The home buying process

Buying a house can be an exciting and important milestone in your life. It’s a big decision that requires careful consideration and understanding of the process. In this article, we’ll explain how to make an offer on a house and walk you through the steps involved in buying a house.

1. Research and budget:

Before making an offer on a house, it’s crucial to do your research and determine your budget. Look for properties that match your needs and preferences. Consider factors like location, size, amenities, and proximity to schools or workplaces. Take into account your financial situation and establish a realistic budget for the purchase.

2. Engage a mortgage broker to obtain a pre-approval

Your broker will help you to understand your maximum purchase price based on your borrowing capacity, deposit and/or repayment budget. They will recommend a lender that suits your particular circumstances. A pre-approval gives you the a sense of confidence when you are making offers on purchasing a property it can also assist you in making an offer with a shorter finance and/or settlement timeframe that may be looked upon more favourably by the seller meaning your offer may be more likely to be accepted. Generally pre-approvals are valid for 90 to 180 days depending on your lender. It is still important to include a finance clause in your offer, see below for more details. During your pre-approval period it is very important that you continue to pay any liabilities on time and don’t apply for new loans of any kind, as this can impact your full approval. Continue to save as much as you can at this time and be sure you do not spend the funds allocated to complete your purchase.

3. Inspections and due diligence

Once you find a house that interests you, it’s important to conduct thorough inspections and due diligence. Request a copy of the contract of sale and Section 32, also known as a Vendor’s Statement. The Section 32 is a mandatory document that discloses information that may affect the value of the land being sold in a property transaction. Send these documents to your conveyancer so they can advise you on the property’s title, zoning, and any potential encumbrances that may affect your purchase.

4. Making an offer

When you’re ready to make an offer on a house, work with your conveyancer and broker to draft a written offer. This offer will typically include the proposed purchase price, any conditions (such as subject to finance or satisfactory inspections), and a proposed settlement period. The selling agent will submit the offer to the seller for consideration. Negotiations may occur between you and the seller, through the real estate agent. The seller may counter your offer with a different price or negotiate the terms and conditions. This back-and-forth process continues until both parties reach a mutually acceptable agreement.

5. Signing the contract of sale and deposit

Once the offer is accepted, your conveyancer will ensure that all of the necessary terms and conditions (including the finance clause) are including in the Contract of Sale before you sign. Upon signing the contract, you will be required to pay a deposit, usually a percentage of the purchase price. Your finance clause will protect your deposit, so that if you exit the contract according to any of the conditions enclosed, your deposit will be returned to you immediately. Before you pay the deposit to the real estate agent’s trust account, be sure to call them on the phone to confirm the bank account details and avoid being caught out by scammers. If you do not have a pre-approval at this stage contact your mortgage broker as soon as possible. Ensure the signed contract of sale is sent to your broker as soon as it’s available.

6. Building and/or pest inspection

If included in your contract as a condition, arrange a qualified building inspector to assess the property’s condition, including its structural integrity, electrical systems, plumbing, and any potential issues.

4. Full finance approval

When your broker has received the fully signed contract of sale, they will order a valuation of the property. In most cases an inspection of the property will be required by the certified valuer that is engaged by the lender. The real estate agent will be contacted by the valuer to arrange a suitable inspection time. If the valuation is the only condition to your pre-approval, once the valuation report is received the full approval, also known as the unconditional approval, will be requested by your broker.  You’ll be the first to know when the unconditional approval is issued. At this time, if the building inspection was sufficient, you are now required to purchase the property under the contract.

8. Settlement

Settlement is the final stage of the buying process. It involves transferring ownership of the property from the seller to you. During this period, your conveyancer will work with the seller’s legal representative, your lender, and other parties involved to ensure a smooth and successful settlement. OA few days before settlement you will need to transfer any additional funds required for the purchase to your conveyancer’s trust account. Again you need to call your conveyancer to confirm the account details to protect these funds. Your conveyancer and broker will inform you when the settlement has been completed and you can collect your keys from the real estate agent! If you intend on moving into your new home, we recommend not booking a removalist for the day of settlement as there can be circumstances where the settlement date needs to be pushed.

Buying a house involves several steps, from making an offer to settlement. By doing thorough research, seeking professional advice, and working closely with your mortgage broker you can navigate the process with confidence. With proper preparation and guidance, you’ll be well on your way to becoming a proud homeowner.