Buying your first home can feel like a daunting process. From working out how much you can borrow, to finding the perfect property, to organising building and pest inspections, it can seem like a pretty overwhelming task. We’ve broken down the steps for purchasing a property in Australia into 7 easy steps to hopefully eliminate some of the fear and confusion when it comes to buying your first home.
Please note: The process outlined below is for a standard residential property transaction (Private Treaty sale), rather than an auction.
1. Establish finances
If you’re buying outright with cash, you can skip this step. If you’re taking a mortgage from a bank to buy your home, it’s important to get pre-approval before you start your search. This way, you know how much money you can spend, and what properties are in your price range. If you’re looking to get an estimate of your borrowing power before heading to a bank, there are free calculators and financial tools online that can give you a better overview of your situation. Mortgage brokers can also assist you in determining how much you can borrow, if you would rather go through the process with a person present.
2. Begin the search
Now that you know what your price range is, you can search for properties that are within it. Sites such as Domain and RealEstate show properties available from various states and can be a great place to start. You can search by suburb, price range, and even include keywords such as “pool” or “air conditioning”. Ensuring you maintain a good relationship with real estate agents when looking at properties can also be helpful, as they may be able to suggest similar, newly listed properties that fit your criteria, as they arrive on the market.
3. Make an offer
Once you have found a property that ticks all of your boxes, it’s time to make an offer! In some Australian states, the first offer can be verbal, however it is recommended to make a written offer, or at least to confirm the verbal offer via email. It is also important to remember to make your offer “subject to building and pest inspection” and “subject to finance”, as this allows for you to pull out of the purchase if big issues are found with the house or flat during inspections, or your bank finance for the property falls through. (If you are purchasing via auction, the whole process is a little different and you will need to have your inspections and terms and conditions completed before the auction day, and checked by your solicitor.)
4. Instruct a solicitor
When your offer is accepted, the real estate agent will ask for your solicitor’s details so they can forward the contract on to them. A copy of the contract will also be sent to the seller’s solicitor. Conveyancing – the transfer of the property title – will also need to be arranged by either your solicitor or a conveyancing specialist. Some buyers choose to do their own conveyancing using do-it-yourself conveyancing kits. Doing your own conveyancing means you will save money, but will also be legally accountable for any mistakes that you may make.
5. Building and pest inspections
It is important to have building and pest inspections conducted on the property before the settlement. Building inspections check the foundations of the property, as well as informing the purchaser of any damage or problem areas that may be difficult to see by the untrained eye. Pest inspections can determine if there are termites in the property, if the property ever had termites, and when it was last treated for them. It can also determine if any significant damage has been done. According to BPIC, “real estate professionals estimate that approximately 30 percent of building inspections reveal major faults”. Building and pest inspections are a valuable investment, as they can save you from the stress of finding out your house is in a poor state after settlement has occurred.
If issues are found with the property during the inspections, and you have made the contract “subject to building and pest inspection”, you may be able to choose to walk away from the agreement, or have the price of the property reduced. If you wish to negotiate a lower price for the property, you should get in contact with the real estate agent to let them know the results of the inspections and the new amount you are willing to pay. They will then pass this on to the buyer, who will either accept the new amount, deny the new amount, or make a counter offer. If negotiating makes you feel uneasy, you can hire a buying agent to assist you with the process.
The settlement process will mostly be handled by your legal representation and the banks, however, it is important to still take an active role on settlement day and ensure the property is in the same condition as when your final offer was accepted. On settlement day, the vendor will exchange their title of ownership over to you (upon confirmation of the transfer of funds). Subsequently your lawyer or solicitor will notify the appropriate government departments about the change of ownership. Once everything is confirmed by your appointed agent, you can take a deep breath and relish in the fact that you’re a new home owner! Congratulations!