We have been lucky enough to go through this process 3 times. We purchased our first house back in 2010. We then purchased our second house in 2014 and sold the first house not long after that. In early 2015 we bought our first investment property as well.
While purchasing our second house I made a few notes on what actually happened as it’s so easy to forget the details as time goes on. I thought it would be nice to share those notes here, even though it has been 2 years since it all happened.
I would like to note that none of the properties we purchased were at auction, therefore the process outlined below is what happened in a tender.
- Make an offer and the vendor accepts the offer
- Sign a contract with the real estate agent agreeing to purchase the property ie: exchanged contracts
- Make the initial deposit of 0.0025%. This will be taken by the real estate agent
- You will then have a set number of days which is called the “cooling off period”. This is usually about 5 days. In this period you will have to contact a lawyer or a conveyancer to go over the contract of sale and make sure everything is ok with the sale. You will also need to get a building and pest inspection done on the property which can be arranged by the conveyancer that you hire. This is optional but I think they are definitely worth doing.If the building or pest inspections reveal anything alarming which makes you decide not to go ahead with the sale, then you will lose your initial 0.0025% deposit.
- Within the first 10 days after contracts have been exchanged you will need to make a 10% deposit. How you pay this deposit can vary. You might have to get a bank cheque and give it to your conveyancer who will then pass it on to the vendor or you might be able to deposit the money into a trust account provided by the real estate. In our case we had to make a 5% deposit to a trust account and the vendor wanted this deposit on the 5th day. Hence, in our case the vendor was willing to accept a reduced deposit for an earlier payment.
- You should already be talking to your bank to secure the home loan for the purchase. You should have this sorted within the first 10 days ideally.
- Make the stamp duty payment via bank cheque to the state government. Stamp duty is basically a charge applied by the state governments in Australia when properties are purchased. The cheque can be given to the conveyancer who will then pass it over to the relevant government agency. This should be done before settlement day, otherwise a late penalty fee may be charged.
- The settlement date is usually 41 days after the initial exchange of contracts, but this can vary. After settlement is complete you will get the keys!
In a nutshell, that’s basically what happens. This is the process we went through in New South Wales but it might be slightly different in other states of Australia.
I hope someone out there actually finds this information useful 🙂