The Home Buying Process
While it is one of the most exciting things you can do in your life, it pays to be organised. Having a simple plan and executing it will ensure you will have fun. You may need to use the services of some or all of the following professionals:
- Finance Specialist
- Building and Pest Inspector
- Insurance Professional
- Registered Property Valuer
- Real Estate Agent
- Furniture Removalist
Your first port of call should be a finance specialist. This will allow you to set the price range that you can afford. The finance specialist may need to proceed to obtaining a conditional approval through a lending institution if you’re planning to stretch yourself financially. It is also important to discuss the matter of deposit with the finance specialist. If you don’t have access to sufficient funds to offer upon signing a contract, there are options available. As a guide, a deposit should be sufficient to cover the agent’s commission for the sale.
Investigate the Market
Try to give yourself enough time to investigate the market you are prepared to buy into, simply by inspecting as many houses as you can. That way you will have a strong understanding of which property is value for money and which may be overpriced. Don’t discount surfing the net for properties for sale in your area. It is becoming more popular and with virtual tours you can get a good idea of the home before you approach the agent.
The first rule to remember is that you make your money when you buy, not when you sell. In other words your goal is to buy the property under market value. By being aware that the real estate agent you are dealing with works for the vendor, you are less likely to open up with regards to what you are prepared to pay.
Find a Home that Suits
When you find a home that may suit you, ask the agent for a list of similar properties that have been sold recently. If the listing agency has done it’s job properly, it would have already provided a list of comparable sales to the vendors to help them set the sale price. Drive past these properties to get a better feel for the market.
If you remain unsure as to the home’s true worth the services of a registered valuer may be required. They will be aware of recent sales and market trends.
If you are not a good negotiator it may pay to engage the services of an independent real estate agent to negotiate on your behalf. They may save you far more than the fee they will charge.
Make an Offer
When you have found the home that suits you it’s time to make an offer. Instruct the real estate agent preparing the contract to include a finance clause and a building and pest inspection clause. You should give yourself at least 14 days to organise these matters. You should ask that the contract term be at least 30 days to give the lender and solicitor time to complete their work.
It is imperative not to sign this contract until you have allowed your solicitor to peruse it.
Sign the Contract
Once the vendor agrees to the price and the terms, and you both sign the contract, it’s time to meet again with the lending specialist. A loan application is prepared and submitted to the appropriate lending institution. The loan process is explained in detail on this website.
Most contracts provide for the property risk to be with the purchaser from 5pm on the working day following execution of the contract. This means that if the property you are buying is damaged in any way from that time, you may be up for the repair costs. It is important therefore to insure the property as soon as possible after the contract is executed. When insuring the property, ask the insurer to note the interests of the proposed lending institution as mortgagee and request the issue of a Certificate of Currency of insurance.
Building and Pest Inspection
Now it’s time to contact the building and pest inspector to have the property checked for unwanted creatures and to ensure that there are no obvious construction flaws. Be aware that nearly all properties will have some issues. Be guided by the building inspector. If something major is found you may choose to terminate the contract or renegotiate the purchase price to cover expected repair costs.
Don’t forget to book in a furniture removalist. If you are thinking of doing it yourself, please consider the time effort and organisation you will need to put in. A furniture removalist can be money very, very well spent. My last two moves cost me around $1500.00. Again, use professionals; you will enjoy your life so much more. Be positive; make a tentative booking shortly after signing the contract, and confirm the booking upon finance approval.
Loan documents and Title Transfer Documents
By the fourteenth day you and your solicitor will have been advised of the fate of your loan application. If all has gone well it should now be plain sailing. Loan documents and title transfer documents will need to be signed. You can attend to signing the documents in front of the solicitor if you need clarification about the documents. Otherwise you can elect to use the services of a Justice of the Peace or a Commissioner for Declarations as some of the documents must be witnessed by an appropriate person. Many loan specialists are JPs or C.Decs and may be able to help you with the paperwork.
After you confirm the booking with the removalist you have one task left. If you have not authorised the lending institution to access your bank account for the balance of equity, you need to provide those funds by bank cheque or bank transfer to your solicitor’s trust account.
Upon settlement, the keys to the property should be made available to you. It is common practice that the keys can be collected from the real estate agency that acted for the vendor in the sale. A phone call to the agent a few days prior to the settlement date to organise this may circumvent any possible hiccups that might otherwise occur.
Now allow the lender and the solicitor to do their work, all that you can do has been done and congratulations will shortly be in order.