BUYING A HOME
What to Look For when Buying
Here are a few questions and tips to consider when buying a home, to help make the viewing process easier and more productive:
Before you start, get a plan together that you and your partner agree on. Make sure you have a pre-approved budget from your bank or broker and don't waist your time looking at properties you can't afford - nothing is more dis-heartening!
- Do your research into the general area you are considering. Sites like realestate.com.au, domain.com.au and real estate agent sites like dotcompropertysales.com will give you a good idea of what is currently For Sale and what has recently Sold.
- Does the home have your “need” features (those features you MUST have)? (For example, number of bedrooms, ensuite, closet space, kitchen size, etc.)
- When buying a home, does it have any of your “want” features (those features you’d like to have but may be willing to forgo)? (For example: large backyard, deck, spacious family room, pool etc.)
- What is the general condition of the home? (Are there signs that the owners have kept up with repairs and maintenance?)
- Will the home need any major repairs or renovations? Is there anything that may need to be replaced soon?
- What do you like most about the home?
- Is there anything about the home you don’t like? Can that be changed with renovation now or in the future?
- Take a walk around the neighborhood. Are the homes generally well-kept, indicating pride of ownership?
- Do you like where the home is situated in the neighborhood?
- Does the neighborhood have what you want? (For example: schools, access to transport, shopping, local parks, etc.)
Buying a Home in NSW
There are two main ways a home can be Bought (and Sold) in NSW - Private Treaty and Auction.
Private Treaty is where the vendor, or home owner, sets the price they would like to sell their property for and their real estate agent negotiates individually with prospective buyers to achieve a sale as close to this price as possible. Once an offer is accepted and contracts are exchanged, there is usually a 5 day cooling off period, in which time the buyer usually orders a Pest & Building report and secures their finances.
An Auction is a public sale conducted by a licenced auctioneer and is governed by strict rules. There is a reserve price, which is essentially the minimum price the home will sell for - if bids surpass the reserve and you are the highest bidder, you have to sign the contract and pay the 10% deposit there and then. There is no cooling off period when buying a home via Auction.
Apart from the purchase price , there are some other costs that you should be aware of, and budget for, when buying a home.
These include:-
Stamp Duty: This is a tax levied by the NSW Government. It is based on the value of your property and can be significant - As a guide around $14,000 for a property purchased for $400,000; $23,000 for a $600,000 property and upwards of $41,000 for properties over $1 million.
Solicitors/Conveyancer's Fees: Between $1,500 and $3,000 depending on the complexity of your contracts. Conveyancers tend to be cheaper than solicitors.
Pest, Building and Strata Reports: Between about $400 and $600 for a combined Pest and Building report and about $250 for a Strata report.
Lender's Mortgage Insurance (LMI): LMI is required if borrowing more than 80 per cent of the property's purchase price. This is a one off premium to cover the lender should you default on the loan. This varies but allow for around $10,000.
Removalist Costs: These can vary considerably depending on distance and the amount of furniture involved. There are many different ways to tackle this such as renting a van and asking your mates to help or hiring a professional removalist. But just remember to factor this in.
Making an Offer
Once you have found a property that suits your requirements and that you would like to buy, it is time to make an offer. Offers on a property can be made any time, over the phone or in person, however the preferred method, to avoid any misunderstanding, is via email or text.
As a real estate agent, we are legally obliged to submit all offers to the seller for their consideration. If you want to buy the property, it is really up to you to let us know as soon as possible.
Negotiations
Sometimes first offers are accepted but more normally it becomes a negotiation process with counter offers being made. At the time of your offer, when buying a home, we will inquire if there are any conditions or concessions you are prepared to make with that offer, or whether your finance has been pre-approved.
The seller may then decide to accept the offer, reject it outright, or submit a counter-offer.
If the seller makes a counter-offer, he or she may suggest changes like a revised price or settlement date. You can accept the counter-offer, or submit one of your own. This process will continue until the seller and the buyer mutually agree, or until the offer is rescinded. Every negotiation is different and there is no specific formula for arriving at the final price.
Negotiations with Dotcom Property Sales will happen in good faith. We will never lie about the number or size of existing offers. We keep all interested parties in the loop.
It is our responsibility to the seller, to work as hard as we can to achieve the maximum price for them, while at the same time providing all potential buyers with accurate information and communication in a timely and professional manner.
Exchange and Settlement
Ideally prior to making an offer buyers should be pre-approved with a deposit ready, however this is not mandatory.
Once an offer is accepted we encourage the purchaser to exchange contracts as quickly as practicable, to ensure another buyer does not try to ‘gazump’ them.
Gazumping can occur when another buyer makes an offer when the owner may have already accepted yours. The law states that agents must present all offers to the seller. If the original purchaser takes too long to get the contract signed and to pay the deposit (i.e. 'exchanged'), then the seller has every right to sell to someone else. If your offer is accepted, the speed at which you move will make a huge difference in ensuring you secure the property. Just remember a sale is not made until both parties have signed and exchanged contracts and a deposit has been receipted.
When buying real estate there are typically two types of exchange methods...
1. Solicitor's Exchange
The real estate agent will forward the seller's details to the buyer’s solicitor to prepare the contracts. When all the reports are in order and the loan is formally approved, your solicitor or conveyancer will organise the exchange of contracts.
The contract is a legal agreement between the seller and the purchaser. It sets out the terms and conditions of the sale. Any fittings you are purchasing with the property, such as curtains, blinds, light fittings, awnings, air conditioner or TV antenna, should be listed in the contract to avoid disputes at or after settlement.
The contract is prepared in duplicate by the seller’s solicitor or conveyancer. The original is forwarded to the seller for signature. The copy is forwarded to the purchaser’s solicitor or conveyancer for approval and then signed by the purchaser. The exchange of contracts is then carried out with the payment of the (usually) 10% deposit.
Prior to this time, if another offer is made, the agent, by law, must present the other offer to the seller, even if they have already accepted an offer. The owner is legally entitled to ‘Gazump’ the first buyer until contracts have actually been exchanged.
2. Agent Exchange
This happens where the buyer signs the contract with the agent and pays a minimum deposit of 0.25% of the purchase price.
The vendor also signs the contract.
Once both parties have signed, the agent then exchanges the contract by dating it.
At this point the seller cannot pull out or sell to another party (i.e. no possibility of ‘gazumping’).
The buyer however usually has a 5 day cooling off period in which to do their due diligence (i.e. pest and building reports, solicitor checking the contract, finance valuation if required).
If the buyer withdraws from the sale during the cooling off period, they forfeit 0.25% of the purchase price.
Please note: in this instance, the buyer’s solicitor will still review the terms of the contract prior to exchange, so solicitor's charges may still be applicable.
Settlement:
Settlement represents the completion of sale when the balance of the contract price is paid to the vendor and the buyer is legally entitled to take possession of the property. It usually takes place 4 - 6 weeks after exchange.
For more information see The Sales Process section in Selling Your Home.
