It is wise not to underestimate the risks associated with buying a property – but sadly, many people do not give them serious consideration until something goes wrong.
If you are thinking about buying a property (or are already embarked on this process!), we’ve put together this article to help you understand what can (and does) go wrong and why you need an experienced conveyancer and law firm by your side to successfully guide you through the process of buying.
Risk 1: Can you afford it?
Purchasing a property is one of the biggest financial investments you will make in your life. Before even walking in the door to a property you need to know what you can realistically afford – including all of the “hidden costs”, which add <tens of thousands of dollars> to the cost of the property.
When purchasing a property, the hidden costs to be considered can include:
- A pre-purchase pest and building inspection costs
- Bank charges,
- Registration fees,
- Stamp duty,
- Legal costs, and search costs, etc.
You also need to find answers for the following questions by speaking to your bank/mortgage broker, conveyancer/lawyer, your accountant and even your employer:
a) What fees will the bank charge – do you have to pay mortgage insurance?
b) Is your job secure? What will you do if you are unexpectedly stood down or made redundant? Will your parents guarantee your loan if needed?
d) Are you eligible for any stamp duty concessions or first homeowner grants?
e) What searches do you need to conduct and how much will they cost?
f) Can I afford to make any repairs to the property that might be required after settlement?
g) When do I need to pay for any or all these costs?
Always “over budget” for what costs may be involved in buying, it can be a nice surprise after settlement if you have not spent it all.
If you are unable to cover all the costs associated with purchasing a property, you may be in breach of the Contract of Sale.
Risk 2: Do you know what you are actually buying?
The first rule of purchasing a property is “Do Not Assume Anything”.
Unless it is specifically noted in the Contract, then a specific item may not be sold with the property for example, that lovely built in bar. Do not assume that the bar or any other fixture or fitting forms part of the sale Contract unless it is clearly stated in the Contract.
Do not assume that the property is free from pests, is structurally sound, meets all building requirements or is not about to have a new freeway built right behind it or that you can just knock down that old garage! Conducting thorough pre-purchase inspections and checks can save you hundreds of thousands of dollars.
Risk 3. Don’t rely on verbal advice
Even if you have been advised by the Agent or the Seller that “the bar is included”, this must be written into the Contract. If the Agent says it is included, simply ask them to make sure the item is listed in the Contract.
After the Contract is signed it may be too late to negotiate an agreement with the Seller, and if it is not specified in the contract, then they are not obliged to leave the item.
Risk 4. Rushing to secure the property
Buying your first home, another property or an investment property is a huge financial decision to make. Do not feel pressured into acting quickly to secure the property you have your heart set on. A good Agent will understand you need time for your due diligence.
Take the time to get proper advice, before you sign the Contract.
Risk 5. Get the Contract checked by an experienced professional
You have a right to obtain legal advice prior to entering a Contract and we strongly recommend you exercise this right to ensure your best interests are protected, as any errors in the contract can prove costly.
Contracts may look like simple documents, but often the simple things can be overlooked. Ensure your full name is noted including all middle names, and ensure the Contract is subject to what you require, i.e., finance, a pest inspection, or a building inspection etc.
Choosing the right firm to do your conveyancing
An experienced conveyancer will help you manage all these risks – and the old saying “you get what you pay for” unfortunately is true.
Do not be tempted by cheap up-front pricing. Saving a few dollars in your conveyancing is the last thing you should worry about when something goes wrong with your purchase. The costs associated with quality conveyancing are very small in contrast to the price of your home or the potential loss of a deposit.
Choose a conveyancer backed by a law firm that will support you and provide the level of assistance needed to protect your investment.
The team at Tonkin Law is ready to assist you with the purchase of your property. Suzanna and Shelley will support and guide you throughout the entire process. If an issue does arise which needs legal expertise, they can quickly pull in legal advice from the team at Tonkin Legal.
We have helped thousands of people in the Northern suburbs to successfully purchase land and property, supported by our deep understanding of the local market. We are here to help you too. If you would like advice, please do not hesitate to contact Tonkin Legal Group on (03) 9435 9044.