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Today we’ve got another topic for you. We’re looking at steps of buying a house. And as you can see, there’s actually quite a few steps here. Now, everyone’s different, every situation is different, so you might find that the steps that we’ve got here may occur in a different order. What you might also find, if you’re looking at a property from an investment perspective, and you use a buyer’s agent or someone to help facilitate the transaction, a lot of these steps for you personally might be chopped out and the ease of the transaction will be a lot more simplistic because the buyer’s agent will do a lot of the work for you.
But if we have a look at this list, and there is an order but can be in no particular order, one of the first things to do, and I agree with this, is organize your finance. There’s no point us going into a property transaction if we can’t actually get financed or we can’t get the finance to buy a property that we’ve got our hearts set on. So, to give you a quick example, if the lenders are telling us we can borrow $500,000, but we’re looking at million dollar properties, well, we’re sort of wasting our time. So, it’s fundamentally important for us to check our finance first.
And there’s probably a whole detailed conversation on the property clock that we’ll do it another day, but keep and eye out for that first before you actually do go to your bank to find out, because I’ve got a detailed explanation on the property clock.
Finding a property, fundamentally important and it ties in with doing your research on the property. And something could be as easy as, once you found the property, get a building inspection done. If you’re buying a new property, what you might want to do is get a building inspection done at the first handover. So that way, the building inspector can pick up all the defaults in the property from the build, because there’s always going to be something that’s been missed, and then they’re rectified. And the building inspector’s a specialist compared to us that might not be a specialist, so they’ll be able to check those differences for you.
Engaging in a good conveyancer is fantastic. There are some conveyancers, but not many, that can do conveyancing Australia wide, but it’s fundamentally important to have good conveyancer that’s going to go through the numbers and explain to you the contract that you’re signing as well.
We’ve also got making an offer. Again, that ties in with the finance. You need to approach the real estate agent or the buyer’s agent will do that for you and make an offer. And we’ve got it here the option, you can also sometimes if you want to buy pre-option you can make an offer. But again, it comes down to having a strong understanding of your financial position and your finances when you’re coming to this offer and option stage.
Then we have the contracts of sale. Now, if you’re building, you might have a land and house component of the contract of sale, or if you’re buying an existing or a house that’s just been completed, you’ll have one contract of sale. Can be a little bit of an onerous process, so don’t let that deter you, but there can be quite a few signatures and there is a lot of reading involved. Again, a buyer’s agent will go through all of that with you and make that process easy.
Then we have the deposit. So, each property or each real estate agent with the property will have a different terms and conditions. Some may ask for $5,000 or $10,000 or 5% of the transaction cost. So, be aware that you will need to pay some form of deposit when you’re purchasing a property. What you can do and what’s something that I strongly recommend is always make the contract subject to finance. Even if you have pre-approval, because your situation could change even after you’ve signed the contract. And if you’re situation changes, the bank’s going to want to know and they may actually reduce how much you can borrow or say we can’t do the loan any more.
If your contract is signed, subject to finances, still in that period, well then you can leave that contract and get your deposit back. So, make sure when you’re placing on your deposit on a property, the you have your subject to’s carefully put into place and that’s where a conveyancer can help you so you don’t lose your deposit.
It’s all about organization and timing. Lastly, then, we’ve got cooling off. Cooling off, again, is different in each state. Generally the rule of thumb is two days after contract signing, you have cooling off, but it also will depend on the subject to clauses that you’ve got. And then we’ve got the most important thing, which is settlement.
And settlement means that then the property is actually in your ownership. What is quite interesting is, if we go back to the contract stage, at law, contract stage can sometimes mean that’s where ownership occurs. And so you might find that there’s a request at contract stage for you to actually get some insurance on that property. And that is to protect you, just in case something happens to the property, if it’s an established one and a fire and it burns down for instance, that if one party doesn’t have insurance and you do, and you’re deemed the legal owner, even though it hasn’t settled, you will be protected.
I hope those tips helped, and look forward to speaking to you again soon.