purchase is a crucial and important first step to understanding what you may be able to afford and the repayments that come with it however, once this is in place it is only one of the pieces to the puzzle. When the property search begins having a conveyancer or solicitor to review the purchase contract so that you fully understand the terms of the transaction you may be about to enter into, is probably one of the more important parts of the buying process.
When should I engage a Solicitor or Conveyancer?
Whether you engage a solicitor or conveyancer, both professionals perform the same function when it comes to reviewing a purchase contract and the advice for the purchase of the new property. If the transaction is straight forward, there is really no differences in the duties performed. Where you may find a solicitor more qualified is when the purchase becomes a little more complicated, and there may be legal issues that arise that may need a lawyer’s advice.
When you find a property you are interested in, the real estate agent will provide you with a copy of the sale contract. This is a lengthy document which can be very confusing and should be reviewed by your solicitor or conveyancer before you sign it. The process can be overwhelming for a first-time property buyer, so find a solicitor/conveyancer you feel comfortable with. This is where a referral is often helpful in finding the right one for you. They will guide you through the pertinent parts of the contract you should be aware of, negotiations on deposit terms and length of settlement and when and when not to exchange on the purchase.
Typically, the fees for your property purchase will be between $1,600 and $2,200 plus GST. You should also budget around $200 for the cost of rates certificates (etc) that are required during the process. Whilst there might be a charge for a contract review (when looking at multiple properties) many solicitors will include this charge in their overall fees. The solicitors may also provide advice on when it may be beneficial to gain copies of building and pest reports or strata reports (in the case of unit purchases) these may be costs incurred over and above the normal conveyancing fees
As all sale contracts are drafted in favour of the seller, your solicitor should also request some amendments to the contract to achieve a more balanced contract. This process generally takes 1-2 business days.
You should also use this time to work with your banker to finalise your finance approval if you have not already done so, carry out any further inspections at the property as well as valuations that will form part of the financial approval process.
It is recommended that you obtain a pre-purchase inspection report for the property. As a purchaser, you accept the property with all defects, so these reports are helpful in identifying issues that are not readily apparent to a first-time homeowner. Your solicitor can assist you with obtaining these reports.
Once you have the green light to proceed and the purchase price is agreed, the agent will ask you to sign the contract and pay a deposit.
Signing the contract
This stage of the process where the contract is agreed and signed is referred to as “exchange”.
When purchasing residential property (except at auction), the sale contract includes a “cooling off period”. This will secure the property for you for five business days, so the owner cannot sell it to anyone else during this time. This is intended to give you some time to finalise your finance approval and pre-purchase inspections (Property valuation). If you elect to rescind (terminate) the contract during the cooling off period, you will forfeit only 0.25% of the price and the rest of your deposit will be refunded.
As is the case for a purchase at Auction, some sellers will ask you to waive the cooling off period and ask you for a “66W certificate”. This is prepared and signed by your solicitor and means that the contract will not have a cooling off period, so it will be immediately binding. If you agree to take this option, it is important to ensure that your finance is unconditionally approved and that you have carried out any pre-purchase inspections of the property. If you terminate the contract after exchange, you will lose your deposit and the vendor can take further legal action against you for any further losses incurred.
What happens next?
Once the contracts are exchanged you will generally have 4-6 weeks before the settlement of the purchase which is when you will take ownership of the property. You will use this time to finalise any loan documentation that needs to be signed by you for your finance to be ready. Your solicitor takes over from here and arranges all the necessary paperwork and electronic lodgements in preparation for the settlement of the purchase. This will involve liaising with the vendors solicitor to ensure all necessary outstanding items for the current owners are attended to and any necessary contractual obligations have been carried out.
On “settlement” day, you as the purchaser will not need to attend settlement. The three parties; vendors solicitor, your solicitor and the banks solicitor will come together in a virtual workspace known as the PEXA system to finalise the transfer of the property. They will ensure all payments are made to each party as well as any outgoing banks or utility company. They will lodge the incoming banks mortgage on the title of the new property as well as arrange for the title of the new property to be changed into your name as the new owner.
Now what? All that is left to do from here is crack the champagne and enjoy your new home.
The Credabl team is available to chat live on our website www.credabl.com.au or you can call one of our specialist lenders on 1300 27 33 22.
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