Property Buying Process
Once you have applied for a home loan and have your finance in order, you are now ready to hit the market to start searching for a property.
PLEASE NOTE that having your finance (home loan) in order before negotiating or exchanging on a contract is very beneficial and makes the buying process a lot easier.
First thing to consider for yourself is:
- Do you know the best way to search, identify and negotiate on a property?
- Do you have the time to research, go to open for inspections, try your hand at negotiating and purchase?
If the answer is no, then you may want to consider a buyers agent to assist you with the purchase as they do this for a living.
However, if you’re motivated, have the tenacity or experienced and happy to continue on this path with FORDABLE guiding you along the way, here is our summary of the buying process.
Step 1: Understand your strategy
Is your goal to buy an owner occupied home, an investment property or build wealth through property (the bigger picture)?
Understanding your strategy will assist you to stay on target with achieving your goal. It will allow you to make decisions based on a preconceived plan, with less “what if” conversations.
Step 2: Determine what is most important to you
For an owner occupied property (your home), if living close to transport, having access to schools or shops is your priority, then this will help you narrow down the search range. Your priority may be house and land which dictates exactly what type of property, and therefore the location will have to be second in line.
If you are purchasing an investment property then there are a myriad of criteria which need to be considered and you should either educate yourself very well in what this is, seek a buyers agent to assist you or read some more info on our blog.
Once you know what is most important, you can start to narrow down your options, pointing you to the properties within your criteria.
Step 3: Understand the local market
Seek some assistance from your trusted advisor on obtaining a property report. Most Mortgage Brokers and Buyer’s Agents have access to RP Data and through this paid service, they can obtain property reports which will give you detailed information about the market, the growth, other comparable sales, infrastructure and more.
Educate yourself on what the other properties in the area are selling for before you start getting serious about a property you may like the look of. If you discover the property is selling at a price which is in line with other comparable sales, then you’re moving forward.
Step 4: Inspect, review the contract and determine if building or pest inspections need to be ordered
Not all people inspect a property before they buy. The property rental yield may be good enough for a savvy investor to purchase sight unseen. However, if possible you may want to inspect and if this is going to be your home, most likely you will be inspecting.
If the property stacks up with what you are seeking, then you could start asking the sales agent a few questions such as:
- Are there any issues with the property that you know of?
- Why is the owner selling?
- Are there any developments happening in the area?
- Are there any changes to zoning in the area (this is related to council opening up an area for new developments such as apartments, high rises, or other)?
- Have there been any renovations that were done without council approval?
- Has any other potential buyer had a bank valuation completed and do you know the outcome?
Investigation is worthwhile when considering a new purchase and asking lots of questions will also indicate to a sales agent that you are serious / genuinely interested in the property.
In most cases, people will want to order a building and pest inspection to conduct further due diligence on the property. Whilst these reports can be a little vague (e.g. “there doesn’t appear to be any issues”) they can be helping in identifying any obvious or real concerns that an untrained eye is not looking for. These things could be moisture, structural related, termite’s discovered, etc.
All building and pest inspection reports come with the disclaimer (“at the time of inspection” and “from the areas we could access” - meaning they will not move furniture around), so it is worthwhile reading the full report to understand what may have been inspected and what may not have been.
Regarding contract review, your solicitor can do this for you once you have entered into a cooling off period or prior to auction. Solicitors can also arrange for a strata report to be conducted in the event you are purchasing a unit.
Like all services related to property and finance, you can get lucky finding a great service provider or you can go to our contact page and complete the form to connect with our team of professional solicitors to assist with your conveyancing.
Step 5: Understand if this is a private treaty sale or an auction sale
There are a few things to get your head around at this point, and they are associated with a private treaty, cooling off period, 66W and auction sale.
A private treaty sale means the property is for sale at an expected price (which can be negotiated) and an offer can be submitted to start the sale price negotiation.
What’s important to know is that a private treaty sale can have a cooling off period or a 66W condition agreed to.
The cooling off agreement is generally a 5 day period which allows a purchaser to conduct pest and building inspections, plus get finance in order (i.e. pre-approval upgraded to formal approval after valuation).
A 66W agreement means you are proceeding with the purchase without any conditions such as building and pest inspections or finance approval.
An auction sale is very similar to a 66W by which you are buying the property and paying a 10% deposit when the hammer drops. You can conduct inspections prior to the auction and undertake all the due diligence you like prior to auction but once you are the highest bidder and the hammer falls, you must provide the 10% deposit on the day (non refundable).
We have a team of professionals who can assist with the buying, negotiating and even represent you at auction. To connect with one of our team who can assist you with this process, please go to our contact page and complete the form.
Step 6: Negotiation was successful
Once you have successfully agreed on a price or purchased at auction, you will need to have your trusted broker order a valuation on the property from the lender which you application has been conditionally approved.
Once the contract of sale (COS) has been supplied and the valuation has been completed (at the purchase price) then you are ready to proceed to formal approval.
PLEASE NOTE: if valuation comes in lower than than the purchase price, the purchaser will need to cover the difference (i.e. purchase price is $500,00 and valuation is $480,000, then the lending amount may change and the deposit amount will increase).
Step 7: Formal approval
Once the valuation is completed and all exceptions are addressed, formal approval may be confirmed and loan documentation will be issued.
Once formal approval is confirmed, the loan documents will be issued for the purchaser to sign. They will require a witness to sign the loan documents and preferably, this should be your mortgage broker to ensure all loan information is accurate and correct.
Once all loan documents are executed and sent to the lender, their legal team will certify then to ensure all requirements are met. If all requirements are met, then certification will be confirmed and settlement can be booked.
Step 8: Settlement
Once settlement is booked, all requirements have been met. Some of the last minute requirements prior to settlement being booked may include insurance policy for the property. Settlements are normally conducted in the afternoon with the legal team from the lender, the purchasers solicitor and the vendors solicitor which can be online or in person.
After settlement is completed, your trusted mortgage broker will be informed and you can then collect the keys to your new property.
Step 9: Post settlement
Post settlement, it’s essential that all your loan application details are confirmed so you have full transparency on what your loan structure, product type and repayment requirements are. This is a service we provide to ensure you are completely briefed on your ongoing commitments are.
Step 10: Ongoing monitoring of your finance
Post settlement, we will monitor your loan and continue to ensure you are getting the most competitive rates for your circumstances, negotiating rates with your lender and provide feedback on options for reducing your repayments if possible.
To speak with one of our team about the buying process, go to our contract page and complete the form.Apply for Property Finance