Buying a house is an experience of many varied emotions, from excitement to confusion to being overwhelmed and finally the ultimate reward of having a place to call your own. I’ve been through the whole process twice now and suffice to say I’ve had my share of trials and tribulations along the way. Today I’m going to walk you through a rough outline of the process (note that this will be Australian centric, sorry overseas readers!) so that those aspiring property owners looking for a bit more information on the process will hopefully come out feeling a bit more confident when they start looking for a place to call home.
First of all before you start looking at any houses you’re going to have to know what kind of budget you have to work with. At this early stage I’d highly recommend seeing a mortgage broker as they can look at your financial situation and find a loan that’s appropriate for you. They can also teach you how to build business credit, which can be useful to you in the long term should you be short on capital. I have personally used Aussie Home Loans as my brokering agent every time I’ve looked for a property and have never been recommended the same loan twice (nor any of Aussie Home Loans products either). There are of course dozens of firms around and none of them charge any fees so I’d wholeheartedly encourage you to talk to a few of them if you’re not completely happy with any one of them. At this point you can also get pre-approval for a loan, meaning the bank is ready to finance you and will make the whole buying process a lot faster than if you’d found a house then had to get finance.
With your finance sorted you can now go about looking for a place to call your own. In my experience this is a whole lot of fun for the first couple weeks as you get to see many great houses (and some not-so-great) but it can be exhausting if the process drags out over a long period of time. Whilst I said before you shouldn’t bother looking before you’ve got finance it can help to do a little market research in the months prior to fully committing to getting a house. This will let you know how the market is doing and which properties have been on sale for a while. A rule of thumb is that the longer a property has been on the market the more likely that the seller will be flexible regarding the price (although it could also mean the property is overpriced, in need of dire repairs or has something else preventing it from selling).
Once you’ve found a place that’s within your budget the next step will be to make an offer¹. This process is wholly dependant on the agent selling the property and can be as informal as a telephone call to the agency or could involve multiple forms in order to register your intent to buy the property. It’s at this point you can negotiate the price for the house if you so desire and it’s quite possible that the house will go for below or above the advertised price. Should someone else make another offer you will, most of the time, be notified by the agent should the offer be higher than yours. Strictly speaking agents are not meant to tell you how much other people are offering for the property but inevitably most do. Depending on the instructions given to the agent by the seller there might be predetermined sell point or they may leave the property open for offers until they’re satisfied with the price. Should you be lucky enough to place the accepted offer you’ll be contacted by the agent and will usually have to supply a $1000 deposit to confirm your intentions to buy the home (this is counted towards the asking price).
According to Think Conveyancing’s website, at this point its time to bring in the lawyers or a conveyancer, as part of the formal offer acceptance you will have to nominate one such agency to deal with the legal paperwork required by the sale. Just like if you were seeking the aid of an injury attorney in Orlando for example, you have to do your research. In my experience you will be better served by an actual lawyer rather than a conveyancer as they will be able to provide qualified legal advice in the event something should go wrong. They can also help with explaining some of the legalese and add provisions and protections into the sale contract should they be required. Once you’ve nominated the agency the agent will send them the required paperwork and you’ll be required to sign a few things in order to get the process going. Soon after (usually before 10 business days) your and the selling party’s lawyers will then exchange contracts, allowing both sides to inspect them prior to agreeing to continue with the sale. Again at this point you’ll be required to sign the paperwork to say that you’re happy with the terms of the sale. At this point you have a financial interest in the property so it’s recommended to take out insurance on it at this point.
Once the paperwork is completed the next major event will be the settlement, the formalisation of the sale contract that both parties have agreed to. Before this happens however there are usually a few things that need to be sorted out. Probably the largest of tasks is the payment of stamp duty which has to be done either directly to the Revenue Office or through your lawyer’s trust account. There are also things like arranging financing for paying out rates or water bills (usually paid to your lawyers who hold it in trust for use at settlement) and having one last final inspection of the property to make sure you’re still happy with it. The bank will also send out a representative at this point to do an evaluation on the property to make sure the property isn’t worth substantially less than the loan they’re giving you. Once they have been completed (can be anywhere from 2 weeks to months, in my experience) then both party’s legal representatives convene to complete the sale. Shortly after this you should be contacted by the agent who will hand over the keys and you’re officially a home owner.
This scenario does not mention anything that might go wrong during this entire process. Should all things go well the time from accepted offer to moving in is usually around 4 weeks however this can easily balloon out should any part of the process be delayed. The most common problems are finance related, usually either delays in sending out appraisers or not releasing the funds for settlement. There can also be issues at settlement like unapproved structures or disclosure of required sale information (like if it’s a flood plain, for example). However if you have a good lawyer behind you most of these problems will be made clear to you and options presented for remediation.
So in a nutshell that’s what the process is for buying a house in Australia. I’m sure there are details I’ve missed or haven’t given enough attention to but if you were wondering what’s actually involved in securing property than this should give you a good insight into what’s required. It can seem daunting at first but realistically it’s really just a whole lot of talking, walking and sending money to people in the right places. If you have any questions about a particular part of the process feel free to ask in the comments below and I’ll do my best to ask.
¹I’m deliberately writing this from the perspective of buying a house through a negotiated price rather than at an auction. Buying a house at auction is an inherently more risky scenario due to emotional involvement and the removal of many buyer protections. The process before and after the auction is identical however.
The advice provided here within is general advice and should not be considered professional financial advice. It does not take into consideration your personal circumstances and can not be used in any financial decision process. No party should take action or refrain from action based solely on the content of this post or any other contained here on The Refined Geek. Please seek professional financial advice before proceeding with any investment.
