Secure the property of your dreams

There are key financial, legal and logistical considerations to keep in mind at each stage of the property buying process. The steps in making a property purchase are the same whether you buy by private treaty or at auction, though the timings differ between the two.

When buying by private treaty, once you (or your agent) make an offer and the vendor (or their agent) accepts it, signs the sale contract and receives the deposit, you have ‘exchanged’ contracts and the cooling-off period begins. This period varies from state to state, but during this time you can withdraw from the sale by paying a specified penalty.

Purchases at auction have no cooling-off period. Because of this, contracts and inspection reports will be prepared by the vendor and made available to potential buyers before the auction. You may be able to organise your own building inspections prior to the auction.

Once the cooling-off period is over or you have bought at auction, you then enter the ‘settlement’ phase. This is usually when building, pest and other legal checks take place, so make sure your contract has provisions to cover any unfavourable reports or conditions they may uncover. The sale is ‘completed’ when, at the end of the settlement period, the remainder of the price is paid and the deeds are given to the buyer.

Buying by private treaty

Most Australians buy their properties by private treaty. The vendor sets an asking price and potential buyers are free to negotiate, either directly with the vendor or through an agent the vendor has appointed to handle the sale.

Private treaty sales are preferred by many as they can feel less risky than getting into an emotion-laden bidding war at auction. However, it’s still important to keep your wits about you and proceed carefully at all stages of a purchase. Here are our top tips:

• Know your market. As always, it’s vital to understand prices in the area you’re looking at so you can make a realistic offer (relative to your finances and the local market).
• Have your finances ready. Once your offer has been accepted, you want to move quickly to exchanging contracts, so get your finances pre-approved.
• Don’t get gazumped. Until contracts are exchanged, your vendor can still accept a better offer after accepting yours, so get your building and pest inspections done quickly to avoid being beaten to the punch.

Bidding at auction

Auctions have the advantage of being final on the day, so you don’t need to worry about being gazumped. You do need to worry about over-committing in the heat of the moment, however, as your bid is binding and there’s no cooling-off period. As always, doing your research and having your finances pre-approved will be a great help, as will sticking religiously to your budget. It’s also helpful to attend a couple of auctions just to get a feel for what goes on and how the bidding proceeds.

A lot of psychology is involved in bidding successfully at auctions. Here are some suggestions on how to get the best result on the day – even if ‘best result’ means walking away from a sale that would bust your budget.

• Open strongly. Putting in a sensible first bid will tell the auctioneer and your fellow bidders that you’re serious about the property. This will help separate the speculators from the serious buyers.
• Set a realistic budget. And don’t exceed it! Your research should give you a good indication of the property’s value, so make sure you have enough funds to play with – and be very careful about exceeding your limit. The excitement of an auction lasts for a day or two but a mortgage is a much longer commitment.
• Remain calm. This is the most important advice of all. No matter how much you like the property, if the bidding goes past your limit you need to be able to walk away. You can always get a friend or a broker to bid on your behalf if you know you’re prone to over-excitement.

Settlement of your property purchase

Regardless of sale method, once contracts have been exchanged and the deposit paid, the settlement period begins. You and the vendor may negotiate a shorter or longer settlement period to accommodate various needs. These can include your current living arrangements, like existing leases or property ownership commitments, or concerns such as wanting to move in before or after a special event (like a holiday or anniversary).

On settlement day, you (or your chosen representative) and the seller (or the seller’s agent) will meet and finalise the sale – which includes paying the vendor the remainder of the dwelling’s price. In return, you’ll receive the dwelling’s keys and title deeds and it will finally be your home.

Now all you have to do is arrange to move in – but that’s a story for another day.

Continue reading the Complete Home Buyers’ Guide with: A home buyers’ checklist