20 April 2022

Breaking down the house buying process in Australia

Emma McLaren
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Buying a house can be one of the most exciting life experiences. If you’ve worked hard, saved a deposit, patiently waited for the right home to come on the market, and finally had an offer accepted after attending plenty of open homes, you’ll be familiar with just how many steps can be involved. Even then, it’s easy to get lost as you move from offer through to handover. If you’re a first-time buyer or want to refresh yourself across the home buying process, here’s our complete guide to the house buying process in Australia.

Pre-contract

While it’s often exciting to find a new home, rushing to sign a contract can be a recipe for heartache. If your offer has been accepted, the seller’s agent will supply you with a sale contract that lists the conditions related to purchasing the house. Too many first-time buyers make a major mistake at this stage: they sign the contract before obtaining qualified legal advice.

Before signing any house purchase contract, it’s wise to obtain this advice from a qualified solicitor. You may also benefit from the input of your financial advisor. They can advise you as to whether the purchase is in alignment with your long-term financial goals and ongoing repayment capacities. Purchasing a home is too large an investment to risk, so make the most of this pre-contract stage.

Pre-contract creates the opportunity for you and your solicitor to thoroughly review the purchase. This includes:

  • Completing searches and investigations to make sure the property is appropriate for your needs. This will also identify any issues that may be an issue down the track, such as restrictions to intended uses or elements that may negatively impact the property’s value.

  • Negotiating contract specifics to suit your needs, including the price, the deposit amount, and the preferred date of settlement

  • Negotiating any special conditions you’d like within the contract

  • Reviewing your rights and liabilities under the contract’s clauses

By working through this pre-signature stage thoroughly, you can move forward with a greater level of peace of mind.

Contract signature

Once you’ve reviewed the contract and your due diligence is completed, it’s time to sign the contract. If you have any questions or red flags, it’s important that these are addressed before signature.

Specific contract conditions

Many contracts will be subject to conditions such as finance, building and pest inspections, or other particulars as per the buyer and seller’s instructions. Once the contract is signed, it’s time for these conditions to be satisfied by the due date per condition. This may include seeking finance approval or ensuring any work is completed by the seller that the sale is conditional upon.

Pre-settlement

Settlements require preparation which is undertaken both by your solicitor and by yourself. This stage includes:

  • Completing bank loan documentation to ensure all finances are available by the date of settlement

  • Preparing transfer documentation, including any other documents relating to the transaction (such as lease documents)

  • Confirming the time and place where settlement will occur

If documentation and finances are not in place by the date and time of settlement, this can cause major issues. It can also open up the risk of a breach of contract. You can work closely with your solicitor and your lender to ensure all requirements are met ahead of settlement.

Delays before settlement

It’s not uncommon for settlement to be delayed. This can occur due to a range of factors, so by being prepared, you can do as much as possible to avoid this.

One common reason settlement may be delayed due to finance falling through. One way to avoid this is to work closely with your lender prior to making an offer, building an understanding of your borrowing power and securing pre-approval. With a realistic pre-approval in hand, you can make offers that are informed by this pre-approval capacity.

Bank mix-ups and delays in processing can also lead to delays in settlement. If sellers delay the submission of their release authority, banks may not have the time they need in order to prepare for settlement. Delays can also result from sellers completing release authorities that are incomplete or incorrect, such as using a different name on bank documents than from corresponding legal documents.

Final inspection issues can also lead to delays in settlement. If the buyer discovers a fault that’s occurred in the home, the seller may require more time in order to complete repairs.

Valuations are also a major factor in settlement delays. If a property’s formal valuation is below the contract purchase price, a lender may not be willing to lend the buyer the amount needed to complete the purchase. The buyer will need to fund a shortfall, which can take time as they work to a solution.

By maintaining clear communication with your lender and your solicitor, you can limit the risk of a delay in settlement due to conditions that are within your control. Paying close attention to contract particulars and special conditions is a proactive way to ensure a process that’s as smooth as possible.

The date of settlement

Once all conditions are fulfilled and settlement is confirmed, the goal for settlement is to be as uneventful as possible. On the date of settlement, your solicitor, or your lender, will give the money to the seller in order to receive the transfer documents to the property. These documents may also include the release of mortgage documents alongside any other documentation required to ensure a clear title to the property.

Once settlement has taken place, it’s time to pop the champagne. You officially own your new home!

After settlement

Once settlement has been completed, the home’s all yours. Your solicitor or your lender will complete the transfer of registration shortly after settlement, which moves the property into your name. They’ll also finalise any outstanding matters, including paying rates to the local council and advising authorities that you now own the property.

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