Buying a property can be one of the most significant investments you make in your lifetime. While it can be an exciting and rewarding process, it can also be stressful and overwhelming, especially if you are a first-time homebuyer. In this blog, we will outline the general steps involved in purchasing a property, from placing an offer to settlement day.
However, it’s important to note that not all property transactions are the same, and there may be additional or different steps depending on the circumstances.
For example, some buyers may have a subject to sale of their property condition in their offer, meaning the purchase of the new property is dependent on the sale of their existing property. In this case, the process can be longer and more complex as it requires coordination between multiple parties and timelines.
1. Find a property of interest and place an offer
The offer is a crucial step as it outlines special conditions. It’s essential to seek advice from your settlement agent or finance broker on what to specify. For example, they may recommend you include a building inspection, termite inspection, and pool inspection to ensure that the property is structurally sound and safe. The seller may counteroffer, and negotiations on price and special conditions may occur until both parties reach an agreement. If the seller accepts your offer, it becomes a legally binding contract.
2. Your offer is accepted, and both parties sign the O&A
Once your offer is accepted, the seller and buyer will sign a contract known as Offer and Acceptance (O&A or COS, contract of sale). This agreement sets out the terms and conditions of the sale, including the price, settlement date, and any special conditions.
3. You officially appoint a settlement agent and a finance broker
At this stage, you must engage a settlement agent to represent you in the settlement process. They act as an intermediary between the buyer and the seller, and their primary role is to ensure that the buyer receives a clear title to the property. You may also need to engage a finance broker or bank if you finance to purchase.
4. Your settlement agent commences all due diligence
Your settlement agent will start the due diligence process, which involves checking the property’s title and raising all appropriate searches with Landgate. For example, a settlement agent can write to the rating authorities and receive responses from these departments, which are provided to the buyer, prior to settlement.
5. Your settlement agent will bring any special conditions to your attention
Special conditions may include things like subject to finance or subject to a building inspection. For example, If finance is not obtained by the due date, your settlement agent can request an extension of finance approval via the real estate agent for both parties to agree on a variation of the finance due date.
6. Your finance broker receives financial approval of your mortgage application
If you require finance approval, your finance broker will obtain financial approval of your finance application. This process typically takes around 21 days from the date your offer is accepted.
7. You sign all mortgage and settlement documentation
Once financial approval is received, you will need to sign all the necessary mortgage and settlement documentation. The settlement documentation includes the transfer of land document, which transfers the property’s legal ownership from the seller to the buyer. Other documentation may include discharge of mortgage (if applicable), any required statutory declarations, and any other legal documents required to complete the settlement process.
8. Monies are transferred into your settlement agent’s trust fund
Prior to settlement day, you may need to transfer the balance of the purchase price into your settlement agent’s trust account. Your settlement agent will provide you with the details on how to do this.
9. Settlement day arrives
Settlement day finalises the property transaction, and the buyer receives the keys to the property. Delays or errors from third parties can cause postponements, making it essential to work with an experienced settlement agent. Settlement agents can identify potential issues, liaise with relevant parties, and ensure that all documentation is in order for a smooth transaction. By seeking professional advice and assistance, buyers can increase the chances of a successful property purchase and settlement without complications.
10. Your property transaction is settled, and the real estate agent delivers the keys!
A successful settlement is the culmination of the property transaction process, and it’s an exciting moment for both you as the buyer and the settlement agent that has being acting for you. Your settlement agent will ring you to share the good news and will instruct the real estate agent to deliver the keys – congratulations!
Ultimately, buying a property is a significant investment that requires careful consideration and planning. Knowing the steps involved and seeking professional advice can make the process less stressful and increase the likelihood of a successful transaction.
Additionally, different states and territories in Australia may have different laws and regulations regarding the purchase of property. It’s crucial to engage the services of experienced professionals, such as a settlement agent and finance broker, who are familiar with the local laws and regulations and can guide you through the process.
We understand that buying a property can be overwhelming and intimidating, especially for a first-time buyer. If you have questions related to the settlement process, legal and contractual obligations, etc., email or give us a call for expert settlement advice.