Through over ten years of assisting home buyers reach settlement, we have seen many mistakes made by property purchasers and have gained experience in working with clients to resolve problems which are often caused by these common oversights. This article sets out mistakes you can try to avoid and provides some helpful tips on things that purchasers should be mindful of when buying a home.
Signing the contract before thoroughly inspecting the property
A detailed pre-purchase inspection is essential, the contract of sale requires the vendor to hand over the property in the same condition as when it was sold. By signing the contract, you accept the property as inspected on the day of sale – that is, the day you signed the offer or contract.
If you are purchasing an older property, you may wish to engage a builder inspector to provide a professional opinion on any structural concerns or defects. This is the most important inspection as you want to go into your purchase fully aware of the condition of the property and either negotiate accordingly on price, or factor in repair costs in your personal budgeting process.
You are entitled to inspect the property at any reasonable time during the week before settlement, however this final pre-settlement inspection is not an opportunity to renegotiate the purchase price or raise defects for repair by the Vendor.
If, during the final inspection, you find that something is not working as it was on the day the property was sold, you can request a repair or negotiate a reduction in the purchase price. Check all the items listed in the contract are there and in the identical condition.
Overlooking details when signing the contract
Before you sign to buy, make sure you’re happy with the conditions of the contract. If needed, make amendments or additions such as:
“The vendor agrees to repair the broken window and damaged flooring in the laundry prior to settlement.”
Ensure that your details are complete and correct. Do not forget your middle name! When you apply for financing your loan documents will require your full name as per your formal ID documents (eg. passport or birth certificate) – these loan document details need to match the details on the property contract of sale. Filling in your full name means that the contract will not require amendments later, saving you time.
Unsure who you want the property title to be held by? Including “and/or nominee” will allow you to nominate a substitute or additional purchaser before settlement.
Being unaware of important deadlines
Keep track of the key deadlines that your banker and conveyancer advise you of as well as any deadlines agreed during the sale (eg. deposit payment deadline).
If your contract is subject to a satisfactory building inspection report, book the inspection as soon as possible and be aware that you may end the contract if the unsatisfactory report is submitted with written notice to the vendor by the end date of the clause.
Other due dates to be aware of include:
- Payment of deposit
- Loan approval, if your contract is subject to a loan being approved
- Loan document processing, submit your mortgage documentation at least 2-3 weeks before settlement
- Cooling off from the contract (ie. Withdrawing if you change your mind)
Once settlement is completed, you can collect the keys from the agent and take possession of the property. Keep in mind that if your settlement takes place in the late afternoon, you may not be able to arrange access to the keys until the following day, organise moving in accordingly.
Underestimating additional costs
In addition to paying the initial deposit, keep in mind that your home loan will not cover all upfront costs. These include:
- conveyancing fees
- financial adviser fees and commissions
- loan establishment fees
- adjustment and lodgement fees
- land transfer duty (formerly stamp duty) – more information here
- goods and services tax (GST) – more information here
- building and pest inspection costs
You may be eligible for stamp duty discounts, to read more about this, please visit our article: Now is the time to buy! (Stamp duty discounts 2020-21)
Remember to also consider the post-settlement additional costs, such as moving costs, insurance, maintenance costs and annual outgoings.
At Wealthsource Legal, we provide high standards of service to assist with your property transaction. We are qualified and experienced professionals who can help you through to a smooth settlement, and would be happy to guide you through your purchase.