Buying a home is not only one of the largest purchases you are likely to make, it can also be one of the best long term investments - so it`s important that you get it right.
Whether buying a home to live in or an investment, you need to approach the process in a systematic manner. This means doing all your homework and making sure that the property you are buying is the right one in terms of price, location, value, size and lifestyle.
Here is a checklist of things you may want to consider:
Some say this is perhaps the most important of all aspects having the greatest influence on the potential capital growth of your property. Even a beautiful house with all the latest modern conveniences will not make up for the fact that it is 5 kilometres from transport and shops, if that is a priority.
Once you have found the property that suits you, it is wise to check it out during the week as well as on the weekend, as a quiet environment one day might be quite different at other times.
Types of Property & Orientation
It is important to decide which property type, be it house, unit or apartment that suits your needs. Everyone has different tastes, but the most sought-after orientation is usually a north or west facing rear garden or living area. This orientation maximises sun in the afternoon to these areas and will help keep those rooms at the front of the house i.e. bedrooms cooler during the summer months.
Builders, architects and tradespeople can be of assistance in providing pre-purchase assessments. Archicentre among others provides this service. For a fee they inspect and report on:
- any faults the property may contain such as dampness and leaks
- the budget for any necessary repairs or alterations
Archicentre can be contacted on 1300 13 45 13
Auction or Private Sale
There are two main ways to buy a property - by private sale or by auction. As a buyer you don't really have a choice, as it is the seller who decides which method to use to sell their home.
Bidding at Auction for the first time can be daunting. It is a fast moving and emotionally charged atmosphere that requires you to keep a cool head. So if you don't feel confident participating in the Auction process, you can ask a friend, or a buyer's advocate or our Company to bid on your behalf.
Buying by Private Sale involves a process of negotiation between you and the owner, with the buyer usually starting low and the seller starting high. The property will have an advertised price - and negotiations will occur around this figure until both parties agree on the price.
Benefits of buying at Auction or Private sale:
- You can compete with other bidders in the open and you are aware of the offers being made.
- The sale and signing of all documents takes place on the day of the auction
- Unlike an Auction, the negotiation process is not as transparent
- The speed of the process is not as frantic
Vendors Statement (the Section 32 Statement)
In Victoria the vendor or more commonly known as the seller, is required to provide a Vendors Statement or Section 32 as part of the Sale of Land Act which describes the financial, legal and planning details of the property. This document needs to be sighted before a Contract of Sale or Contract Note is signed. The Section 32 should include as a minimum:
- A copy of the Certificate of Title showing any existing easements or covenants and boundary measurements of the land.
- Information about planning or development restrictions.
- Details of any mortgage over the property.
- Outgoings such as rates, body corporate fees, etc.
- Building restrictions and copies of permits issued for recent work carried out.
Making an Offer
Missing out on a property can be a very disappointing experience, so it is important to understand how the process works.
When making an offer to purchase a property, it is important to be aware of the following:
- The agent will submit all offers to the vendor.
- The property remains on the market while the vendor considers all offers. Just because your offer is the first one submitted, does not necessarily mean that it will be accepted.
- Offers can be made subject to a finance clause or other conditions such as a builder's inspection.
- You can also make your offer conditional on certain terms and these special conditions must be written into the contract.
- Once the offer is made in writing, it is up to the vendor whether or not to accept the offer, or give the parties the opportunity to increase their original offers.
- An offer is not legally binding on both parties until the buyer and the seller have signed a Contract of Sale or Contract Note and Vendors Statement which contains details of the property, the price, deposit and settlement terms.
- The agent is not obliged to give you another opportunity to increase your offer.
- If your offer is accepted, a cooling off period may apply.
Cooling off period
You are entitled to a cooling-off period of three (3) business days (Section 31 Sale of Land Act 1962). This means that you are legally able to withdraw from the Contract if you change your mind during this time. However, it is important to remember the cooling-off period does not apply in the following circumstances:
- You bought the property at or within 3 clear business days before or after a publicly advertised auction or
- You have received independent advice from a legal practitioner before signing the contract or
- the property is used mainly for industrial or commercial purposes or
- the property is more than 20 hectares in size and is used mainly for farming or
- You previously signed a similar contract for the same property or
- You are an estate agent or a corporate body
Cancelling a contract during the cooling-off period
Written notice must be given to the vendor or vendor's agent that you are ending the contract. You are entitled to a refund of all the money you paid EXCEPT for $100 or 0.2% of the purchase price - whichever is more.
The costs most Victorian homebuyers will have to consider are:
- 10% deposit on signing of contract.
- Balance of the purchase price less deposit paid.
- Stamp Duty on the transfer of the property.
- Mortgage Application fees (if applicable).
- Adjustments such as council rates, water, owners corporation fees, etc.
- Conveyancing and/or Legal Fees.
Conveyancing costs for a straightforward purchase vary, from $500-$900.
It is essential that you organise your finances before making an offer or bidding at an auction. The loan amount will dictate your 'best' purchase price, and it is always advisable buyers stick to their budget. Always seek independent advice when it comes to the tax implications and relevant financial details of purchasing a property.