You’ve found your dream home. Now’s it’s all down to timing.
Buying a home calls for some serious time management – often from the moment you make an offer. Yet many buyers are uncertain about exactly what happens once your offer is accepted.
If you’re the highest bidder at an auction, you’re obliged to see the sale through when the hammer falls. Buying through private treaty is quite different. Price negotiations can last for days, possibly weeks, with offers and counter-offers flowing backwards and forwards.
Exchange – hand over contracts and cash
When a price is agreed upon, the next step is exchange – when buyer and vendor sign and swap separate contracts of sale. A 10 per cent deposit is normally handed over, and a cooling off period of about 10 days follows. The timeframe varies between states and doesn’t apply at all in WA.
At this stage you have a financial interest in the property, so be sure to arrange building and contents insurance. You can upgrade the contents cover to include furniture and other belongings after you move in.
Settlement – still plenty of work to be done
Okay, you now typically have about six weeks until ‘settlement’ – when the purchase is finalised and the keys to your new home are handed over. In the meantime your solicitor or legal rep will work behind the scenes checking that all property rates and taxes are paid up, and that the seller is actually entitled to sell the property.
As the buyer, you need to get in touch with your lender to finalise finance. Having pre-approval in place before you make an offer on a property will speed up this part of the home buying process.
Settlement can be a stressful stage if you are an existing home owner upgrading to your next property. Unless you have definite buyer for your current place, it may be worth approaching the vendor of your new home asking for an extended settlement period. Otherwise you may need to weigh up the options for managing two mortgages, and this is an area where your Aussie Broker can help. It may be possible to rent out your current home or organise bridging finance. This will provide funds to tide you over until your present home is sold.