Buying a new home is one of the most exciting and memorable experiences we’ll have in our lives. I still remember getting a tingle of excitement down my spine every time I set foot inside a display home. ‘This is how I want my living room to look’ ‘this kitchen is amazing’.
What you may not realise is how easy it can be to get swept up in all the hype of picturing how your dream home is going to look. Things move fast, within the space of 4 weeks, my partner and I inspected 40 odd display homes and before I knew it, I was sitting down with the real estate agent with a contract of sale staring right at me.
What was this ridiculously large document that required me to sign every single square inch and section of each page? The contract of sale is a legally binding document prepared by the real estate agent or a solicitor, which sets out the terms and conditions agreed upon by the buyer and seller.
A typical Contract of Sale will include:
- Property owner/vendor name and address
- Chattels list: Things that are included in the sale of the home, such as curtains, blinds, fixtures, fittings, carpets and so on. If the owner or vendor mentions certain chattels are part of the sale of the home, make sure they are in this list.
- Settlement conditions: Are things such as subject to finance, final inspections. Each condition needs to be numbered and initialled by both parties.
- The sale price of the property and deposit amount
- Deposit amount due date
- Settlement date
- Will the house be vacant possession or tenanted
Before you rush to sign and initial everything, here are some important questions to ask and conditions to check when going through the contract of sale.
What’s included in the sale?
Remember, a contract of sale is a legally binding document, so you’ll want to go through it with a fine tooth comb to know exactly what you are buying. First off, make sure that the property you inspected matches the property on the title of the Registered Plan. If you suspect something isn’t right, hire an independent surveyor to inspect and prepare a plan for comparison.
Keep an eye out for registered and unregistered easements on the plan. This can include things such as electrical mains, communication structures, or sewers. Easements can restrict how you may use certain parts of the property. A quick example, if you were planning to renovate or extend the property down the track, it’s possible that you may not be able to at all or have to fork out more.
We touched on the chattels list earlier on. This is the perfect time to go through what’s going to be included in the sale of the property. Permanent fixtures/chattels such as curtains and blinds, ovens, the stove, carpet, light fittings and so on, are usually specifically listed so there is no doubt they are included.
However, the ones you should crosscheck are all built-in appliances you see during inspection including, fridges, TVs, washing machines or microwaves). You can always request for chattels to be added into the contract.
Have you contacted your finance/mortgage broker or lender to make sure you can afford it?
This may sound like an obvious question to consider but it is what will ultimately determine whether you get your dream home or not. If you do not have enough funds by the time settlement comes, you may not be able to settle on time, which can incur a whole range of penalties including interest, damages, losses and so on.
You’ll also want to reconfirm the deposit amount and when and how it should be paid, whether it’s a lump sum or instalments through electronic transfer.
What are the special conditions?
Are there any special conditions listed by the vendor? If so, you’ll want to pay extra attention to these. Special conditions can include penalties for delay in settlement or that the sale is subjected to tenancy.
There’s also an opportunity to add your own special conditions, such as sale is subject to finance, this means even though you signed, if your finance doesn’t come through you will not be stuck with a new home you can’t afford.
Other conditions include pest and building inspections being satisfactory, assurances by the seller that all rubbish will be removed, and due diligence (which allows buyers to terminate the sale contract if they are not satisfied with the condition of the property based on their investigations.)
If you’re renting or selling your own home, it’s crucial you negotiate an appropriate settlement period that best suits your timeline and the seller. Failing to settle by settlement date can incur some pretty hefty fees. Check the contract to see when the proposed settlement date is, which can be between 30 to 90 days.
Have you done your final inspection?
Falling in line with everything that has been mentioned so far, the final inspection is something you’ll want to get done prior to settlement date.
This allows buyers to inspect the property to check that the seller or vendor has complied with their obligations listed in the contract. It’s one last chance to inspect the home to ensure you’re receiving the same home you signed for when you made an offer.
Read more about the process with our complete Final Inspection Checklist
Are you after ways to sell your current house at the best price? Check out the list of renovations you could undertake that will help you sell you house quickly and with a return on your investment:
– Home Improvements Part 1
– Home Improvements Part 2
No surprise here, one of the best ways to freshen up your house facade, whether it is the one you are planning to sell or the one planning to buy, is to install a new garage door that complements your home.