Upon negotiation and acceptance of your offer to purchase a property you will be required to pay a 10% deposit (percentage based on purchase price). In some circumstances a $1000.00 part deposit will be accepted with the balance payable at a later date.
Please note that the paying of this deposit does not mean you have purchased the property. It is a simple sign of good faith and intent to purchase.
The purchase is not affected until you sign a contract for sale, the owner of the property signs their copy and the contracts are exchanged. Remember that the owner has the right to sell the property to any other purchaser, regardless of their offer being higher or lower than your offer prior to contracts being signed and exchanged. If the property is sold to another buyer, then your deposit is fully refunded. The owner may also change their mind and not sell the property. However, once contracts are exchanged, the owner cannot change their mind.
Regardless of whether an offer has been accepted by an owner, the law requires Real Estate Sales people to pass on all offers, or expressions of interest made by any party to the owner at any time up until contracts have been exchanged. Sales people cannot withhold an offer even though another offer has been accepted.
When you sign a contract for sale as a purchaser you enjoy the benefit of a 5 day ‘cooling off’ period. This gives you 5 business days in which to organise any inspections required (e.g. pest reports, building inspection reports) with the knowledge that no one else can purchase the property as the property is withdrawn from sale and held for you. If you do not wish to proceed with the purchase because of information revealed by these reports, or if you simply change your mind for any reason, then you can withdraw, a penalty of 0.25% of the purchase price is forfeited to the owner (equates to $250.00 per $100,000), and the balance of deposit is refunded to you. The signing and exchange of these contracts ensures you are not ‘gazumped’ by another purchaser willing to pay a deposit and sign a contract. Please note that gazumping is NOT an illegal practice. After signing your contract you should contact your solicitor immediately.
Your agent will assist you in organising pest and building inspection reports, so you can ensure that there are no hidden problems with the property. You can then continue with the purchase with confidence.
In some situations, your agent may not be able to attend the signing and exchange of contracts. In this situation, your details are forwarded to the owner’s solicitor who prepares the contracts. A copy is then forwarded to your solicitor in the due course. This can take a number of days to happen. It is your responsibility as a purchaser in this situation to contact your solicitor immediately, organise to sign your contract and have the solicitor attend to an exchange without delay. Remember, until such time as your solicitor affects an exchange of contracts, the property remains on the market for sale. Solicitors are very busy people and often it may be difficult to gain and early appointment with them. Ensure you deal with a good real estate solicitor who is accessible; this will reduce the chance of delays which could result in you losing the property to another buyer.
SUMMARY OF STEPS WHEN PURCHASING:
-
Agreement of purchase price
- Immediately apply for finance if required (if this has not already been done)
- Contact your solicitor
-
Payment of deposit to agent
-
Sign contract for sale with agent or solicitor/conyencer
-
Exchange of contracts affected by agent or solicitor/conveyancer
-
Immediately organize pest inspection and building inspection reports required
-
Outstanding balance of deposit paid to agent (prior to expiration of ‘cooling off’ period