Negotiating a fair price for a property is one thing, but a contract of sale seals the deal. Here’s what to look for to give your purchase the best possible chance of proceeding to settlement without hiccups.
Whether you’ve been looking for the right property for what feels like an eternity, or the right one just seemed to fall in your lap, putting your hand up to buy it is merely the first step towards making it yours.
LJ Hooker Avnu agent Brad Rogan points out that neither the vendor nor buyer is legally bound to sell or buy a property until copies of the contract of sale have been signed and exchanged. “In NSW*, residential property buyers have a five-day cooling off period after the contracts have been exchanged. They can withdraw from the sale within this time without penalty,” Rogan says.
Buyers who are extra keen to lock in the sale and make a place their own can negotiate to waive or reduce the cooling-off period. Those wanting to make extra sure they’re making the right decision can negotiate a longer cooling-off period, but this is usually only the case in a slow market where buyers are harder to secure. “Buying at auction is another story – there is no cooling-off period,” cautions Rogan.
Agents have their own set of rules they have to stick to for a sale to go through. For instance, if they arrange an exchange of contracts the agent has to give copies of the signed contract to each party (or their conveyancer or solicitor) within two business days.
Contract of sale checklist
Before signing a contract of sale, LJ Hooker Avnu agent Anthony Godson advises having a reputable and licensed property conveyancer, solicitor or lawyer review it, along with the additional reports related to the property. “In most cases, these are more important for the buyer’s consideration than some of the standard contracts,” Godson says.
In his opinion, all good agents and agencies in 2019 should have a strata report (relevant for apartment purchases) or a pest and building report (relevant for house purchases) complete on the property and ready for interested buyers to review before taking the property to market. “The information and findings contained in these reports help shape a buyer’s opinion of the value for the home and allow a prospective purchaser to move forward a lot more quickly with their offer,” Godson says.
Many property sales are subject to conditions such as an extended settlement period, final finance approval or pest and building inspections. These should be listed in the contract of sale, and each has to be initialled by both vendor and buyer. It’s important that your conveyancer or lawyer go through the contract of sale with a fine-tooth comb but be sure also to do your own checks of basic information such as the property address, how much of the deposit is due and what the balance is, and what the settlement date is. Inclusions such as pool equipment, outdoor furniture and window coverings should also be in the contract of sale. The more care you take, the less chance there is for complications that could jeopardise the sale.
Godson suggests conducting the following checks with your conveyancer or solicitor before signing a contract of sale:
- Settlement period
- Fixtures and fittings
- Any specifically listed exclusions
- Whether the property will be vacant when you take ownership of it or if it’s tenanted. If it is tenanted, how long is the lease and what are your rights to take possession of the property?
- Deposit amount and its due date (deposits are usually 5% or 10%)
- Release of deposit clause
- Land tax adjustments
- Possible easements on the land
- Drainage and sewer diagrams that may run through the middle of a property (these have the potential to cause headaches for buyers looking to rebuild on the site).
If the contract of sale is sound, settlement day will arrive before you know it and the agent will arrange to hand over the keys to your new property. To be on the safe side, organise your removalists for the day after settlement, just in case you take possession of the keys later in the day than you anticipated.
*Each state and territory has its own set of rules, so be sure to check the relevant regulations if you live outside NSW.
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