Umina Beach | Woy Woy


Buying a Property

How much can you afford?

The first thing to do before you begin your search for a property is determine how much you can afford and the area in which you wish to buy.

There’s no point setting your heart on something you can’t afford. Once you establish how much you can borrow and afford to repay you will have a realistic idea of what you can buy.

Researching recent sales and the price of properties on the market should give a good indication of property values and an understanding of the real estate market in the area in which you are looking to buy.

Identify your priorities

Select the location

It’s been said many times before but one of the most important considerations when house-hunting is the location. Choosing the right location is vital not just because it may add value to a property but because you (or your tenants) will have to live there too.

Look for up and coming areas and consider the edge of popular areas. The so-called ripple effect is the most common reason for prices to rise in an area. If you can’t afford the street or suburb you desire you may wish to consider neighbouring areas, especially if you want a bigger house.

It is also important to be aware of any future development plans for your target areas which could impact on the property’s value or your quality of life.

When short listing suburbs it is important to consider proximity to transport, schools, shopping centres, recreation and local facilities and any other amenities that are important to you.

Type of property

A house is likely to be the most expensive type of property but for good reason. You are distanced from your neighbours and will generally have a garden. Semi-detached houses, terraces and townhouses usually have an outdoor area and a degree of privacy however they are likely to be noisier than a house due to their proximity to neighbours. Apartments on the other hand are generally smaller and more likely to be noisier than houses however they tend to be more affordable and easier to maintain.

Putting together a shortlist of things that are important to you in a home is a good idea. Buying a property requires a considerable amount of research, time, commitment and planning. The following process suggests some simple steps to consider before you start your property search.

Points to consider before purchasing a property

Whether you are buying a property as an investment or to occupy extreme care should be exercised to ensure your purchasing experience is stress free and the risks are minimised. The following should be considered before you make your purchase decision:

  • Think about why you are purchasing a property. If you intend living in the property does it really suit your needs?
  • Do you want a freestanding home, a terrace, townhouse or a unit? Or do you want to purchase a block of land and build a new home?
  • How many bedrooms and bathrooms do you want to renovate?
  • If a property has been renovated recently you migh wish to check with the local council to ensure planning or building permits were approved.
  • If you have young children or elderly people living with you, you might wish to avoid stairs and prefer a level block. Do you intend to install a pool in the future? In the garden too big or too small? Will you need more bedrooms in the future? Is the location of the property close to schools etc.
  • If you are buying a villa, apartment or townhouse you may be sharing a common wall with your neighbours. It is advisable to check noise levels if possible.
  • Try to meet your new neighbours. They may not share the same values as you.
  • If parking is important to you make sure it has its own allocated space. Even if you don't need a car space this feature will add value in the resale of the property.
  • If you are buying an investment property you must consider the needs of the potential tenants. It is a good idea to speak to a real estate agent to find out the types pf properties that get the highest returns in the area.


Before you Buy


If you want to buy or sell a home, land or investment property you’ll have to sign a contract. The legal work involved in preparing the sale contract, mortgage and other related documents, is called conveyancing.

Most people employ a Conveyancer/Settlement Agent or Solicitor to do legal work involved in purchasing a property such as preparing documents, giving legal advice on contracts and explaining the implications.

The conveyancing process can involves the following steps:

  • Examining the contract of sale
  • Examining a strata inspection report if the property is part of a strata scheme
  • Arranging a payment of stamp duties
  • Checking any outstanding arrears or land tax obligations
  • Finding out if any government authority has an interest in the land or if any planned development could affect the property
  • Finding out any information that may have not previously disclosed such as a fence dispute or illegal building work
  • Calculating adjustments for council and water rates for the property settlement
  • Completing any final checks prior to settlement
  • Attending settlement
  • Overseeing the change of title
  • Exchanging the contract of sale and paying the deposit
  • Arranging finance if necessary
  • Arranging building and pest inspections
  • Preparing and examining the mortgage agreement



Before you commit to purchase a property a number of reports should be completed. The cost of a professional property inspection is minimal in comparison with the cost of buying a property that requires extensive and unforeseen repairs. The most common reports requested by purchasers are building inspections and pest inspections.

A strata or company title report is important for people purchasing home units as is a copy of the most recent body corporate minutes.

Building inspection

A building inspection will give you an expert’s opinion on the condition of the property you’re interested in buying. The report should provide information on the property’s condition and identify and detect any significant building defects or problems.

The consultant will inspect:

  • Interior of the building
  • Exterior of the building
  • Roof space
  • Under floor space
  • Roof exterior
  • Site

If problems are identified you can get specialist advice or ask the vendor to have the problems repaired or try to negotiate a lower price for the property.

Pest inspection reports

A pest inspection will detect whether or not there is any termite activity or any pests that may exist in the property.

Strata and company title searches

If you are buying an apartment, townhouse, villa or any property managed by a company or body corporate it is important to arrange a strata or company title search. This search will show you the history of the property, identify any problems the property has, list past repairs and proposed repairs to other units and the common areas. This information is important as the cost of repairs to common property can in some cases be substantial and owners normally share the cost of these repairs.


Buying at Auction

Before you bid at auction you must understand the process and satisfy yourself about all details relating to the property. If you are the highest bidder and your bid is accepted, you are obliged to purchase the property. If buying at auction you should have:

  • Decided on a definitive upper limit that you are prepared to pay
  • Conducted inspections
  • Had legal documents checked by your solicitor/conveyancer
  • Organised a bank cheque for the deposit
  • Had finance pre approved

Conditions of sale by auction may differ between state and Territories. Your agent can explain the conditions applicable in your area.

Bidding at auction

In some states prospective purchasers who wish to bid at an auction for residential and rural property must register by giving particulars to the selling agent before they are permitted to bid. Bidders are issued with a bidder’s number which is displayed when making a bid.

The vendor or the auctioneer on the vendor’s behalf may make one bid which must be announced during the auction. This is called a vendor bid.

If the property fails to reach the reserve price it is passed in. As a courtesy, the highest bidder is usually given the first opportunity after the auction to negotiate further with the vendor through the selling agent. If the highest bidder does not purchase at the reserve price the property will be placed back in the market for sale by private treaty.

Bidding on behalf of a purchaser

If you want someone else to bid on your behalf, they must give the auctioneer a written authority from you, before the auction starts. The letter must include your name, address and details of proof of identity, such as your driver’s licence or passport.

Telephone bidding

The practice of bidding by telephone is allowed subject to compliance with certain procedures. A written authority must be given to the auctioneer prior to auction, containing an acknowledgement that the person on whose behalf bids are made, has been given a copy of the conditions that are applicable in respect of the sale, and the bidder is satisfied the person has been given a copy of those conditions. A copy of the contract must be provided to all successful telephone bidders after the auctioneer has signed it on their behalf.

Dummy bidding

It is illegal to make ‘dummy’ bids at an auction. If you make ‘dummy’ bids for the seller, you may be prosecuted and incur a substantial fine.

Bidding Tips

  • Attend similar auctions in the week leading up to your auction, to better understand the system.
  • Get a feel for the bidding process before you start.
  • Establish a limit of how much you are willing to spend for the property.
  • Know what's happening around you. Don't hide, otherwise the auctioneer may miss your bid.
  • Bid with confidence. This shows people that you are serious about buying.
  • The auctioneer will set the bidding increments, depending on the price bracket of the property. Bid in these increments if you can and don't raise the price unnecessarily.
  • When the bidding slows or stops at a figure acceptable to the vendor, the auctioneer may announce that the property is to be sold. The auctioneer will repeat the price several times before the hammer comes down and the property is sold.

Reserve price

Before the auction the seller will nominate a reserve price to their agent which is the lowest price they are willing to accept. The reserve price is not revealed to buyers.

Passed in

If a property fails to reach the reserve price the property can be ‘passed in’ or withdrawn from auction. The agent will then negotiate with the highest bidder on behalf of the vendor. This may result in a sale.

Purchase at auction

If you are the successful bidder, you must sign the sale contract and pay the deposit immediately (usually 10%). A cooling-off period does not apply if you buy at auction so it is imperative you arrange finance prior to the auction. 


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 obligated to forward formal offers to the vendor.

Contract exchange

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.

The deposit

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.

Cooling-off period

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