Buying a home made easy and simple

Private Treaty Sales Process

Home loan pre-approval

A home loan pre-approval will give you a clear guide on how much money you have to work with, putting you in a stronger position to negotiate with a seller or potentially bid at an auction. Some conditions may need to be met before full loan approval is given, most commonly a valuation report of the specific property is required.
There are a number of different types of home loan pre-approval, from a simple short form pre-approval through to a formal written pre-approval.
Once you have identified the property you wish to purchase, to obtain final approval (sometimes called formal approval) you need to contact your lender or broker and they will normally require additional information such as tax returns, proof of income or payslips, statement of assets & liabilities etc. The lender will then proceed to assess the property through an independent and approved Valuer and process the final approval.

Viewing the home

It’s a good idea before viewing properties to make a list of what you actually need and/or want in a home.

You will then be working to a clear criteria of your needs to ensure you purchase the right property for you and your family. Bear in mind, it is rare if not impossible, to find the 100% perfect home and you may need to be flexible on some features.

In addition to viewing properties, you may also wish to conduct some market research on the property market and local property values. There are a number of websites where you can purchase reports. Remember, the property market rarely stands still, so take all of this research and information with a “grain of salt” and allow for market growth if the sales information is months old.

Agreeing on price

After inspecting the property, should you seriously be interested in purchasing the property, you will need to make an offer.

An offer can be submitted in several ways:

• Verbally to the agent
• In writing (fax or letter) to the agent
• Email to the agent

When making an offer, the buyer should highlight any specific terms or other considerations that may impact whether the seller might accept the offer or not. i.e. Extended settlement, reduced deposit etc

The seller may accept, decline or look for further increases from yourself or other buyers.
Even if an offer has been accepted, the seller has no legal obligation to sell the property to you and may accept any other offer until an exchange of contracts has taken place.

Pre-purchase reports and enquiries

A Pre-Purchase Report is essentially a report conducted by an independent consultant or inspector to check various matters relating to the property.

Your legal representation (solicitor or conveyancer) will generally provide you with the advice on which Pre-Purchase reports will be required and will organise these on your behalf. The most commonly conducted reports are:

For a house or similar homes:

Building Inspection – this is a thorough visual inspection of the property which should identify potential building issues or possible defects. The entire property (where accessible), is inspected including roof cavity and subfloor areas. This is a very detailed written report which outlines all areas inspected or unable to be inspected.

Pest Inspection – this is a thorough visual inspection which will highlight any current or past pest problems such as termites, borers or similar.

For someone that has not seen a building or pest inspection, these reports are generally 20 – 50 pages of detailed comments of possible problems from the inspector and can look very scary. Virtually every single home will have some building problems or defects and it is very important to understand whether these are normal for the type, age and condition of the property. If you are still unsure, you may wish to speak directly to the consultant or inspector and seek their advice on whether further enquiries with other experts may be required.

For home units, villas, townhouses and similar strata title homes:

Strata Report – this report provides a detailed account of dealings with the Home Owners Corporation. The report will normally outline the financials, minutes of previous meetings, building issues or other matters that have been previously raised.

As every property is different, your legal representation will advise you if you should be conducting other enquiries which could range from structural engineers, geotechnical engineer, surveyor, title searches, electricity supply authority or water supply authority.

Exchanging contracts

The exchanging of contracts is the legal part of buying/selling a home and will need to take place irrespective of whether the property is sold by Private Treaty or Auction.

Any negotiations and verbal agreement on price prior to an exchange of contracts is not legally binding and the buyer or seller has the right to change their minds.
An exchange of contracts is where there are two separate Contracts of Sale, one is signed by the buyer, one is signed by the seller, each party only signs one Contract of Sale (not both documents). The exchange is deemed to have taken place when the signed Contracts are physically “swapped” or “exchanged” between both parties (normally via the agent, solicitor or conveyancer), with the respective deposit being paid and the Contracts of Sale being dated immediately.

The exchange of contracts may happen in several ways:

Exchange of Contracts subject to a Cooling Off Period – this is where the buyer and seller exchange contracts subject to the standard five (5) business day cooling off period. During the cooling off period only the buyer can withdraw from the sale and the seller is legally bound by the contract. Should the buyer withdraw from the contract, the buyer will forfeit to the seller the deposit amount of 0.25% of the purchase price ($250 for every $100,000 purchase price). Within the cooling off period, the buyer will need to complete any Pre-Purchase Reports, review of the Contract of Sale by your solicitor or conveyancer, obtain formal loan approval and any other enquiries that their solicitor or conveyancer advises. On or before the expiration of the cooling off period, the buyer will need to pay to the agent the remaining deposit as set out in the contract which is typically 10% of the purchase price.

Exchange of Contracts with a Section 66W Certificate – commonly referred to as an “unconditional” exchange of Contracts. A Section 66W Certificate is signed/supplied by your solicitor or conveyancer, this Section 66W Certificate forms part of the Contract of Sale and waives the cooling off period. Upon exchange of Contracts with a Section 66W Certificate, the full deposit (typically 10% of the purchase price) must be paid. Normally any Pre-Purchase Reports and/or finance arrangements should be completed prior to an unconditional exchange. There is no legal right for a buyer to withdraw from the sale as they have entered into a legally binding contract.

Exchange of Contracts under Auction Terms – when a property is sold at Auction, there is no Cooling Off Period if the Contract is exchanged either at Auction, or up until midnight the same day as the Auction. There is no Section 66W Certificate required although the full deposit as set out in the Contract of Sale must be paid on exchange.

Settlement day

Between exchange of contracts and settlement, there is a period of time (normally 42 days or 6 weeks but may vary) prior to the settlement day.

Settlement day is a pre-scheduled date and time where the buyer will become the legal owner of the property and is provided the keys.

Prior to settlement day

In preparation for the settlement date, the buyers solicitor or conveyancer may request the seller and/or buyer sign transfer documents or to supply certain cheques for the settlement. Whilst your solicitor or conveyancer will normally notify you of anything they may need, it is worth checking with your solicitor 1-2 weeks prior to settlement day.
The standard Contract of Sale in New South Wales provides that the buyer is entitled to conduct a pre-settlement inspection to ensure everything is in the same condition as when they exchanged contracts. To organise this please contact your Gavan Property Agent to schedule a mutually convenient time which is normally conducted within the last 48 hours prior to settlement. Bear in mind, the seller still owns the property until the scheduled settlement time and date, so they will more than likely still have their furniture and belongings still in the property.

What happens on the settlement day

The settlement date, time and location is generally co-ordinated between both the buyer and sellers solicitors and/or conveyancers together with their respective lending authorities or banks.
The seller needs to ensure that on or before the scheduled settlement date and time, they have the home fully vacated and in a condition that the home can be handed over to the buyer free from rubbish or unwanted items that are not nominated in the Contract of Sale. The seller also should provide all keys, alarm codes, remote controls or other relevant information to the agent on or before settlement.
At the settlement, the solicitors or conveyancers and lenders or banks will:

• Adjust on a daily basis up until the settlement date, all Council, Water, Land Tax (if applicable) and Strata rates/levies.
• Make payment of the funds to the seller including funds from the buyers home loan.
• Discharge any Mortgages associated with the property by the Seller.
• Provide the buyers solicitor or conveyancer with the signed title deeds to be registered with the Registrar General at the Land Titles Office.
• Once settlement has occurred, the solicitors or conveyancers will notify the agent in writing which will then authorise the Agent to:
• Release all keys, remote controls etc to the buyer
• Release any funds held in trust on behalf of the seller

Auction Sales Process

Home Loan Pre-approval

Before looking to purchase a home, the first step is to know how much you can spend.

A home loan pre-approval will give you a clear guide on how much money you have to work with, putting you in a stronger position to negotiate with a seller or potentially bid at an auction. Some conditions may need to be met before full loan approval is given, most commonly a valuation report of the specific property is required.

There are a number of different types of home loan pre-approval, from a simple short form pre-approval through to a formal written pre-approval.

Once you have identified the property you wish to purchase, to obtain final approval (sometimes called formal approval) you need to contact your lender or broker and they will normally require additional information such as tax returns, proof of income or payslips, statement of assets & liabilities etc. The lender will then proceed to assess the property through an independent and approved Valuer and process the final approval.

Viewing the home

It’s a good idea before viewing properties to make a list of what you actually need and/or want in a home.

You will then be working to a clear criteria of your needs to ensure you purchase the right property for you and your family. Bear in mind, it is rare if not impossible, to find the 100% perfect home and you may need to be flexible on some features.

In addition to viewing properties, you may also wish to conduct some market research on the property market and local property values. There are a number of websites where you can purchase reports. Remember, the property market rarely stands still, so take all of this research and information with a “grain of salt” and allow for market growth if the sales information is months old.

Conducting Pre-Purchase Reports

A Pre-Purchase Report is essentially a report conducted by an independent consultant or inspector to check various matters relating to the property.

Your legal representation (solicitor or conveyancer) will generally provide you with the advice on which Pre-Purchase reports will be required and will organise these on your behalf. The most commonly conducted reports are:

For a house or similar homes:

• Building Inspection – this is a thorough visual inspection of the property which should identify potential building issues or possible defects. The entire property (where accessible), is inspected including roof cavity and subfloor areas. This is a very detailed written report which outlines all areas inspected or unable to be inspected.
• Pest Inspection – this is a thorough visual inspection which will highlight any current or past pest problems such as termites, borers or similar.

For someone that has not seen a building or pest inspection, these reports are generally 20 – 50 pages of detailed comments of possible problems from the inspector and can look very scary. Virtually every single home will have some building problems or defects and it is very important to understand whether these are normal for the type, age and condition of the property. If you are still unsure, you may wish to speak directly to the consultant or inspector and seek their advice on whether further enquiries with other experts may be required.

For home units, villas, townhouses and similar strata title homes:

• Strata Report – this report provides a detailed account of dealings with the Home Owners Corporation. The report will normally outline the financials, minutes of previous meetings, building issues or other matters that have been previously raised.

As every property is different, your legal representation will advise you if you should be conducting other enquiries which could range from structural engineers, geotechnical engineer, surveyor, title searches, electricity supply authority or water supply authority.

Auction day

Prior to Auction Day.

Prior to Auction day, it is a great idea to attend a couple of other Auctions to ensure that you are comfortable with the Auction process. Gavan Property also provides actual videos of recent live Auctions.
Whilst there is no legal requirement to do so, prior to the Auction day, it is recommended that all bidders:

• Have the Contract of Sale reviewed by your solicitor or conveyancer
• Conduct any necessary Pre-Purchase Reports
• Arrange finance to bid at Auction
• Ensure they have suitable arrangements in order to pay the deposit on Auction day.

Bidding at Auction

Before auctioning a property, the seller will nominate a reserve price in writing which is not disclosed to anyone other than the Auctioneer and/or the Agent. The reserve price is the lowest price that the seller is willing to accept.
If you are intending to bid at Auction, it is a legal requirement that you MUST register to bid for that property. This is normally done on the Auction day and requires you to supply the Agent with an Australian Drivers license, Australian Passport or other approved form of identification.
Typically, during the Auction, the Auctioneer will call out the denominators or the amount of the bid increments that he/she is looking for. When making a bid, you must hold up and display your bidders registration number.
Everyone seems to have a different strategy on how to win at Auction, although this rarely seems to make any difference. The reality is, buyers are there to buy, sellers are there to sell. Bid strong, bid early and secure your home!

• Expect the unexpected – prices at auction can shoot up very quickly and bidding early is the only way to ensure you are involved in the Auction.
• Set a firm and realistic upper limit for the particular property.
• Make your bid by raising your hand and displaying your bidders card. The auctioneer will assume your bid is in the same increment as the previous bid that is, if the current bidding is rising by $10,000 or $5,000 at a time, then your bid will be increased by that same amount. If you want to change your bid amount increment to a greater or smaller amount, simply call out the amount. Although should the bid be in too small an increment, the Auctioneer does have the right to accept or refuse any bids in which he/she does not feel is in the sellers best interest.
• It is not uncommon for either a bidder to ask “is the property on the market?” or the Auctioneer may call out “the property is on the market”. This is essentially announcing that the property has reached the reserve and will be sold to the highest bidder at or above this amount. There is no legal requirement for an Auctioneer to announce this and the Auctioneer may elect not to disclose this at all even if asked.
• Don’t be afraid to bid strongly and aggressively for the property if you want to eliminate other potential buyers.
• Don’t be too disappointed if the bidding goes over your limit. As disappointing as this might be, if you have put forward your highest and best offer, sometimes there are other buyers with higher budgets and you can only give it your best.

Exchanging Contracts

Between exchange of contracts and settlement, there is a period of time (normally 42 days or 6 weeks but may vary) prior to the settlement day.

Settlement day is a pre-scheduled date and time where the buyer will become the legal owner of the property and is provided the keys.

Prior to settlement day

In preparation for the settlement date, the buyers solicitor or conveyancer may request the seller and/or buyer sign transfer documents or to supply certain cheques for the settlement. Whilst your solicitor or conveyancer will normally notify you of anything they may need, it is worth checking with your solicitor 1-2 weeks prior to settlement day.
The standard Contract of Sale in New South Wales provides that the buyer is entitled to conduct a pre-settlement inspection to ensure everything is in the same condition as when they exchanged contracts. To organise this please contact your Gavan Property Agent to schedule a mutually convenient time which is normally conducted within the last 48 hours prior to settlement. Bear in mind, the seller still owns the property until the scheduled settlement time and date, so they will more than likely still have their furniture and belongings still in the property.

What happens on the settlement day

The settlement date, time and location is generally co-ordinated between both the buyer and sellers solicitors and/or conveyancers together with their respective lending authorities or banks.
The seller needs to ensure that on or before the scheduled settlement date and time, they have the home fully vacated and in a condition that the home can be handed over to the buyer free from rubbish or unwanted items that are not nominated in the Contract of Sale. The seller also should provide all keys, alarm codes, remote controls or other relevant information to the agent on or before settlement.

At the settlement, the solicitors or conveyancers and lenders or banks will:

• Adjust on a daily basis up until the settlement date, all Council, Water, Land Tax (if applicable) and Strata rates/levies.
• Make payment of the funds to the seller including funds from the buyers home loan.
• Discharge any Mortgages associated with the property by the Seller.
• Provide the buyers solicitor or conveyancer with the signed title deeds to be registered with the Registrar General at the Land Titles Office.
• Once settlement has occurred, the solicitors or conveyancers will notify the agent in writing which will then authorise the Agent to:
• Release all keys, remote controls etc to the buyer
• Release any funds held in trust on behalf of the seller

Settlement Day

The exchanging of contracts is the legal part of buying/selling a home and will need to take place irrespective of whether the property is sold by Private Treaty or Auction.

Any negotiations and verbal agreement on price prior to an exchange of contracts is not legally binding and the buyer or seller has the right to change their minds.
An exchange of contracts is where there are two separate Contracts of Sale, one is signed by the buyer, one is signed by the seller, each party only signs one Contract of Sale (not both documents). The exchange is deemed to have taken place when the signed Contracts are physically “swapped” or “exchanged” between both parties (normally via the agent, solicitor or conveyancer), with the respective deposit being paid and the Contracts of Sale being dated immediately.

The exchange of contracts may happen in several ways:

Exchange of Contracts under Auction Terms – when a property is sold at Auction, there is no Cooling Off Period if the Contract is exchanged either at Auction, or up until midnight the same day as the Auction. There is no Section 66W Certificate required although the full deposit as set out in the Contract of Sale must be paid on exchange.

Exchange of Contracts subject to a Cooling Off Period – this is where the buyer and seller exchange contracts subject to the standard five (5) business day cooling off period. During the cooling off period only the buyer can withdraw from the sale and the seller is legally bound by the contract. Should the buyer withdraw from the contract, the buyer will forfeit to the seller the deposit amount of 0.25% of the purchase price ($250 for every $100,000 purchase price). Within the cooling off period, the buyer will need to complete any Pre-Purchase Reports, review of the Contract of Sale by your solicitor or conveyancer, obtain formal loan approval and any other enquiries that their solicitor or conveyancer advises. On or before the expiration of the cooling off period, the buyer will need to pay to the agent the remaining deposit as set out in the contract which is typically 10% of the purchase price.

Exchange of Contracts with a Section 66W Certificate – commonly referred to as an “unconditional” exchange of Contracts. A Section 66W Certificate is signed/supplied by your solicitor or conveyancer, this Section 66W Certificate forms part of the Contract of Sale and waives the cooling off period. Upon exchange of Contracts with a Section 66W Certificate, the full deposit (typically 10% of the purchase price) must be paid. Normally any Pre-Purchase Reports and/or finance arrangements should be completed prior to an unconditional exchange. There is no legal right for a buyer to withdraw from the sale as they have entered into a legally binding contract.