View our Frequently Asked Questions below:
How much is the deposit?
The amount may vary, but it is normally 10% of Contract price.
What is a holding deposit?
It is an amount paid normally between $1,000 to $5,000 by the purchaser to show that they are genuinely interested in purchasing the property.
Who do I pay my deposit to?
The deposit is typically paid to and held by the Real Estate Agent and held on trust until vendor can be eligible to release the money.
What is a written offer to purchase?
A written offer is normally made within a Private Sale by the purchaser and the offer is completed by offering the price, any special conditions or arrangements together with settlement time frame. Offer will then be taken to the Vendor by the selling agent for Vendor's consideration. The Vendor counter signing is the act of acceptance. At this point the Contract is exchanged and become legally binding on both parties.
What is a caveat?
The word caveat means "beware", and the lodging of a caveat over a property is a way telling anyone who wants to deal with the property to be aware of the fact that someone else’s interest already has priority. In other words, a caveat is a written warning to anyone who checks the Certificate of Title of the property that the person who lodged the caveat (known as the “caveator”) has an interest in it. The Registrar of Titles cannot deal with the property without first notifying the caveator.
What is a purchaser's caveat?
A purchaser of real estate, will acquire what is known as an “interest” in the property purchased. However, a purchaser will not be the legal owner of the property until their interest is registered with the Land Titles Office of Victoria. This means that there is a risk that someone else could register their own interest in the property before the purchaser registers theirs. By lodging a caveat a purchaser can prevent others from registering interests ahead of theirs.
What is "Cooling Off"?
According to Section 31 of the Sale of Land Act a purchaser who may end the contract within 3 clear business days of the day that purchaser signs the contract if none of the exceptions listed below applies to you.
You must either give the vendor or the vendor’s agent written notice that you are ending the contract or leave the notice at the address of the vendor or the vendor’s agent to end this contract within this time in accordance with this cooling-off provision.
You are entitled to a refund of all the money you paid EXCEPT for $100 or 0.2% of the purchase price (whichever is more) if you end the contract in this way.
EXCEPTIONS The 3-day cooling-off period does not apply if:
PLEASE NOTE: It is very important to remember that the cooling off period starts when the PURCHASER first signs the contract, regardless the vendor had counter signed the purchaser's offer or not, even though the vendor may not sign until a few days later! For an example: The cooling off period ends three (3) business days after you sign the contract, if you signed on Tuesday, then the period expires on close of business Friday.
What is settlement?
Settlement is the day on which the legal representatives of all parties, including any financiers, meet at a prearranged time to exchange documents. Final document checks are performed to ensure accuracy and completeness, important legal documents are exchanged, and payment of the purchase price is made. Shortly following settlement, the registration of the property transfer takes place at the Land Titles Office, this is when the conveyancing process concludes.
Eleven Mistakes to avoid when Buying and Selling Property
1. NOT CHECKING WHAT YOU’RE SIGNING
With so much at stake you should never sign a contract without being sure you understand what’s in it and whether it actually reflects the deal you have made.
Most property transactions will use a standard contract developed by professional associations in each state, but there are always documents and clauses for your particular property.
As soon as you’ve signed, you’ve lost your best chance to reconsider or ask for changes.
2. NOT BEING AN INDIVIDUAL
You and your home are both one of a kind. The contract also needs to be tailored to meet the particular circumstances of your transaction with special conditions.
Some common issues dealt with in special conditions are:-
3. NOT WATCHING CRITICAL DATES
Many buyers and sellers don’t understand the importance of adhering to critical dates set out in the contract or the consequences if these dates are not met.
Common conditions where time is important include:-
Pest and building inspections
The buyer only has until the date in the contract to obtain these inspections and notify the seller of the results. If they are not completed in time, the buyer cannot withdraw from the contract if there is a problem.
Finance approval
If the buyer hasn’t had their finance approved, and formally notified the seller by the date in the contract, then either the buyer or the seller may be able to withdraw from the contract.
4. NOT PAYING A DEPOSIT
Many buyers and sellers don’t realise that if a deposit is not paid when the contract is signed, the purchaser will be in breach to the contract. The amount of the deposit is open to negotiation, but is normally 10% of the purchase price.
The agent holds the deposit in their trust account, usually until settlement, when it is available to the seller.
5. INADEQUATE SEARCHES AND ENQUIRIES
After taking days or weeks to select a property, many buyers don’t undertake adequate property searches and enquiries to check that the home is sound and complies with Council and other regulations.
Searches on a property should check things like:-
It is important to inform us about which searches and enquiries you have done and what conditions should go in the contract.
6. THE WRONG PERSON BOUGHT IT
Often homes, and especially investment properties, are not bought by the right person or entity to achieve the best taxation and liability outcomes. For instance, it may be better for a property to be owned by a spouse, a family trust or superannuation fund. Consult with us and your accountant well in advance to avoid unforeseen problems with capital gains tax, stamp duty, income tax, land tax and asset protection.
7. MISSING THE COOLING-OFF PERIOD
Many buyers don’t realise that they have the benefit of a cooling-off period. Definitions please refer to the abovementioned article.
8. NOT SPECIFYING EXCLUSIONS & INCLUSIONS
The contract needs to make it clear what items are being sold. The general rule is that anything attached to the property or building – a fixture – is included in the sale.
However the contract can also set out exclusions – items that the seller can remove and take (e.g. a hat rack screwed onto the wall) or inclusions – items that are free-standing, but staying on the property (e.g. pot plants).
Many disputes arise over fixtures, exclusions and inclusions, thus please be aware.
9. MISSING OUT ON A FINAL INSPECTION
Many buyers do not realise that it is wise to carry out a final inspection of the property on the settlement date. This is your chance to ensure that the property has been left in a proper condition, that all exclusions have been removed and inclusions left behind.
You should contact the agent to arrange a final inspection and notify us either to confirm that all is in order, or if you have concerns.
10. INEFFECTIVE SPECIAL CONDITIONS
If you have asked for special conditions to be included in your contract you need to be sure they will be effective. Special conditions that are casually or carelessly drafted may have little or no effect, which leads to disputes between the buyer and seller. For example:-
When you want to be able to terminate a contract if a special condition is not satisfied, this should be clearly stated.
11. NOT UNDERSTANDING AN AUCTION CONTRACT
It’s easy to be carried along by the momentum of an auction sale, but many buyers don’t realise that the winning bidder has to sign an unconditional contract and pay the full deposit as soon as the agent’s hammer falls. There is no cooling off period, no finance approval clause and no rights to terminate if a building or pest inspection reveals problems.
This makes it important to get us to advise you on the contract well before the auction so that you understand your responsibilities when you make a bid.
How much is the deposit?
The amount may vary, but it is normally 10% of Contract price.
What is a holding deposit?
It is an amount paid normally between $1,000 to $5,000 by the purchaser to show that they are genuinely interested in purchasing the property.
Who do I pay my deposit to?
The deposit is typically paid to and held by the Real Estate Agent and held on trust until vendor can be eligible to release the money.
What is a written offer to purchase?
A written offer is normally made within a Private Sale by the purchaser and the offer is completed by offering the price, any special conditions or arrangements together with settlement time frame. Offer will then be taken to the Vendor by the selling agent for Vendor's consideration. The Vendor counter signing is the act of acceptance. At this point the Contract is exchanged and become legally binding on both parties.
What is a caveat?
The word caveat means "beware", and the lodging of a caveat over a property is a way telling anyone who wants to deal with the property to be aware of the fact that someone else’s interest already has priority. In other words, a caveat is a written warning to anyone who checks the Certificate of Title of the property that the person who lodged the caveat (known as the “caveator”) has an interest in it. The Registrar of Titles cannot deal with the property without first notifying the caveator.
What is a purchaser's caveat?
A purchaser of real estate, will acquire what is known as an “interest” in the property purchased. However, a purchaser will not be the legal owner of the property until their interest is registered with the Land Titles Office of Victoria. This means that there is a risk that someone else could register their own interest in the property before the purchaser registers theirs. By lodging a caveat a purchaser can prevent others from registering interests ahead of theirs.
What is "Cooling Off"?
According to Section 31 of the Sale of Land Act a purchaser who may end the contract within 3 clear business days of the day that purchaser signs the contract if none of the exceptions listed below applies to you.
You must either give the vendor or the vendor’s agent written notice that you are ending the contract or leave the notice at the address of the vendor or the vendor’s agent to end this contract within this time in accordance with this cooling-off provision.
You are entitled to a refund of all the money you paid EXCEPT for $100 or 0.2% of the purchase price (whichever is more) if you end the contract in this way.
EXCEPTIONS The 3-day cooling-off period does not apply if:
- you bought the property at or within 3 clear business days before or after a publicly advertised auction; or
- the property is used primarily for industrial or commercial purposes; or
- The purchaser is an estate agent or a corporate body (e.g. a company); or
- the property is more than 20 hectares in size and is used primarily for farming; or
- you and the vendor have previously signed a contract for the sale of the same land in substantially the same terms; or
PLEASE NOTE: It is very important to remember that the cooling off period starts when the PURCHASER first signs the contract, regardless the vendor had counter signed the purchaser's offer or not, even though the vendor may not sign until a few days later! For an example: The cooling off period ends three (3) business days after you sign the contract, if you signed on Tuesday, then the period expires on close of business Friday.
What is settlement?
Settlement is the day on which the legal representatives of all parties, including any financiers, meet at a prearranged time to exchange documents. Final document checks are performed to ensure accuracy and completeness, important legal documents are exchanged, and payment of the purchase price is made. Shortly following settlement, the registration of the property transfer takes place at the Land Titles Office, this is when the conveyancing process concludes.
Eleven Mistakes to avoid when Buying and Selling Property
1. NOT CHECKING WHAT YOU’RE SIGNING
With so much at stake you should never sign a contract without being sure you understand what’s in it and whether it actually reflects the deal you have made.
Most property transactions will use a standard contract developed by professional associations in each state, but there are always documents and clauses for your particular property.
As soon as you’ve signed, you’ve lost your best chance to reconsider or ask for changes.
2. NOT BEING AN INDIVIDUAL
You and your home are both one of a kind. The contract also needs to be tailored to meet the particular circumstances of your transaction with special conditions.
Some common issues dealt with in special conditions are:-
- Making the deal subject to finance or other conditions.
- Occupation before settlement.
- A rent back period after settlement.
- A longer than usual period before settlement.
- Time for you to sell your current home before buying the new one.
- Unusual items that are included or excluded from the sale.
- Problems that must be fixed before settlement.
3. NOT WATCHING CRITICAL DATES
Many buyers and sellers don’t understand the importance of adhering to critical dates set out in the contract or the consequences if these dates are not met.
Common conditions where time is important include:-
Pest and building inspections
The buyer only has until the date in the contract to obtain these inspections and notify the seller of the results. If they are not completed in time, the buyer cannot withdraw from the contract if there is a problem.
Finance approval
If the buyer hasn’t had their finance approved, and formally notified the seller by the date in the contract, then either the buyer or the seller may be able to withdraw from the contract.
4. NOT PAYING A DEPOSIT
Many buyers and sellers don’t realise that if a deposit is not paid when the contract is signed, the purchaser will be in breach to the contract. The amount of the deposit is open to negotiation, but is normally 10% of the purchase price.
The agent holds the deposit in their trust account, usually until settlement, when it is available to the seller.
5. INADEQUATE SEARCHES AND ENQUIRIES
After taking days or weeks to select a property, many buyers don’t undertake adequate property searches and enquiries to check that the home is sound and complies with Council and other regulations.
Searches on a property should check things like:-
- Developments planned for the area, such as new roads and powerlines.
- Restrictions on the use of the land, such as covenants or easements.
- If the area is subject to flood or subsidence.
- If the land has been filled or is on the contaminated sites register.
- Whether a building complies with council regulations.
- If the results show problems, you may be able to withdraw from the contract.
It is important to inform us about which searches and enquiries you have done and what conditions should go in the contract.
6. THE WRONG PERSON BOUGHT IT
Often homes, and especially investment properties, are not bought by the right person or entity to achieve the best taxation and liability outcomes. For instance, it may be better for a property to be owned by a spouse, a family trust or superannuation fund. Consult with us and your accountant well in advance to avoid unforeseen problems with capital gains tax, stamp duty, income tax, land tax and asset protection.
7. MISSING THE COOLING-OFF PERIOD
Many buyers don’t realise that they have the benefit of a cooling-off period. Definitions please refer to the abovementioned article.
8. NOT SPECIFYING EXCLUSIONS & INCLUSIONS
The contract needs to make it clear what items are being sold. The general rule is that anything attached to the property or building – a fixture – is included in the sale.
However the contract can also set out exclusions – items that the seller can remove and take (e.g. a hat rack screwed onto the wall) or inclusions – items that are free-standing, but staying on the property (e.g. pot plants).
Many disputes arise over fixtures, exclusions and inclusions, thus please be aware.
9. MISSING OUT ON A FINAL INSPECTION
Many buyers do not realise that it is wise to carry out a final inspection of the property on the settlement date. This is your chance to ensure that the property has been left in a proper condition, that all exclusions have been removed and inclusions left behind.
You should contact the agent to arrange a final inspection and notify us either to confirm that all is in order, or if you have concerns.
10. INEFFECTIVE SPECIAL CONDITIONS
If you have asked for special conditions to be included in your contract you need to be sure they will be effective. Special conditions that are casually or carelessly drafted may have little or no effect, which leads to disputes between the buyer and seller. For example:-
When you want to be able to terminate a contract if a special condition is not satisfied, this should be clearly stated.
- If a fence needs to be built, the special conditions should clearly state the type of fence to be constructed, who pays and what happens if it is not built in time.
- If new carpet is to be fitted, the special condition should clearly state the color, type, quality, value and who pays.
- Discuss special conditions with us so that you will get proper protection.
11. NOT UNDERSTANDING AN AUCTION CONTRACT
It’s easy to be carried along by the momentum of an auction sale, but many buyers don’t realise that the winning bidder has to sign an unconditional contract and pay the full deposit as soon as the agent’s hammer falls. There is no cooling off period, no finance approval clause and no rights to terminate if a building or pest inspection reveals problems.
This makes it important to get us to advise you on the contract well before the auction so that you understand your responsibilities when you make a bid.