The steps involved in buying a property can often be confusing.
Mortgage brokers, banks, real estate agents, buyer’s agents, solicitors…each transaction can involve multiple parties, all with their own goals and ways of working.
But they all have one thing in common.
They understand how a property transaction works, and with that knowledge comes the ability to be involved in ensuring the transaction runs smoothly.
We want to share this knowledge with you in the hope that next time you buy property it will feel a little less chaotic.
After all, no-one likes surprises at settlement.
The 6 steps of a property transaction:
It’s always a good idea to get pre-approval for a mortgage before you even start looking at property. That way you know what budget you’ve got to work within.
It also avoids the anxiety associated with finding your dream property and then crossing your fingers that you’ll get approved.
2. Signing the contract
Once financing is in place and you’ve made an offer for a property (either by private sale or if you’ve won at auction), you’ll be required to sign the Contract of Sale and pay the deposit.
This step is called ‘exchange of contracts’.
The Contract of Sale is prepared by the seller’s conveyancer or solicitor and generally sets out the description of the property, the agreed purchase price, the settlement date, warranties associated with the sale, terms conditions of the sale, and other general information about the property.
It is important that your solicitor has looked over the Contract of Sale prior to this stage of the property transaction.
He or she will be able to highlight any potential problems associated with the property, and in the case of a private sale, can negotiate changes to the contract on your behalf.
3. Removal of conditions
In the case of a private sale, the purchaser’s solicitor normally negotiates that the sale be conditional on certain things, such as satisfactory results from building and pest inspections.
This means that if the inspections determine for example that the property was infested with termites, the purchaser would be entitled to renegotiate the price or walk away from the sale.
At this stage of the transaction the parties undergo the requisite inspections and if everything is in order, the sale then becomes unconditional.
If the sale is by auction then it is recommended to have completed all of your due diligence before bidding.
After all, you don’t want to be committed to purchasing a property that may have fundamental issues associated with it.
4. Preparation of settlement statement
This is where it can get confusing.
All the costs associated with the purchase are calculated and should be outlined to you in advance of settlement.
If you have questions about the figures then don’t be afraid to ask what they mean, why they’re incurred and when they’re charged. This is when having a good solicitor and mortgage broker really pays for itself.
Now this is the fun part. On settlement day your solicitor or conveyancer meets with the seller’s representative and your lender to exchange documents and cheques.
The documents are then formally lodged to register you as the new owner of the property. Once settlement is confirmed to have taken place then you get to collect the keys and off you go!
6. Post settlement matters
Even though you’re now enjoying your new home, remember to get confirmation from your solicitor or conveyancer that the transfer of ownership has been registered at the Land Titles Office.
As you can see, whilst the process can be somewhat predictable, there are certainly opportunities for the transaction to involve many twists and turns.
For this reason we always advise clients to retain the services of a solicitor rather than a conveyancer.
The main reason for this is because solicitors have the legal knowledge to predict and attend to any legal issues that may arise during the