Buyers Information

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At Alex Scott & Staff we understand that buying a property is one of the biggest financial decisions you will ever make. It should also be one of the most satisfying experiences you have, and certainly is life changing. Even before you make the 'big decisions' about which property to buy, there are many other important decisions you will need to make. Doing some homework can help you avoid potentially expensive mistakes. You are more likely to make the right choices if you know what you want; are informed about your options; shop around for the best price and property that meets your needs; refuse to be hurried into a decision; take your time; read everything before you sign it; and ask questions.

In this section of the Alex Scott & Staff website you will find answers to many of your questions when it comes to buying.

Be informed

Make a list of what you absolutely must have in a property so that you don't get carried away and buy something that looks 'great' but doesn't have what you really need. Make a 'wish list' also, so that these desired but non-essential items can be factored into your decision making when you find them in a property within your price range. Learn as much as possible about all aspects of the property buying process. Find out all you can about the market value of property in your preferred areas by searching the internet, attending auctions and reading newspapers for auction results and prices of properties listed for sale.

Shop around

Apart from being informed about current market values and what you need and want in a property, you will also need to be informed about the products and services offered by solicitors and conveyancers, and loan providers.

Don't hurry

Never rush or be pressured into making hasty decisions. There is a lot of money at stake - a lot of years will be spent paying off the mortgage. Make sure that you are making this commitment for the right property. If you take your time and do your homework, you will feel more confident that you have found the right house at the right price, the right solicitor and the right loan when it comes your way.

Read before you sign

During the buying process you may come across several types of contracts such as loan agreements, contract notes and contracts of sale of real estate. A good general rule is not to sign any document without reading and fully understanding its contents including all terms, conditions and fine print. Make sure that anything which has been agreed to verbally is put in writing. You will therefore know exactly what you are committing yourself to. If something is unclear, ask for an explanation. If you are still uncertain, it is better to wait and seek professional advice before signing.

The First Home Owner Grant

The First Home Owner Grant scheme provides eligible first home owners with a non-means tested, one-off payment of $7000 (as of 1 July 2000). This is regardless of the purchase price of the property. It can be used for the purchase of an existing home or to build a new home. Some lenders will help to arrange the First Home Owner Grant application for their borrowers. Eligibility criteria and application forms are available from the State Revenue Office of Victoria's website at www.sro.vic.gov.au.

The Agents responsibility to the Buyer

A buyer will usually not pay for the services of an agent, unless specifically employing a buyer's advocate. Buyers will generally deal with who is handling the sale of the properties in which they are interested. They may also leave their details with an agent indicating the type of property they are seeking and an approximate price range. The agent can then notify them directly when suitable properties become available.

A buyer can generally expect an agent to:

• take the buyer's details and provide advice about relevant properties for sale
• answer questions about listed properties
• arrange inspections
• provide a copy of a vendor's statement
• communicate offers to the seller
• organise the signing of the contract.

Before buying a property

Before a property is sold, the seller (vendor) is required by law to provide the buyer with a vendor's statement or 'section 32'. The transfer of ownership of land from the seller to the buyer is called a conveyance of land. This process is usually undertaken with the assistance of a solicitor or conveyancer. Buyers and sellers should engage their own solicitor or conveyancer separately. Whether it is a conveyancer or a solicitor that is chosen will depend on the buyers or seller's preferences and individual requirements. For example, the need for legal advice. However it is important to understand that there are differences in what a solicitor and a conveyancer are qualified to do and what they are legally allowed to undertake on behalf of a client.

The Vendor's Statement (Section 32)

The vendor's statement or section 32 is usually prepared by the seller's solicitor or conveyancer. It is then signed by the seller and made available to prospective buyers, usually via the agent before the sale or auction. The buyer may then have the statement checked by his or her own solicitor or conveyancer prior to purchase. The vendor's statement contains information about the property's title, including mortgages, covenants and easements, zoning and outgoings such as rates. It does not include any information about the condition of any buildings, whether they comply with building regulations or if measurements on the title are accurate. The onus is on the buyer to find out about anything that is not covered in the vendor's statement. The information that must be included in the vendor's statement is outlined in section 32 of the Sale of Land Act 1962. The vendor's statement is a legal document and must be factually accurate and complete. If the vendor's statement contains incorrect or insufficient information, a buyer may be able to withdraw from the sale or take legal action.

Professional Building Inspections

Before signing a contract, a buyer should consider enlisting the services of a qualified building inspector, surveyor or architect to provide a professional condition report. A qualified inspector will know exactly what to look for and will see through any cosmetic improvements covering up faults that may be missed by the untrained eye. The inspector may provide a written condition report, pointing out faults in the property, whether they can be repaired and how much these repairs are likely to cost. The report will also highlight any unsafe or unauthorized renovations and extensions. The buyer may be able to use this report to negotiate conditions in the contract as well as the price. The inspection service should have full professional indemnity insurance to protect the buyer if a problem is missed in the inspection.

Making an Offer

Any offer to buy a property must be made through the agent. The agent will then communicate this offer to the seller. Although an offer can be made verbally, it is not legally binding until it is in writing and signed by both parties. This will generally be in the form of a contract note or a contract of sale of real estate signed by the buyer and, if accepted, signed by the seller. The agent may also require the buyer to pay a deposit (see page 43). The deposit will be returned if the offer is not accepted. An offer becomes binding when both parties sign the contract note or contract of sale and all conditions are met. A buyer should not sign without carefully reading and understanding this document.

Conditional offers

In a private sale the buyer can negotiate with the seller to have the sale subject to certain conditions. For example, obtaining finance, the sale of an existing property or the successful completion of a building inspection. If the contract is made 'subject to finance', the buyer should always nominate a lender in the relevant section of the contract. An auction contract of sale is unconditional.

Negotiation

If the seller does not accept the offer, the agent may go back to the buyer and see if he or she is prepared to make another offer. Through a process of negotiation the agent will attempt to achieve a mutually acceptable price. This negotiation may involve verbal offers, but will only be legally binding when in writing.

Contract note

Prospective buyers will sign a contract note or contract of sale when they wish to make an offer on a property. The contract note contains details of the property for sale, names of the seller and buyer, seller's estate agent, price, the deposit paid, balance owing at settlement and any special conditions such as a clause 'subject to finance'. An agent or agent's representative can complete a contract note in preparation for the buyer and seller to sign.

Contract of sale of real estate

A contract of sale of real estate is a more detailed legal document than the contract note and is usually prepared by a seller in consultation with a solicitor. The terms agreed upon in the contract note can be set out more formally and in greater detail in the contract of sale. It is possible to proceed straight to a contract of sale without first completing a contract note. Settlement is the date on which the balance of the purchase price is paid to the seller, and the title of the property is handed over to the buyer. The seller sets the date of settlement in the contract. The settlement period is usually between 30 to 90 days but a buyer may be able to negotiate an alternative settlement period with the seller prior to signing the contract.

Cooling Off Period

A cooling-off period of three clear business days applies to non-auctioned residential property sales regardless of price. The cooling-off period allows the prospective buyer time to consider the offer, and begins from the date the buyer signs the contract, not from the date the seller signs it. to end the contract within that period, the buyer must provide written notification to the seller or the seller's agent. A buyer will be entitled to a full refund of monies paid, less $100 or 0.2% of the purchase price, whichever is the greater.

The cooling-off period does not apply in the following circumstances:

• The property was purchased within three clear business days before or after a public auction.
• The buyer received independent advice from a solicitor prior to signing the contract.
• The property is used mainly for industrial or commercial purposes.
• The property is more than 20 hectares in size and is used mainly for farming.
• The buyer has previously signed a contract for the same property with the same terms.
• The buyer is an estate agent or corporate body.

When is the property sold?

When both parties have signed the contract the property is sold. The sale is finalised at settlement when all checks have been made, the title and transfer documents exchanged, and the balance of the purchase price has been paid.

Seven simple steps to BUYING:

1. Decide which area you wish to buy in.
2. Decide what kind of property will suit your needs and lifestyle.
3. Establish how much you can afford and arrange finance for your proposed purchase.
4. Start looking in your preferred area, for your preferred property in your price range.
5. Inspect the properties and have them professionally checked by builders and pest inspectors for your own piece of mind.
6. Assuming you've found what you want, make an offer and negotiate the purchase with your Alex Scott salesperson. Negotiations may include price, settlement time and inclusions.
7. Confirm your finance situation, appoint a legal representative (conveyancer or solicitor), sign contracts, pay your deposit and await settlement day for the property to be yours.