October 15, 2015

5 Questions to ask before buying real estate

You’re excited. You’ve found your dream home and are ready to make an offer. Don’t rush – this is one of the biggest decisions of your life. There are a few things you should ask before you sign a contract and doing the conveyancing.

     1 – Should I have a solicitor check the contract before I sign it?

You’re buying a property!It doesn’t matter if you’ve done this before or whether it’s your first time.

There’s excitement, fear, and apprehension because this will probably be one of the most significant financial commitments you will make in your life.

So, it’s time to step back and make decisions which are well thought through and soundly based.

The starting point is this – despite what you might have heard, most real estate agents are very reputable.

The real estate industry is highly regulated and with the use of modern technology and the adoption of standard practices (such as the use of contract documents which are generally approved by the REIQ and the Queensland Law Society) there is usually a consistent level of good practice across the industry.

Your contract might have special terms or conditions – these special conditions are often prepared by solicitors or can be obtained by agents from specialist providers.

Because buying real estate is such a major financial commitment, if you are in any doubt as to whether or not the contract satisfies your requirements, then it would be wise to discuss the contract terms with a solicitor.

If you are happy to sign the contract once it has been prepared by the agent, then always check the spelling of your name/s, address and contact details, and above all, make sure that if you have any special requirements that they are set out in the contract. Don’t leave things to chance – always insist that details of any furniture and appliances (including dishwashers) are set out in the contract.

     2 – Should I get a building and pest inspection report?

The answer to this question is a very straightforward – “YES“.

The report will give you the peace of mind you need to proceed with the purchase of a house or residential unit. There is a cost (currently in the order of $500.00) but this will be small change if there are problems with the house or unit.

If the inspector finds problems with the house or unit then you have several options, not the least being to terminate the contract. These options can be discussed with your solicitor.

Remember – potential building defects that an inspector might find will not necessarily be the obvious ones that you saw during the inspection of the property.

Your agent will be able to recommend a local inspector – you can then engage that inspector to prepare a report for you.

     3 – I need finance to buy the property – do I need a pre-approval of finance?

Having a pre-approval of finance is not essential but it can guide you in the right direction as to the price and style of home you might want to buy.

Remember, a pre-approval of finance is not an approval of finance for any particular property, but rather a guide.

Also remember, post code matters. You should make sure that the dream home you find is included in the area of the post code you have approval for from your bank.

If you need financing to complete your purchase, then you should make sure that you tell the agent – he will include details for finance in the contract, such as the details of your bank and the time you require to have finance approved. Generally a finance approval will take 14 – 21 days – this will allow you time to make an application to your bank and for your bank to approve your loan. It will also allow time for your bank to have a property valuation made of the property.

     4 – Do I need any Special Conditions in the contract?

Whether or not you will need Special Conditions in your contract will depend on your particular circumstances.

For example, if you are selling the home in which you now live and you will need this sale to be completed before you can buy your new home, then you will need to tell your agent so that the agent can include an appropriate Special Condition.

If you already have a contract for the sale of your home, then you will need to give the agent details of that contract so that the agent can prepare a contract for your new home.  The agent will need to work out appropriate dates to be included in the contract for your new home, particularly the settlement date.

What is important is that dates, such as the settlement dates – line up. If they don’t then difficulties can arise.

There might be other reasons why you need Special Conditions – the seller might be required to make repairs to the property or you might want the property professionally cleaned after tenants leave the property. If you do, then the agent will include these in the contract so that the seller does the work before the settlement date.

     5 – What other costs and charges do I have to pay?

Apart from the costs of buying the property, you will need to be aware that there are other costs and charges which you will have to find.

At the settlement date adjustments will be made for council rates and charges and if you are buying a residential unit, then body corporate fees will need to be adjusted.

Apart from that there will be legal fees and titles office fees.  We can advise you of these charges.

Your bank will also charge you for various items relating to the loan.

Stamp Duty will also apply. This is a State Government charge based on the value of the property which you are buying.

There are exemptions which you can claim, such as if you will be occupying the house as your principal place of residence.

There are essentially 3 concessions which could apply – otherwise investment duty will be charged.

You should contact us to discuss whether or not you are able to claim a concessional rate of duty. Conditions will apply and these are determined by the State Government.

If you fail to comply with the conditions then penalties could apply.

You should also ask when Stamp Duty will be payable.

Take your time and ensure that you are comfortable with the answers for each of these five questions. Remember that it’s difficult to say no after you’ve signed the contract. If you have any doubts or questions, speak to Don Gayler to be confident you are making the right decision for you.