What’s involved in buying a property?

Private Treaty

1. Before you purchase or start looking for a property to buy, you really should understand the property price range in which you can afford to buy. This is basically dependent upon your deposit amount and how much you can borrow (and comfortably be able to repay).
2. Make an appointment to see one of our loan consultants to understand what your financing opportunities are and total expected costs, in particular how much you can borrow and what your repayments will be (you can start by using the various borrowing calculators here)
3. Obtain the documents ready for which you will require to get a loan-pre-approval or for the loan application process (see checklist)
4. Research the market of listings and sales in the area you want to buy
5. Arrange for your solicitor or conveyancer to advise you in the legal process, including looking through the contract for sale on any property you wish to purchase before signing the contract.
6. Arrange for any pest or property inspections you may want conducted on the property, either pre exchange of contracts or as conditions of sale. If buying by auction, these must be conducted before the auction.
7. Obtain the Contract for Sale from the real estate agent or private seller. When you are ready make an offer on a property. See Buying at Auction.
8. ‘Exchange of contracts’ occurs when you and the buyer have both signed the contract for sale. Once you have exchanged contracts, ring your Time Finance consultant to get the formal loan approval process started.
9. Subject to the terms of sale contract, a deposit is payable. This is usually 10%. If buying by auction, the deposit is normally required at the auction when signing the contract. If buying by private treaty, a ‘holding deposit’ (approximately 1%) is required to be paid showing ‘good faith’ until the full deposit is payable when you exchange contracts. Note that a holding deposit does not mean that the property will be held exclusively for you until exchange of contracts.
10. After you exchange contracts in a private treaty sale, a legal cooling-off period may apply. During this time (varies from state to state) you may be able to withdraw from the contract to buy the property. There is no cooling off period if you buy at auction. Make sure you understand your obligations by obtaing advice from your legal advisor, as you may lose your deposit if you change your mind during the cooling off period.
11. The settlement of the property is usually arranged for around 6 weeks after the exchange of contracts. This date varies between sellers and is disclosed in the contract for sale. This is when the balance of the property’s purchase price is paid and you take ownership. Discuss this process with your appointed legal representative who will handle these details of settlement. You don’t usually need to attend this process.
12. Once settlement has occurred, the seller (or their agent) will hand you the keys to your property!

* This list does not contain all eventualities and possible outcomes relevant to any purchase you may be considering – seek professional advice from your legal and real estate representatives.

Buying at Auction

Auctions are exciting and nerve racking for buyers and sellers because both have to make quick decisions.

Unlike buying a property by private treaty, if you make the winning bid you are legally bound to exchange contracts and pay the deposit on the day, and there is no cooling off period.

As a buyer it is essential that you do your preparation and homework first so that you can confidently bid and win at auction.

Before the auction

• Go to as many ‘trial’ auctions as you can to watch and learn the process
• Get a feel of the auction market by going to some of the open houses of the trial auctions, and get a feel for the difference between what an agent quotes as the expected price and the actual sold price.
• When you find a place you like, get a contract from the agent—read it yourself and have your legal representative check it.
• Get building and pest inspections done if you require them
• Arrange finance—get pre-approval on your loan.
• Decide on the maximum amount you want to pay for the property.

At the auction

• Depending on your state or territory, you may need to register to bid when you first arrive at the auction venue, so take some ID as well as your cheque book.
• Watch the other bidders to see who is showing their hand
• Wait until the property is “on the market” before making a bid (this means that the reserve price has been reached and the property will be sold)
• Bid in good increments taking the auctioneers guide, and not more than you need to – you might get the property for less than what you were expecting to pay. You don’t have to bid in the increments the auctioneer is seeking.
• Don’t go past your limit.
• If the property was not declared ‘on the market’ (it didn’t reach its reserve price) it will be ‘passed in’. There is a benefit of you being the last bidder because you have the first right to negotiate with the seller.
• If you weren’t the highest bidder, you should still let the real estate agent know of your level of interest.

After the auction

If the property was declared ‘on the market’ and the property was sold to you as the highest bidder, this means you have bought it. The auctioneer or agent will sign the paper work (exchange contracts with you) and you will need to pay the required deposit (usually 10% of the sale price).

If you haven’t started the loan process, now is the time to call your Time Finance Loan Consultant.

More Information about Auctions

For more info about auction rules and regulations, visit the fair trading or consumer affairs authority in your state or territory.

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