TIPS FOR BUYERS

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Step 1. Check Your Finances

When you have made the decision to enter the property market, whether as a first time buyer or seasoned investor, consider your borrowing capacity and the associated costs of acquiring real estate.

Starting out, consider the following when buying property;

• Affordabilty is essential. Initial enquiry can by made on most loan calculators provided on many real estate and financial websites, including realtywest.com.au.
• Arrange an appointment with your Bank or Finance Broker to discuss your borrowing capacity in more detail. Be prepared, it is important to disclose all relevent information including current and previous finance facilities.
• At this early stage, when you have an indication of your borrowing capacity it is also important to get an understanding of what this borrowing capacity means in relation to what your maximum property purchase price can be. This is determined by your deposit savings and/or the equity available in other real estate. Your bank and/or your finance broker will help you understand your overall financial capability.
• If you intend to move forward, it is now essential where possible to obtain written finance pre-approval on the lenders letterhead. This written conditional approval will be invaluable, particularly if buyer interest in your dream home is strong and there is likely to be a number of comparable offers on the table.

Your bank or finance broker will help you consider the following additional fees.

• Fees associated with setting up your finance and mortgage.
• Conveyancing or settlement agent fees.
• Statutory and/or Government fees.
• Stamp duty and/or Transfer costs.

Addititional and other pre-settlement costs to consider include;

• Building and contents insurance.
• Council rates and Water Corporation rates.
• Strata levies (where applicable).
• Pest and building inspections (where included in the contract).
• Removalist costs.
• Connection to utilities, including Western Power, Alinta gas and Telstra.

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Step 2. Do Your Research

Know the Market

Understand what and why there are differential price points.

Talk to Your Local Realtor – RealtyWest

• Discuss your property requirements.
• Find out if you are in the price ball park.
• Indicate your desired price range.
• Register your details.

Search the Internet

• Internet sites, including reiwa.com.au and realestate.com.au provide a valuable comparison tool in terms of what is on the market and what your desired budget will purchase.
• Website Suburb Profiles also provide a terrific comparison tool in terms of amenities, including schools, transport, shops and parks.
• Local Authority websites, ie. www.belmont.wa.gov.au provide an excellent source of information relating to neighbourhood services, upcoming events and technical information.

Browse the Newspapers

• Weekend property liftouts and homes for sale/rent provide an additional source of reference, with many suburb headings also linking adjoining suburbs for consideration.
• Local Community Newspapers, including the Southern Gazette are an additional and excellent local property resource tool.

Essentially, it is important to be as fully informed as possible and be prepared to ask lots of questions or bring a trusted friend who is!

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Step 3. Use a Licensed Settlement Agent

The role of a Licensed Settlement Agent or Conveyancer is to ensure that all the contract conditions of sale are completed.

In addition to contract terms, Settlement agents typically attend;

• Title/Plan searches and checking any restrictions on the use or transfer of the property which are identified on the title.
• Arranging, where required, for any restrictions on the title of the property to be removed.
• Enquiring with local councils and with government departments about rates, taxes and water consumption to determine details of the sewer connection, any outstanding orders and building licences and the amounts to be paid by the seller and the buyer.
• Notifying the relevant authorities about the change of property ownership.
• Preparing settlement statements and a number of legal documents and forms.
• Obtaining payment from the client of any fees and duty payable on documents involved in the transaction and arranging for the payment of transfer/stamp duty and other fees to the relevant government agencies.
• Attending settlement to exchange documents and monies to facilitate the legal transfer of the property.
• Notifying the relevant authorities when settlement occurs.

The role of a settlement agent is a complex and time consuming business with many traps for the unwary.

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Step 4. Use a Reiwa Member Agent

Why use a Reiwa Member Agent?

Buying your first home or investment property will be one of the most important financial decisions many people will make. In nearly all cases, there will be real estate agent involved in the negotiation of the sale and contract.

RealtyWest is an Accredited Reiwa Member Agent, which means that as a buyer you will negotating with a trained professional committed to ongoing professional development and training.

In addition, Reiwa Member Agents have access to benchmark industry accepted documentation and forms used in all areas of real estate practice. In particular, Reiwa has developed an Offer and Acceptance form regarded by many as the best available property sale contract in Australia. Reiwa has also developed an accompanying joint form of General Conditions for the Sale of Land which it co-owns with The Law Society of WA.

When used together in a real estate transaction these forms have resulted in the simplest type of real estate contract in Australia. These forms and contracts are frequently updated to reflect the changing regulatory environment and to ensure that clients of Reiwa members are protected.

Professional insurance

For the protection of consumers of real estate services REIWA members are required as a condition of membership to hold professional indemnity insurance.

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Step 5. The Settlement Process

Property settlement is the finalisation of a real estate transaction between a buyer and a seller.It is the process of ensuring all the conditions of the standard offer and acceptance are fulfilled. The following is a brief outline of the usual process of property settlement;

• Appointment of a Settlement Agent.
• Receipt of Contract and Authority to Act put in place.
• Identify and Act to ensure satisfaction of any Special Conditions.
• Act as required when contract becomes unconditional.
• Liaise with financial institutions where required.
• Arrange execution of settlement documentation and prepare for settlement.
• Attend settlement.
• Prepare final settlement and disbursement statements.

The settlement agent deals with…

• Search fees (for example, land title office).
• Settlement disbursement fees – telephone calls, postage, photocopying, courier etc.
• Bank cheque fees.
• Duty.
• Your proportion of council and water rates.
• Registration of transfer.

YOU deal with…

• House/contents insurance.
• Removal costs/dates.
• Disconnect/reconnect gas/phone/water.
• Mail redirection.

Things you can do

• Read all correspondence carefully BEFORE signing any documentation.
• If you have any questions – ask your settlement agent or real estate agent.
• Return all documentation promptly and act quickly to any requests from your settlement agent or bank.

Pre-settlement inspection

• You must be given a reasonable opportunity to inspect the property once within the five days prior to the settlement date and be accompanied by no more than two people.
• The pre-settlement inspection is an opportunity to make sure the property is in the same condition as when you made the offer.

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Glossary of Real Estate Terms

48-hour clause: Where an offer is subject to the sale of your home the seller may want to include a ’48-hour clause’. Should the seller then receive an unconditional or subject to finance only offer you will have 48 hours to make your offer unconditional or your contract will be cancelled. This leaves the seller free to accept the unconditional offer from the other buyer.

It is important that the clause says when the 48 hours begins and ends (for example, 48 hours begins when buyer is notified and does not include weekends or public holidays).

Buyer’s agent: When the buyer makes an agreement for a real estate agent to represent them exclusively.

Certificate of Title: A page of the Register book specifying the ownership of a defined land parcel, and the lodged or registered interests or claims (encumbrances) against that ownership.

Chattels: Is an item that can be moved and not considered to be part of the structure, for example, dishwasher, clothes dryer, rugs, mats and pot plants.
If there is any confusion between the buyer and the seller about what stays and what goes these can be identified as a special condition in the offer and acceptance document.

Cooling off period: Once the contract has been signed, there is NO cooling off period in Western Australia, that is, there is no time option to reconsider the offer – it is legal and binding immediately upon signing.

Counter offer: Is a rejection of an offer – it is a new offer which may be accepted or rejected.

Deposit: The agent holds the deposit and must not release the money without the consent of both the seller and the buyer.

Deposit – Breach of contract: It is considered a breach of contract if the deposit is not paid as agreed.

Deposit – Disputed: If the seller considers a contract has been terminated and retains the buyer’s deposit, they must tell the buyer and the person holding the deposit. The buyer has 5 business days to dispute the seller’s claim – or the deposit remains with the seller.

Encumbrance: An encumbrance is a lodged or registered interest in land by a person who is not the registered owner.

Encumbrances – CaveatI: Means ‘beware’. It is used to warn prospective buyers that another party has registered some form of right or interest in the property. Details of a caveat are written on a property’s certificate of title (such as money is owing on a property that is for sale).

Encumbrances – Easement: Gives a person or a company ‘rights of use or engagement’ over land owned by another. Usual easements are rights of way, easements for the flow of water over and through another’s land, and easements of support (for example, Water Corporation, Western Power, Main Roads WA, telecommunication companies).

Encumbrances – Memorial: Is a document lodged with Landgate under one of a number of statutes. When noted on a certificate of title, places some form of notice/restriction on a property (such as notification that the land is reclaimed swamp).

Encumbrances – Restrictive covenant: This places some type of restriction on the use of the land. Examples – the land must be landscaped or buildings to be constructed only of brick. For it to be lifted, consent must be obtained from the party named in the covenant or by a court order.

Encumbrances – Right of way: Is a strip of land either for use by the general public, or a restricted section of the community. It may be created by subdivision, specific transfer, or continued use over a period of years.

Error or misdescription: Refers to an error in how certain details of the land are recorded in a contract, for example, property boundaries and/or the area of the land. If this occurs, it is recommended to the buyer that they seek legal advice.

Fixtures: An item that is fixed or part of the property, for example, carpets, down lights and built in robes.
If there is any confusion between the buyer and the seller about what stays and what goes these can be identified as a special condition in the offer and acceptance document.

Forfeiture: Describes the act of the State taking back an interest in Crown land, due to the interest holder’s failure to comply with a condition.

General Conditions: Cover important contractual obligations for both buyer and seller including such matters as the paying and holding of a deposit, settlement, adjustment of outgoings, and other payment responsibilities such as underground power and sewerage connections. It is possible to vary the contractual obligations.
You can for instance, delete or amend existing contractual obligations that form the General Conditions should you choose. The seller would have to agree with the changes if the contract is to be binding.

Joint Form of General Conditions for the Sale of Land The General Conditions: (sometimes called the ‘Yellow form’) A standard part of any contract to sell a property and deal with many issues that arise between a buyer and seller entering into a contract. When an offer is made, a printed set of General Conditions is presented to both the buyer and seller.

Joint Tenancy: The ownership of land in common by more than one person where there is a right of survivorship, that is where on the death of one joint owner, the share of the interest of the deceased goes to the surviving owner(s).

Offer: A definite undertaking – a proposition that will become an undertaking on its acceptance.

Offer and acceptance document: Together with the Joint Form of General Conditions for the Sale of Land, it is a legally binding contract that details the terms and conditions under which the purchase and sale will take place.
Most properties in Western Australia are sold through an offer and acceptance process. A person makes a formal offer in writing to buy a property, and the seller either accepts or rejects the offer.

Pre-approval of a home loan: When your bank of finance broker approve in writing a home loan in principle for a specified sum.

Property title: Proof of a person’s right to land.

Special Conditions: Special conditions can be added to the O and A to meet the particular needs of both buyer and seller. Special conditions may cover issues about property inspections (eg building and timber pest inspections), who pays for necessary repairs (eg the repair of a broken window, fixing plumbing, etc), or anything else important for either buyer or seller.
Any special conditions made to the O and A should be as precisely worded as possible and you may wish to seek legal advice to ensure this.
If the seller agrees to all conditions and the offer is accepted, there is a legal obligation to satisfy every condition or the sale may not be completed. However, before signing the O and A, you should carefully consider your financial situation and thoroughly inspect the property.

Transfer of Land document Certificates of Title: Otherwise known as Title Deeds, these are issued by Landgate with one original and one duplicate copy. The original is always kept at Landgate. The duplicate copy is normally held by the registered proprietor (owner) or by a lending institution as security for a loan. The important difference between these two Title Deeds is that the duplicate Certificate of Title does not include all encumbrances such as caveats and property (seizure and sale) orders. They are, however, always listed on the original Certificate of Title that is kept at Landgate.

Tenants in Common: Where there are two or more people to hold the land in undivided shares. For example X has 1/3 share and Y has a 2/3 share of the land. Both X and Y can transfer their shares to another or others. On the death of one party the land does not automatically go to the remaining partner unless stated in the will.

Vacant possession: A buyer can take possession of the property at noon on the day after settlement or, if the property is vacant, as soon as the settlement process is complete.