13 Steps for buying a home

Let’s get real

Advertising and pre-market

Most properties are sold through real estate advertising portal such as REIWA.com

Western Australia is well served by REIWA.com which provides better property information and good buyer guidance.

However roughly 20 % or properties throughout Australia are sold premarket, that is, properties are listed with real estate agents but the properties are sold to proactive buyers how have developed a relationship with particular agent know for property sales in their area.

Agent will often approach off market property owner sand seek expressions of intertest to sell their property pre-market – that is, after listing the property the agent approach known buyers or buyer agents to sell the property before the property is advertised through the major advertising portals.

If you give details of your requirements and price range to real estate agents, they will be able to help you by showing you several suitable properties in the area you are looking.

Make sure you are very specific about the type, location and price of home you are looking for as some agents may show you properties which they are finding difficult to sell. You should view a large number of properties to compare value for money. This will also help you to realise your own requirements and what your money can buy.

There are many points to consider when inspecting properties. Remember to ask yourself:

  • Does it suit my needs?
  • What are its faults?
  • What are its features?
  • How does the price compare with other properties seen?

Use a Homebuyer’s Checklist when inspecting properties.

Building inspection

A building inspection checks structural soundness, including:

  • foundations
  • the condition of all structural timber (ie. floor joists, rafters)
  • all load bearing walls and members
  • the outer skin of the building (may be brick, stone, timber, fibro)
  • plumbing and electrical wiring
  • kitchen and bathrooms (to update can be expensive).

Before engaging a consultant, confirm exactly what the inspection entails and what further inspections, if any, may be required. A consultant should have sufficient knowledge to enable them to identify any areas of concern.

Pest inspection

You should also have the property inspected for pests before buying it. The lending authority may require this. Check that the company carrying out the inspection carries professional indemnity insurance. This will cover the company and therefore your costs, should the company make a mistake.

Strata inspection

The prospective purchaser can also arrange for a pre-purchase strata inspection, covering other written records. This inspection, although optional, is recommended as there can be problems that might otherwise go undetected. It would need to be carried out before the exchange of contracts.

As strata inspections cover written records only, a separate building inspection is recommended.

You should submit a formal application to your lending body for a loan on the property as soon as possible and once you know there general terms. You should not exchange contracts for the property (with or without the cooling-off period) before finance has been approved in writing. With your formal application you will usually have to pay fees to the lending body, such as establishment and valuation fees. You should obtain a preapproval for a loan amount. Once you have selected a property that you intend to make an offer on the lending body will value the property to determine whether the property is adequate security for the amount of the loan. The lending body lends a percentage of the valuation of a property, not a percentage of the purchase price. How much can I borrow ? Consider your borrowing power Borrowing Power Calculator

In Western Australia an agent is not required to have a Contract of Sale ready before advertising the property but when an offer is made, the agent must present a printed set of General Conditions to both the buyer and seller. General Conditions and the O & A constitute the standard contract for the sale of real estate in Western Australia.

The wording of the O & A is owned by the Real Estate Institute of Western Australia (REIWA) which is the peak industry body representing the interests of real estate agents. The General Conditions document is owned jointly by REIWA and the Law Society of Western Australia.

Once you have found the property you intend to buy, give a copy of the Contract of Sale to your solicitor or conveyancer

The once you are happy with the standard contract and have stipulated any special conditions that you may apply, eg specify a cooling offer period, subject to finance or the sale of another property, submit your O & A to the agent.

Once you make an offer, most real estate agents will ask you to pay an initial or part deposit as a sign of good faith. If you haven’t signed and exchanged contracts this payment does not ‘hold’ the property. It is refundable if you specify a cooling offer period and you change your mind and promptly notify the agent of your intention to withdraw your offer within your cooling off period.

But you can still miss out if another buyer exchanges contracts before you, and has their contract counter signed by the agent or seller.

It is unwise to enter any contract without first obtaining legal advice.

If you are buying the property with someone else, you will need to decide the type of ownership you will have: either

  • Joint Tenants, where the property is held by two or more people in equal shares. If one dies, his/ her share goes to the survivor, or
  • Tenants in Common, where the property is held by two or more people in equal or unequal shares. If one dies, his/her share goes to a person named in his/her will.

When all the inspection reports are collated and the loan is formally approved, you provided your offer to the seller through the agent who will organise the exchange of contracts (legal agreement between the seller and the purchaser) that sets out the terms and conditions of the sale.

Once the contract is signed by the purchaser in duplicate the contract is forwarded to the seller for their signature and an original is forwarded to the purchaser as validation that contact is established and in place.

On the date that the contracts are exchanged, the agent will request that you pay the agreed deposit stated in the contract. You or your solicitor or conveyancer will pay this deposit to the real estate agent, where it will be held in the agent’s trust account until settlement.

Building or Property Insurance

Although the seller is required to hand over free and unencumbered title to you on the day of settlement, and the contract may have joint general conditions it is advisable to take out property insurance from the date of signing the contract even if you have sighted or obtained a copy of a Certificate of Currency indicating that the seller has a current insurance policy.

A Certificate of Currency should be obtained from the insurance provider that you elect to cover your property. Your lender will require details and proof of this on or before settlement.

If you move into the property before settlement, the seller will probably want to make a special arrangement whereby you are responsible for insurance from the time you take possession.

Title Insurance

Title Insurance which protects you from any loss for future events with information that is incorrect on the title, talk to your conveyancer about this Insurance as it is certainly worth the once-off fee that you can include in your mortgage.

You will need to pay stamp duty which is calculated on the purchase price of the property.

Your solicitor or conveyances will usually organise to pay stamp duty on your behalf.

Stamp Duty Calculator

It usually takes four to eight weeks from exchange of contracts until settlement, but this will be agreed with the agent as part of the contract signing process. Your solicitor or conveyances will undertake all relevant enquiries relating to your purchase, including electricity, water and local government authorities. This will show council and water rates, arrears and if the land is subject to a land tax charge in the hands of the seller.
  • Your lender will prepare the mortgage document which sets out the terms and conditions of the loan. Make sure you fully understand your mortgage document before signing it. Know exactly what you are contracted to pay: how, when and for how long.
  • Close to settlement, a settlement statement is sent to the seller for completion. This details the final amount owing, including the adjustments for rates and taxes as at the date of settlement. The seller’s solicitor or conveyancer will inform your solicitor or conveyancer how the cheques are to be drawn.

On the day of settlement or just prior, it is important that a final search of the title is obtained from the Land registry to ensure that the property is clear from any interests or restrictions which may have been recorded between the date of exchange and settlement.

To avoid disputes at or after settlement you should carry out a final inspection of the property to ensure that any fittings you are purchasing with the property, such as curtains, blinds, light fittings, awnings, air conditioner or TV antenna are in place and have not been damaged.

Settlement is the completion of the transaction. A date is arranged by the seller and your conveyancers with all parties including each party’s lender.

In a manual process representative of the seller and the purchaser attend, together with a representative from the lending bodies of the seller and purchaser.

  • The lending body pays the loan moneys and the purchaser pays the balance.
  • Your solicitor or conveyancer authorises the seller’s representative to collect the deposit from the real estate agent.
  • Your solicitor or conveyancer will receive a signed transfer and the title deed, and the lender will arrange for the land registry to transfer the property title and register the mortgage interest.
  • The title documents and mortgage will be held by the lending body until the term of the mortgage is completed.
  • You pay the duty on the contract.
  • You are responsible for insuring the property from settlement. You should have arranged this before settlement whether or not it was a requirement of your lender.
  • Remember to budget for your moving costs and ongoing costs such as council rates, water rates and insurance. Your solicitor or conveyancer will advise you to pay all rates at settlement.
  • The key to the property is handed over at settlement or you can pick it up from the estate agent immediately after settlement.