NSW Property Purchasing Guide

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Purchasing residential property in NSW.

* This is a general information guide relating specifically to property purchases within NSW.

* Always seek the expert advice of your legal counsel or property conveyancer prior to acting, and have your finance approval ready.

* Further information for NSW property buyers and sellers is available at the NSW Department of Fair Trading website.

* Ability Finance recommend everyone considering selling or purchasing property in NSW are aware of this information and seek independent, professional legal advice.

When land, a house or home unit is advertised at a disclosed asking price, it is available to be purchased by private treaty. If you are contemplating a property for sale via private treaty these are some guidelines to help you be prepared for the process.

This information is to be used as a general guide only. Ability Finance strenuously recommend that all readers obtain formal, qualified legal advice prior to considering purchasing any property and obtaining a loan or finance of any type.

As soon as you decide to look for a property to purchase, contact your Ability Finance consultant for a no cost and no obligation consultation to determine your actual borrowing capacity and which banks and lenders from our panel of more that 30 different home loan providers may have finance available for you to choose a suitable loan from.

If you wish to proceed and seek approval for a home loan, Ability Finance can submit an application on your behalf, and apply for an "approval in principle" or pre approval, for finance up to the estimated amount needed, dependant of course on your actual borrowing capacity. This pre approval will be subject to meeting other criteria such as the value and location of the property selected for example, prior to a more formal approval being granted. Unconditional approval is not granted until after a property has been chosen, valued and all supporting documentation has been received and verified by the lender. There are many banks and lending institutions that can give you preliminary approval up to a certain figure, based on your overall capacity to repay the loan.

It is also important to understand that after finding a property and in the period between agreeing to buy this property and the actual time that contracts are exchanged, the seller may choose to accept a higher offer from another prospective buyer, leaving you both disappointed and possibly out-of-pocket. To avoid this happening, it is in your interest to be ready financially to proceed as soon as possible once agreeable sale terms have been negotiated with the vendor.

Once you have chosen the property you intend to buy, you should ask to see a copy of the Contract of Sale. If you request, the agent can make a copy of the Contract available for your solicitor or conveyancer to look over. Making the Contract available to your solicitor or conveyancer is recommended. Since 1988 the Conveyancing Act has made it an offence for an agent to offer a residential property for sale in any way until they hold a proposed Contract for Sale. This Contract, which will normally be prepared by the seller's solicitor or licensed conveyancer, sets out the terms and conditions on which the sale will take place, with the sections dealing with the buyer and the purchase price left blank. The Contract must also include a copy of the title documents, drainage diagram and the Zoning Certificate issued by the Local Council. The contract may also include any council restrictions on the use of the property, and any items included in, or excluded from the sale such as light fittings, curtains, white goods, etc.
Your lawyer or conveyancer will help you check a contract to see that you know exactly what you are purchasing and what is included or excluded from the sale.

You can then make your initial offer to buy the property.

Negotiations over the price of a property, and what is included in the sale, can go on for some time.

Once the vendor and the purchaser have agreed on a purchase price there are other issues that must be agreed upon such as the inclusions like curtains, barbecues and light fittings, the settlement date and how much deposit is required.

Don’t assume that something you see in the property will be included in the sale. Generally if an item is attached to the building and is essential such as stoves, hot water systems carports and some air conditioners they are automatically included. If the items are easily removed such as children’s play swings pot plants, outdoor settings etc they are excluded unless specifically mentioned as being included in the contract. This information is normally on the front page of the contract so ensure that you read it carefully. The estate agent should advise you of items that are included, excluded or negotiable.

If an item is not mentioned in the contract, such as a dishwasher, and the seller agrees to include it, make sure the agent adds this to the contract before you sign it.

The settlement date refers to the date when the whole of the purchase price becomes due and payable. It is also the day you will become the owner of the property and be able to move in. Because there is a lot of work to be done before settlement, normally 4 to 6 weeks is allowed before settlement takes place. If at all possible make some time available to personally check the property the morning prior to actual settlement taking place to ensure that all is in order and that the property has been left as you expect prior to taking final possession of the property.

Normally a vendor will require a 10% deposit when an agreement is made. It is not unusual however for the deposit to be less than 10%. Some purchasers do not have sufficient funds for a cash deposit and in such a case some banks and lending authorities will provide a deposit guarantee bond where they will guarantee the deposit. These bonds normally average in cost between $200.00 and $400.00 depending on the amount of the required deposit. Ability Finance are able to assist purchasers in obtaining a deposit guarantee bond.

Once the vendor and purchaser have agreed on all issues and the purchaser has read the contract of sale and understand their rights and obligations and consulted with their solicitor or conveyancer, the agent will invite the purchaser to sign the contract and an Authority to Exchange. Once a purchaser has signed the copy contract, the agent will deliver this to the vendor and will deliver the original contract signed by the vendor to the purchaser.

The agent will, when instructed by both the vendor and the purchaser, proceed to exchange contracts. This means that the vendor is legally committed to selling the property to the purchaser under the agreed terms. This process, known as the exchange results in each party holding a contract signed by the other party. At this stage a purchaser is committed to buying the property subject to the cooling off period and should be quiet certain that your finances and loan if required is pre approved.

Your solicitor or conveyancer needs to be advised immediately after an exchange of contracts has taken place.

Most buyers of residential property are granted a cooling-off period. This period commences on the day of exchange and ends at 5 pm on the fifth business day following. Within this time, a purchaser can withdraw from the contract. However, if a purchaser does so, they will forfeit an amount of money equivalent to 0.25 percent of the purchase price.

If a purchaser exercise's their cooling-off rights within the five day period, the agent will refund the deposit paid, less the 0.25 percent of the purchase price forfeited to the seller.

The cooling-off rights do not apply in certain cases, such as a sale by public auction. In addition, a purchaser will lose their cooling-off rights if they produce a certificate signed by a solicitor stating that they have received independent legal advice in relation to the transaction. Other matters that need to be attended to by a purchaser at this stage may include the ordering of a building inspection or a pest report. If these things are to be done, it is essential that a purchaser acts quickly in order not to lose the benefit of the five day cooling off period. While the seller may agree to an extension of the cooling-off period, it is safer to presume that they may not. It is also vital that purchasers receive written confirmation that they have an unconditional loan approval before the expiration of the cooling off period. The bank or lender will then be able process the loan so that the money is ready to be paid at settlement.

A purchaser should therefore aim to be in a position where they are able to make a final decision well before 5 pm on the fifth business day.

Once an exchange of contracts has taken place and the cooling-off period has expired, the purchasers solicitor or conveyancer will conduct a number of searches and enquiries to verify that all is in order with the legal title of the property. At the same time, the purchaser should finalise the loan finance with their lending institution. This process can take four to six weeks and Ability Finance will assist our clients and keep them informed throughout this time. When such arrangements have been attended to, the solicitors for both parties will make arrangements for settlement to take place.

At settlement, the purchaser will be required to pay the balance of the purchase price, certain adjustments for water and council rates will be made, any outstanding mortgage will be attended to and the purchaser will then finally become the legal owner of the property.

Ability Finance can help you choose a loan that will suit your purpose and submit your application on your behalf to the chosen bank or lender. Ability Finance will keep you informed at every step of the way saving you time to search for the property and consult with your legal counsel or conveyancer.

Contact Ability Finance now to discuss your options, leave us to organise your loan on your behalf and go property hunting!

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