So you've found your property, what's next?
So you’ve found “the one”, and agreed on a price with the seller. Now is when the real paper shuffling begins. We’ll take you through the process step-by-step.
Step 1 : Exchanging contracts
The first important paper to be shuffled is the contract of sale. Neither you nor the seller is legally bound to go ahead with the sale until a written, signed contract is exchanged.
This contract usually details the:
- Property address
- Names of the parties involved (you and the seller)
- Selling price
- Terms and conditions
- Special inclusions in the sale like a dishwasher or blinds
- Date of settlement (the day you become the owner)
Exchanging contracts is pretty much what it sounds like—both you and the seller sign a copy of the document then swap them. You also have to pay the deposit at this time.
Fact sheet: Contracts - Be confident before you sign
Step 2 : Get legal representation
It’s a good idea to get a legal rep to arrange the whole property transfer process. While this contract is usually prepared by the seller’s solicitor, your legal rep should check the details and make sure zoning, heritage or title restrictions don’t clash with your intended use of the property.
Your legal rep should also:
- Check that all property rates and taxes are paid up, and that the seller is actually entitled to sell the property.
- Help you sort out the property inspections that you should do before you exchange contracts.
Step 3 : The cooling-off period
If you have bought through private treaty rather than at auction you may get a cooling-off period after the contract is exchanged. During this period you can cancel the contract but there may be a small penalty. The cooling off period varies from state to state and WA doesn’t have one at all.
Step 4 : Between exchange and settlement
The time between exchange and settlement is usually six weeks, although this can change if both you and the seller agree to extend or reduce it.
This is the time when you should:
- Arrange the balance of the purchase price—that is, finalise the finance and sign the mortgage documents
- Insure the property
At the same time, your lender will:
- Probably arrange for a valuation of the property
- Require you to take out building insurance effective from the exchange—unless you’re buying a strata property
Step 5 : Settlement
Settlement of the property is when the balance of the purchase price is paid, and the keys and title deeds are handed over.
If you have a mortgage, your lender will receive the transfer document and title deed.
Settlement of your loan usually coincides with settlement of the property—it’s when the lender transfers the money you’ve borrowed as per your instructions—this is usually to the seller.
You also need to pay stamp duty at settlement.
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