Purchasing the Property
Contract of Sale
A residential property cannot be sold until a contract has been drawn up. A contract of sale sets out the terms and conditions of the sale. A buyer can examine the contract at any time during the buying process, even before an offer is made.
Making an offer
Deciding how much to offer can be difficult. You might wish to make your best offer up front or start with a lower offer and be prepared to negotiate up. However, other purchasers who make higher offers might secure the property without giving you the opportunity to increase yours.
- Offers should be made around the current market price. Offers well below market value will not be taken seriously and the vendor might even refuse to deal with you further.
- Ensure your finance has been approved. A vendor is only interested in serious offers that can be fulfilled.
- Put your offer in writing and give it to the real estate agent. The agent is obliged to forward formal offers to the vendor.
Once your offer has been accepted or you have purchased your new home at auction, contracts must be signed between you and the vendor. There will be two contracts one for you and one for the vendor that both parties must sign. The exchange of contracts can be done in person or by post and is usually arranged by your solicitor, conveyancer or the agent. Your agent will explain how the process works in your state or territory.
When contracts are signed by both parties you will be required to pay a deposit, which is usually 10% of the purchase price. The deposit is paid to the seller’s real estate agent or solicitor who will place the money into a trust account until settlement when the balance of the purchase price is paid.
In some states in Australia there is a cooling-off period of 2- 5 working days following the exchange of contracts during which you can withdraw from the sale. During the coolingoff period it is common and permitted for buyers to organise inspections of the property e.g. pest or building inspections. There may be a cost incurred for buyers who withdraw from the sale within the cooling-off period.
There is no cooling-off period for sellers and there is no cooling-off period for buyers who have purchased at auction. It is possible to waive, reduce or extend the cooling-off period with the consent of the seller.
Your Agent will explain the process and legal requirements applicable in your state or territory.
In some states the property is at the risk of the purchaser from the date of signing the contract. If this is the case in your state you should immediately arrange insurance on the property. Your Agent can explain this requirement to you.
The sale is finalised when the balance of the purchase price and other adjustments have been paid and the title and transfer documents have been exchanged. Settlement usually takes place between 2–6 weeks after contracts have been signed by both parties. At settlement you become the legal owner of the property.
State tax/stamp duty
Stamp Duty is a government tax that must be paid on settlement. It is calculated as a percentage of the sale price or the market value. Stamp Duty exemptions may apply for first home owners or concession card holders. This may vary between state and territories. Your Agent can explain the Stamp Duty payable in your state or territory.