The purchase of a property is often the biggest financial decision one makes in their life, especially in Sydney where prices are high. Getting everything right is crucial if you want to ensure you make a good purchase, get your money’s worth and don’t fall into any traps. Here we will go over some things you should know before buying any property.
Different Ways to Buy a Property
There are several different ways to buy a property which you should be aware of, because depending on the situation you could be locked in to various conditions.
The two most common are Auction and Private Treaty.
Buying a property by auction means you attend the auction and bid against anyone else looking to also buy it, and the highest bidder takes the property.
What you need to be aware of in an auction is that, unlike with Private Treaty, there is no cooling off period, and if you are the highest bidder, you are usually legally obligated to complete the purchase.
This means that you should make sure you are happy with everything before the auction, including the contract, the true condition of the property and so on. Once you’ve won, you won’t be able to go back on the deal if you find something you are unhappy about.
So before the auction starts, check the Contract of Sale, properly inspect the property, and if you find something you are unhappy with, you can negotiate the terms. If you can reach an agreement, then you will be good to go on bidding.
The most common way to buy a house or apartment in Sydney is by Private Treaty. This is where the seller of the property puts their property up for sale at the price they would like and then negotiates with potential buyers.
Once you’ve reached an agreement, you exchange contracts with the seller and the Contract of Sale becomes active. At this time you will usually pay the full deposit (normally 10%).
However, there is still a “cooling off” period where you can pull out of the deal if you change your mind (you may still have to pay the seller a fee of 0.25% of the agreed price). You can also have the “cooling off” period waved by your solicitor if they sign a certificate and explain the contract to you so that you don’t have to wait.
If you are buying an apartment or townhouse, you should be aware of the fact that many of them are on a “Strata Title” which means that along with the property you are also buying into the rights and obligations of being part of the owner’s corporation (body corporate).
This means that you’ll get a say on issues related to the building or property but it also means that you will be liable for expenses for property maintenance and repairs, you’ll need to pay strata-levy fees and how you can use your property will be subject to by-laws.
In cases like these it pays off to do a good amount of research about what you are getting into, which is something your solicitor can help you with.
Other Things You Should Know
When you buy a property, you are buying it “as is” which means that any nasty surprises you may find are your problem. That is why it’s a good idea to get the property inspected by a professional so that they can tell you exactly what you are looking at. Everything from pest issues, structural problems or other defects, they’ll bring them to light so that you can make an informed decision.
A property inspection may cost you a few hundred dollars now, but it could save you thousands if not tens of thousands if you buy the wrong property, so it’s highly recommended.
Most standard contracts state that the property comes “in the state you find it”, which means any fixtures are included. However, you should be clear on what a fixture is.
Fixtures are anything that can’t be removed without damage to the property. So for example, a stove would normally be a fixture because it’s hardwired, but a fridge wouldn’t be because it’s just plugged in and can be easily removed.
Sometimes sellers will try to exclude certain fixtures, or other times it may not be clear what counts as fixture. So it pays to double check the contract and clarify any points you are unsure of so you know what you get with the property.
The exchange is when the buyer and seller both sign a copy of the Contract of Sale and exchange them. The buyer will also need to pay the deposit at this point.
If the sale is an auction, the exchange will happen immediately after the winning bid is accepted and the auction is over.
When signing the contract you will need to agree on a settlement date, usually 6 weeks after the date of the exchange. At the settlement date, you’ll need to pay the seller the rest of the purchase price, and any utility bills and taxes.
If you are unable to pay by the settlement date, you will probably be charged interest, and in some cases the seller can cancel the contract and keep your deposit.
If you realise that you won’t make the settlement date, you should let your solicitor know as soon as possible so that they can try to come to an agreement with the seller or their solicitor.
If you are looking at buying a property in Sydney and would like to know you’ve got a professional on your side, talk to us at Elmassian Lawyers now. We are specialists in conveyancing and can help you ensure you are getting the best deal possible on your property purchase!