Is this the year for a new home? The idea of a new home can be very exciting but there’s a lot to consider and plan for. Here are 10 steps to shed some light on what to expect in your new home journey.
Step one: Set up a checklist
Finding the perfect home can be like finding a needle in a haystack. But you can make it easier by creating a list of the top 10 things you really need in a home. For instance, do you want to live in a trendy inner city neighbourhood or more a family orientated neighbourhood? Easy access to highways or close to schools? Renovation potential or a ready-to-move-in home? One bedroom or six bedrooms? Think about what is important or essential to you and your future and base your search on that list.
Step two: Contact a mortgage broker or bank to get a pre-approval
To manage your expectations and set your boundaries, it is important to know how much you can actually borrow from a bank. Better still, you should consider applying for a pre-approval of finance so that you’re ready to move quickly when you do find the perfect home for you. There are a lot of options for home loans so you should contact a mortgage broker or use helpful online tools to compare home loans. To get a pre-approval of finance, you will need to provide some financial information to your mortgage broker or directly to a bank, such as your income (and any income from a partner if they are borrowing too), the amount of savings and investments you have, any current loans or debts. Your lender will review this information and advise how much they are willing to lend you. Pre-approvals usually last for up to 3 months after which you may need to reapply.
Step three: Start to explore the market
There may be a lot of properties for sale in the areas you’re looking in so it is important to keep a clear head (remember the checklist from step one). Focus on what is important for you and your future plans. Speak to local agents and use online resources to find out what other similar properties have sold for and how long they have been on the market. This will give you a sense of the housing trends in specific areas. This is the time to go and inspect properties. Don’t solely judge the property on the photos you see online, which can be deceiving, you should always view the property in person.
Step four: Document your property search
After seeing a few properties, your mind can play tricks on you and you might start losing track. So document the good aspects, but also the negative aspects for each property you inspect. Take photos, make notes and shoot videos using your smartphone. This gives you an extra layer to your search over and above the standard real estate listing flyers.
Step five: Get professional advice
Once you’ve found an ideal home and you’re ready to make an offer, ask the agent for a copy of the contract and any seller disclosures and contact lawlab for advice. Buying a home can be one of the biggest decisions in your life so don’t rush into signing a contract before speaking to us. The laws regarding the disclosure of any problems with a property vary from state to state so you want to have someone like us to be your trusted advisor to make sure you’re not buying a lemon. Depending on the property type and location of the property, you may also consider obtaining a building and pest report and a strata inspection report.
Step six: Make an offer
If the property is being sold by auction, then you should register as a bidder before the auction begins and then bid at auction (up to your budget!). If the property is being sold by private treaty, you should contact the agent when you’re ready to make an offer. If you haven’t had the oppportunity to obtain finance approval or building and pest reports, you should make sure your offer includes these conditions or that you have an appropriate cooling off period in which you can do them. There are various ways an agent may ask you submit your offer, e.g. verbally, or by signing an expression of interest (online or on paper), or by signing a contract so they can take that to the seller to countersign (or counteroffer). The practices differ between states and agencies and lawlab can help you manage this sometimes confusing process.
Step seven: Pay the contract deposit
You will usually need to pay an initial deposit when you sign the contract. The deposit is negotiable but usally up to 10% of the purchase price. Deposits are usually held in the real estate agent’s trust account and released to the seller at settlement (although it can sometimes be released to the seller before settlement in some states in limited circumstances). Don’t confuse the contract deposit with the deposit you’ve saved to apply towards the purchase (with the balance being you home loan). If for some reason you had to cancel the contract and had a right to so so, e.g. under cooling off or a finance condition, you would be entitled to your contract deposit back, less any relatively small cooling off termination fee.
Step eight: Exchange your contract (i.e. secure the deal!)
A contract for the purchase of property is not legally binding until all parties have signed the contract. This is often referred to as being “exchanged” although the terminology varies between states. Up until this point, either party may withdraw without any penalties. Lawlab recommends signing electronically to speed up this process and to reduce the risk of being gazumped by other buyers.
Step nine: Apply for formal finance approval and go unconditional
You should contact your mortgage broker or lender as soon as you have exchanged contracts and provide them with a copy of the contract. They will then arrange a valuation of the property and assuming it is satisfactory, they will then issue a formal finance approval and issue loan documents for you to sign. This is usually the time when you advise the seller that you have received finance approval and the contract is unconditional (i.e. you can’t change your mind later and cancel the contract). So be sure you want to go ahead with the sale.
Step ten. Settle the contract and move in to your new home!
By engaging a highly rated conveyancing law firm like lawlab, you usually do not need to worry too much about settlement as we will co-ordinate everything with your broker, bank, agent and the seller’s lawyer/conveyancer. In most states, settlement can now be done securely online and that reduces the risk of delays. We’ll let you know as soon as settledment occurs so you can collect the keys from the agent and be the proud owner of your new home!
So, there you have it, the 10 steps on how to realise your new year’s resolution for a new home. We hope we provided some crucial information for you to get started. We wish you all the best in your new home journey!