Looking to buy your first home in Sydney? Let us help you answer any burning questions you may have.
There’s no denying that buying your first home is an exciting and daunting life step. Selecting the right property in a good location that falls within your budget and best represents your needs is a lengthy process that requires a lot of research and consideration – especially if you’re looking for more than just yourself. The best way to ensure your decision before any purchase is RESEARCH!
We’ve laid out the buying process in a simple step-by-step, to make sure there are no surprises when buying your first property.
Step 1: Finance
Asking the right questions is always a good start. Finding out what finance options you have and how much money you may need to borrow is often the best way to start. It’s important to know that the amount you’re able to borrow will vary from lender to lender, and depends on your personal financial circumstance. There are a range of tools (online) that are available for you to use to gauge more of an understanding on what home loan type is most fitting to you.
Step 2: Inspect and Research
Get out there and inspect as many properties as possible, after seeing a number of units you will have a fair understanding of values. It’s very worthwhile to do some research on the suburbs you are interested in, and attaining the sales history in the building and street. Also, acknowledging the median price range of a suburb gives an indication of the quality of a property and its community.
Step 3: Strata Report & Contract of Sale
Usually before you make an offer on a property, it’s smart to ask for the Contract of Sale and the Strata Report. By receiving this report, you’ll have access to the previous AGM minutes and will be able to preview any upcoming works and plans for the building as well as any ongoing issues. It’s important to know what is going on in the building and be aware of any increased fees and other special levies that may apply. You would want to appoint a solicitor (ideally a solicitor that specifically deals with property transactions) at this stage and get them to assist with reviewing the contract and Strata Report for any concerns.
If the agent does not supply the Strata Report you will need to conduct a search on your own volition. There is a cost associated with this ($200- $600). You may get around this by asking the owner of the property to pay for the report or supply the AGM meeting minutes and any other documents that may shed some light on the ‘behind the scenes’ workings of the building.
If all else fails and you really don’t want to pay for the report you can wait until you have exchanged contracts before conducting the strata search. Keep in mind you may require an extended cool off as the report can sometimes take a week or two to come through.
Step 4: Making an offer
If you’ve completed all these steps and still have a strong interest in a property, you’re now in a position to make an offer. It’s advised to start low so that there is room to negotiate with the owner and ideally arrive at a mutually agreeable price. Depending on how many offers are in place and how responsive the owner is, this negotiation period can vary in speed and duration. Now is the time to introduce any special conditions you require into the negotiation i.e. extended settlement, extended cool off, furniture included etc
Step 5: Exchange Contracts
Fingers crossed that the Vendor accepts your offer, at this stage you will be invited to exchange contracts and pay a deposit. Usually the exchange will take place at the property or at the sales agents office. Increasingly, exchanges are being performed electronically with a digital signature. Some terms that may come up during exchange:
Exchange: The process of the vendor and purchaser signing the Sales contract. There will be two copies of the contract for your authorisation. Once the purchaser signs the vendor will then sign and both parties’ solicitors will receive a copy.
Cool off: With a standard sale there is a 5 business day cool off period. During the cool off period you may withdraw from the deal in writing if you change your mind or find a fault with the property. This cool off period may be negotiated and can be extended upon the agreement of the vendor prior to the exchange.
Deposit: A standard sale requires a deposit of 10% of the sale price. At the time of exchange you can pay 10%, 5% or even 0.25%. An exchange can be considered valid with as little as a $1 paid. The balance of the 10% deposit is due at 5pm on the 5th day of cool off. It is important to know that if you exercise your right to withdraw from the sale during the cool off you will forfeit 0.25% of the sale price to the owner.
66W: This is a document that waives your cool off period. Do not be fooled into signing this. Only sign this if you’re 100% sure that the property is for you and seek advice from your solicitor before signing.
Step 6: Cool Off:
The 5 day cool off period is your final chance to do all your final checks to ensure the property is right for you. It is advised to contract a builder to perform a Building Inspection Report to assess the property for any faults or structural damage. It is also advised to order a pest inspection to make sure there are no termites or other pest issues. If you haven’t conducted your Strata Report yet now is the time to do it. Strata reports can sometimes take more than 5 days to obtain so if you exchange without the Strata Report it is smart to negotiate an extended cool-off.
Step 7: Preparing for Settlement
Once cool off has passed and you have paid the balance of the 10% deposit, the countdown for settlement begins. Your solicitor will take the lead during this time and sort out the necessary change over documents. If you’re an investor you should start considering a managing agent (the selling agent may not always be the best choice) and get the property advertised online one or two weeks before settlement to minimise vacancy. A few days prior to settlement you should book a pre-settlement inspection with the agent/owner and organise to collect all copies of the keys on the day of settlement.
Step 8: Settlement
Settlement will take place at an allotted time, organised by your solicitor. Once the time has passed and settlement is confirmed, the property is now yours and you’re free to collect keys and move in or start showing the property to prospective tenants. Time to celebrate!
I hope this breakdown has been useful. If you have any questions that have been unanswered here, we would be happy to help. Contact our office to discuss.