Property Buying Checklist: What every purchaser should know

1. What is exchange?

An exchange is a swap of the two identical contracts (counterparts) signed by the vendor and purchaser. This becomes the contract date and the countdown to settlement begins. Exchange is when you are ‘locked in’ (the legally binding moment in NSW) to the purchase and the vendor is legally bound to sell the property to the purchaser. 

2. What is a cooling off period? 

Ordinarily you are entitled to a five business day cooling off period after exchange– so if you pull out, your deposit will be returned to you less 0.25% of the purchase price. If you agree to waive this period, the contract becomes binding on exchange and your solicitor or conveyancer will sign a section 66w certificate.

3. Is a building and pest report important? 

Yes! There is a clause in a contract which says you accept the property in its current condition and state of repair. Basically it is too late for you to change your mind after exchange or settlement if the house isn’t in the condition you thought it was.

4. What is the difference between pre approval and formal approval from a bank? 

Pre-approval is an amount your bank can loan you to buy a property based on your assets, income and liabilities. 

For the bank to give you formal approval, they will need a copy of the contract so they arrange a valuation of the property (and complete any other conditions the finance may be subject to). The bank needs to make sure that what they are lending you is in line with the property value. Once you have formal approval, you are almost ready to exchange. 

5. Buying at auction? 

Once the ‘hammer falls’ at an auction, you are locked in. No refund. The auction date becomes your exchange date (no cooling off period) and you must immediately sign the contract and pay your deposit. The countdown to settlement begins! So it’s very important you have already obtained formal approval from the bank, a pest and building report and had your solicitor review the contract. 

6. What is settlement? 

Settlement is the date the property becomes yours! You (or your bank) hand over the money to the vendor and in return, the vendor gives you the title deed (electronic form only) and the transfer. Once this is done, the real estate agent will give you the keys. 

“Liability limited by a Scheme approved under the Professional Standards Legislation. This article does not constitute legal advice and provides general information only.”