I've Signed A Contract-What Next?
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.
A Form 1 is a signed ‘Vendor Statement’ outlining various details relating to the property. The form 1 is required to be signed by The Vendors before it is ‘served’ to the purchaser in order that the ‘Cooling Off’ period can commence (once the Contract of Sale is also signed).
The Form 1 comprises:
- An introductory statement setting out the purpose of the form.
- Details of the parties and the land.
- Details of cooling-off rights.
- A statement by/on behalf of the vendor.
- A certificate by/on behalf of the agent verifying the particulars in relation to the land appearing in the statement.
- A table of particulars in relation to mortgages, charges and prescribed encumbrances and/or easements affecting the property.
- Parts detailing particulars in relation to prescribed matters affecting the property.
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.
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 private treaty sales, a cooling off period of 2 working days exists following the signing of a contract and Form 1 during which a purchaser can withdraw from the sale. During the cooling-off period it is common and permitted for buyers to organise inspections of the property e.g. pest or building inspections.
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 extend the cooling-off period with the consent of the seller.
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 arranged by your conveyancer. At settlement you become the legal owner of the property.
State tax/stamp duty
Stamp Duty is a government tax that must be paid by purchasers on settlement. It is calculated as a percentage of the sale price or the market value. Your conveyancer can arrange payment on your behalf.