BUYING A HOME
Buying a home is the biggest financial decision you’ll ever make so we recommend that you seek advice on your legal rights before making an offer and entering into a contract for sale.
Buying by private treaty
Most people in NSW buy a house or apartment “by private treaty”. The seller (vendor) advertises the property for an amount and then they or their agent negotiates with prospective buyers.
You can make offers to buy a property verbally or more formally in writing by email or letter.
The standard contract for sale includes a ‘cooling off’ period during which you can change your mind and only lose 0.25% of the purchase price. A longer cooling off can also be negotiated with the vendors such as for 10 business days.
By law, Purchasers have the benefit of a cooling-off period, which allows them 5 days after the contracts have been signed and exchanged to get their finance in order and conduct any inspections. The Purchaser is required to deposit 0.25% of the agreed purchase price with the agent and sign the contract.
During the cooling-off period, the purchaser has the assurance that the vendor cannot sell the property to another buyer and it is important during this period that the Purchaser undertake all due diligence before the cooling-off period expires. If the Purchaser changes their mind during this cooling off period or cannot obtain finance, they can withdraw from the purchase and only lose the 0.25%.
Sometimes the vendor will insist that the Purchaser waive their rights to the cooling-off period and your solicitor must explain what this means and sign a section 66W certificate for you. There is no cooling off period for auction sales so if purchasing at auction you should have all your “ducks in a row” so to speak. Finance should be approved, a Purchaser should have done all building and pest inspections, should have their solicitor undertake the contract advice for them before hand and negotiate any changes to the contract before bidding starts.
Due diligence is the process of ‘investigating’ the property you are looking at purchasing to find out anything that may affect your decision to purchase the property. Depending on the property being purchased, you should generally undertake their own due diligence by conducting the following steps:
– apply for a building and/or pest report
– apply for a strata report
– review the entire contract for the sale of land thoroughly
– make any appropriate enquiries with the Council, neighbours, banks, strata managers, solicitors and other relevant parties
– ensure your finances are in order