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read morePurchasing a property is one of the most significant financial decisions you’ll ever make. From making an offer to finalising the settlement, the process involves several stages, each with its own set of terms and requirements. Understanding these stages and the jargon that comes with them is crucial to ensuring a smooth transaction. Here’s a breakdown of the key stages in the property purchase process.
Offer and Contract Signing
The journey begins when you choose the property you want to purchase. If you’re buying an existing property through a real estate agent, you’ll start by making an offer. Once the vendor (seller) accepts your offer, you’ll receive a contract to provide to your conveyancer for review.
For brand-new properties purchased directly from a developer, the process is slightly different. Instead of making an offer, you typically choose the property from a pricelist. The developer then provides you with a contract to take to your conveyancer, just as you would with an existing property. However, if you’re buying at auction, be prepared to sign the contract and pay your deposit on the day.
Mentor Tip
A conveyancer is a specialised lawyer who handles the transfer of real estate. They ensure that your contract is in your best interest and will facilitate the settlement later.
Once your conveyancer is satisfied with the contract, you’ll be directed to sign it and pay your deposit, which is held in trust by the vendor’s conveyancer or solicitor. At this point, you’re committed to the purchase, though you may have conditions such as “subject to finance” (if you’re securing a loan) or “subject to sale” (if you’re selling your current property).
Registration/Titling
In the case of brand-new properties or land, you might sign a contract before the property is finished or the land is ready. This means you’ll have to wait for the property to be titled before it can be transferred into your name. For land, this is the period when streets and utilities are created; for an apartment, it’s when the building is fully constructed.
During this time, your deposit remains in trust, and the developer does not have access to it. If you need additional time to save up for any extra deposit required by your bank or for related costs like stamp duty, purchasing a property with a longer titling period can be a strategic decision. Buying an untitled property also allows you to lock in today’s pricing for a property that may not officially enter the market for several months or even years.
Settlement
Settlement is the final step in the property purchase process. Once your property is ready to be transferred into your name, you’ll be given a settlement timeframe or date. For existing properties, settlement periods are typically 30, 60, or 90 days, though this can be negotiated. For new properties that have just titled, settlement dates are usually set as soon as practically possible after the title is registered.
During this period, it’s crucial to have your finances in order, ready to draw down your loan. Your mortgage broker and conveyancer will work diligently to ensure nothing delays your ability to settle the property.
On the settlement date, you’ll pay the purchasing costs associated with your loan, such as stamp duty. If your bank has approved your loan with a higher deposit than what you initially paid (for example, if the vendor requested a 5% deposit, but your bank approved a 90% loan), this is the time to contribute the shortfall.
If you’re not ready to settle on the specified date and cannot negotiate an extension, you risk losing your deposit to the vendor, who can then sell the property to someone else. Ensuring that settlement goes smoothly is critical, making it essential to have a reliable team of professionals supporting you.
Once the settlement is complete, the property is officially yours, and you’ll receive the keys to your new home. If you’ve purchased an investment property, your property manager can usually collect the keys on your behalf to start renting out the property as soon as possible.
Why a Strong Team Matters
Purchasing a property is a complex process that requires careful planning and the right support. From ensuring your contract is in order to making sure your finances are ready for settlement, having a strong team around you is key to a successful transaction. At The Property Mentors, we specialise in building that team for you, as part of our 8-step “Roadmap to Successful Property Investing.”
If you’re considering purchasing a property, especially an investment property, download our roadmap today to start your journey with confidence and the right guidance.
