Buying a property can be a daunting process. It is probably one of the biggest financial decisions you will ever make so it’s important to ensure that you understand the legal requirements involved in order to make an informed decision. Here, we answer some of your most common questions about purchasing property – whether you’re a first home buyer or a seasoned purchaser.
Do I need financing to buy a property?
Before considering buying a property, it is a good idea to apply for a pre-approval from a home loan provider, so you have an idea of how much you can spend on a property. Your borrowing capacity will depend on many factors including income and financial circumstances, plus the amount of deposit you have saved. A broker or bank can assist with finding the right home loan option for your circumstances.
What’s the difference between a property solicitor and a conveyancer?
Once you have your pre-approval and you have found a property you would like to purchase, the next step is to engage the services of a property solicitor or conveyancer to help guide you through the process.
A question we often get is what the difference between a property solicitor and a conveyancer is. Most solicitors who do conveyancing usually practice in other areas of law, whereas conveyancers are only permitted to practice in conveyancing.
In simple terms, a solicitor will be able to provide legal advice where a conveyancer is unable to, particularly where the matter is more complex and not a “straightforward” transaction.
How much does a property solicitor cost?
Most law firms will charge a fixed fee on purchase matters, however be aware that some firms do charge at an hourly rate. Disbursements are generally charged on top of professional fees, which are any costs your solicitor or conveyancer has incurred on your behalf during the matter. This could be anything from securing a land tax clearance certificate to obtaining rates certificates.
At Ivy Law Group, our property solicitors charge a fixed fee on purchase matters depending on the type of purchase, complexity of the matter and estimated purchase price of the property.
If you would like to learn more about how our property and conveyancing lawyers can assist, please submit an online enquiry.
Can a property solicitor help with building and pest reports?
We can assist with arranging building and pest reports if required, however any questions or issues arising from the reports should be directed to the building and pest inspector who carried out the inspection.
What’s the difference between buying at auction versus buying via private treaty?
An auction involves prospective purchasers bidding on the property at a specified location and time with a reserve price set before the auction.
If you are intending to purchase at an auction, you must ensure that you have obtained all the relevant reports for the property, know your borrowing capacity (if you are getting a loan) and ensure that any requirements and amendments to the contract are negotiated and agreed to prior to the auction. There is no cooling off period at auction, so if you are the highest bidder at auction, the contract becomes unconditional and no changes to the contract can be made thereafter.
Private treaty involves the owner of the property setting the sale price through the real estate agent or through an online property service if they are selling themselves without a real estate agent and the property is placed on the market.
Once a price is agreed between you as the purchaser and the vendor (the owner of the property who is selling), contracts may be exchanged subject to a cooling off period (typically five business days) or the cooling off period may be waived. Negotiations in relation to the property can be done up until the contract becomes unconditional.
What happens during the cooling off period?
In NSW, the standard cooling off period is five business days, starting from the date of exchange of contracts and ending at 5:00pm on the fifth business day after exchange. However, the cooling off period can be waived, reduced or extended if both the vendor and purchaser agree to it.
During this time, you as the purchaser can obtain building and pest reports/strata reports, arrange your finance approval and negotiate special terms and amendments to the contract if required.
If you decide during the cooling off period not to proceed with the property purchase, you must cancel (rescind) the contract before the cooling off period expires. This also means that you forfeit the holding deposit you paid to secure the property, which is 0.25% of the purchase price.
What is settlement?
This is the final stage of the sale/purchase process. This is when you pay the balance of the purchase price for the property plus any adjustments as required to the vendor, and ownership of the property will then pass to you. If you plan to live in the property after settlement, you may collect the keys to the property from the real estate agent once settlement has taken place.
In NSW, the usual settlement period is 42 days (6 weeks) after contracts are exchanged but can be made longer or shorter by negotiation.
How much stamp duty will I have to pay on my property?
In NSW, you must pay stamp duty based on the sale price of the property or the current market value of the property, whichever is higher. Revenue NSW charges a standard stamp duty rate, with a premium rate charged on properties worth more than $3,101,000 (as of 1 July 2020).
Each year the threshold amounts for standard stamp duty and premium stamp duty are adjusted with CPI. In certain cases, you may receive a concession or be exempt from paying stamp duty, for example, if you are a first home buyer.
To learn more about how much you could be expected to pay in stamp duty and eligibility requirements for stamp duty concessions/exemptions, you can visit the Revenue NSW website.
Ready to purchase?
Property matters can create a lot of anxiety, particularly when you are not aware of or prepared for each step of the process.
Our friendly and approachable property and conveyancing lawyers are here to help guide you through the process and will always keep you fully informed every step of the way to ensure a smooth transition.
Get in touch with us today by submitting an online enquiry or calling us on 02 9262 4003.
The content of this article is intended as a general guide to the subject matter. For specific legal advice about your individual circumstances, please contact our experienced lawyers.
Angela is an experienced property lawyer, focusing specifically on residential and commercial conveyancing, leasing and off-the-plan developments.
She has worked with a variety of different clients throughout her career, giving her greater insight into understanding the different drivers people have when it comes to property matters, so that she can achieve the best possible outcome for them.
