|
For many, the pressure is
on as soon as they step off the plane - furniture is arriving off the
boat soon, the kids need to get into school, the dog gets out of
quarantine in a few weeks etc.etc. Tip:
CHILL OUT... Don't rush into a decision you may later regret.
Rent or buy? It's a
dilemma faced by all new families arriving in Perth. Finding good
long-term rentals can be difficult - even more so if you want one with a
pool. However, buying a house upon arrival has risks:
-
You don't know the
suburbs, so risk buying in a dodgy area (some suburbs have good
parts and parts to avoid).
-
You don't know the
market and could end up paying over-the-odds.
-
You don't know about
living in Australian houses (e.g the importance of an outdoor shaded
area, retic, air conditioning, hoons, installing a pool etc.)
-
You don't know about
the cost of living in Perth, so you may risk over-extending
yourselves financially if you buy a house that is too expensive.
On the flip side, house
prices in Perth continue to rise at an alarming pace, with no real sign
of slowing - so renting for 6 months will cost you dearly (look at our
suburb browser page to
see how much the average prices rose in 2004).
You still want to buy
straight off the plane? then you might want to consider our
Property Finder services
and let us find your dream home. There are some unscrupulous people in
the property business - so be careful.
Contact us and we can put you in touch with a Real Estate Agent that
we trust - and lots of our friends trust as well. He can show you any
property in Perth and will give you an honest opinion of what a house is
worth and won't let you be ripped-off.
So, How Does the Buying Process Work?
Like in most countries,
the Real Estate Agent gets paid a fee by the seller (3-4% normally).
Agents can sell properties that they are not listing - but they only get
a very small fee for their trouble - so it is in the Agent's own
interest to sell you one of their listings.
Step 1: Finding a Property
There are many Real Estate
Agents in Perth, most concentrate on particular suburbs. There are three
avenue of attack: the internet (REIWA is a good starting point as that
site has the most properties), the papers (Saturday's West Australian
and the weekly
RealEstateWA), and trawling round all the local real estate agents
that deal with the suburbs in question.
Tip: One
of the best methods for getting a feel for the property market is to
visit 'home opens'. On Saturday and Sunday afternoons, most real estate
agents will schedule public viewings of their properties. Each property
is typically open to the public for an hour, before the agent moves on
to the next one. No appointments are necessary, just turn up, have a
look around and move on to the next house. The schedule of home opens
are normally published in advance in the RealEstateWA paper - but are
also well signposted in each suburb if you happen to be driving by.
Alternatively, Agents can arrange a private viewing at a mutually
convenient time, if the seller agrees.
Step 2: Placing an Offer
Getting a feel for the
real estate market in your target suburbs is vital. Only then can you
gauge what a house is worth. There are many overpriced properties out
there, just waiting for the unwary, impulsive and naive. But before we
get to the offer part, let's take a few steps back in the selling
process... Before the property comes on the market, the Agent will value
the property as part of winning the sellers business (they may value it
higher to win the business, or realistically so it may sell quickly
without too much effort for the agent. Sometimes the owner has
unrealistic expectations as to their house's worth and will overrule the
agent). The Agent and seller then agree to a price range that the
property will be marketed at (eg. 329K-349K). The agent's valuation is
probably near the top end of the range, with the lower price bracket
there to get people to go and see it.
Now we get to the fun
bit... the offer. Part of the agent's job is to negotiate with the
seller on your behalf. The Agent obviously knows what the seller wants -
but they (the agent) also want to sell the house quickly (a few $1000
doesn't make much difference to their commission if they've got to spend
the next 12 weeks spending money advertising it and time at home
opens...). You don't need to stick to the advertised price range. You
can offer less - but don't expect to be greeted with open arms. The
Agent is duty-bound to present all offers to the seller, but don't
expect the agent to do much negotiating on your behalf if you put in a
silly offer - remember they (the agent) originally valued the property,
so how do you think they will look to their client if a derisory offer
is tabled...
A good agent will give you
some guidance as to what the seller might accept. They'll also let you
know if any other offers have been placed.
Tips: Know
the market before offering. Find out the sellers circumstances (are they
desperate, has the house been on the market for long). Give the Agent
strong vibes as to your final offer - that will then put the Agent in
the position of having to talk the seller round to your price - or lose
the sale.
Note: buying chains aren't
really important in WA as people don't back out once the deal is agreed.
The Agent will formally
'write up' the offer on a contract. If you need finance, then the offer
will be subject to finance (you have 21 days to get your finance sorted
out before the offer lapses.) Tip:
speak to a mortgage advisor before
you start looking for a house to confirm your eligibility for a
mortgage.
Additional conditions can
also be put into the offer at this time (e.g. the owner needs to fix the
pool fence, or the air conditioning needs to be repaired etc.). Note
that you should always get the property inspected for termites as part
of the offer conditions (it will cost you around $100). If any termite
activity is found then the seller has to pay to eradicate them. Anyway,
if you need finance, then the bank will normally insist that you get a
termite inspection done. Banks will not normally require building
surveys - but you may want to get one done (particularly if it is an
older property). Tip:
If the property has a pool, consider getting it inspected as unpleasant
surprises can be costly.
You also need to stipulate
at this time what date you want to complete on. It is possible to
complete within 14 days if everything is straightforward. Once
the offer is accepted it is legally binding.
Step 3: Your Offer is Accepted...
Congratulations... You
will need to lodge a deposit with the Agent. Some agents will try and
get 10% - laugh in their face... $500 is ample in most cases. The
deposit is held in a trust account until settlement and will form part
of the final purchase price. The deposit normally has to be lodged
within a week of the offer being accepted.
Next you may need to get
the finance finalised - your mortgage advisor will walk you through the
process. If you are self-employed, getting a mortgage can be a lot
trickier. The bank will not get the house surveyed - but they will get
it valued to ensure that it is worth what you are borrowing (at no cost
to you).
You'll also need to find a
Settlement Agent. Both you and the seller employ settlement agents to
complete the sale and to make sure that all legal requirements are met.
Prices vary depending upon the purchase price.
Tip:
Shop around - and don't be afraid to negotiate on price: when we bought
our current house, I used the main settlement agent in Perth. when they
sent through their estimated charges, I found the cheapest price of
their competition on the internet then asked my settlement agent to match
the price - which they did.
Step 4: Your Finance is Approved
Whew... The waiting is
over and the deal is done. The 'SOLD' sticker will now go up on the
board outside the house and everything moves ahead. Be prepared for a
deluge of paperwork to choke your mailbox. Some suburbs have rules and
regulations that you have to sign up to (e.g. you can't litter your
driveway with broken-down cars) - other suburbs have developer
indemnities that you need to acknowledge (e.g. many northern suburbs are
built on an old firing range - and the developers will state that they
only checked down to 1 metre for munitions!). You should also expect to
receive a Sellers Disclosure Statement, listing important facts about
the property (sewer lines, bore water etc) and what is included in
the price (pool, air con etc).
Note that at this stage
you'll be expected to pay the Stamp Duty on the property. The amount of
stamp duty payable is on a sliding scale depending upon on the purchase
price of the home. Stamp duty on a property can be considerable: e.g. on
a $350,000 property, the stamp duty is currently $13,200 - so remember
to factor this cost into your budget (get more information and the
current rates here).
Tip: A First
Time Homeowners stamp duty rebate is available for first time buyers
(and you qualify as a new migrant if you have never bought a property in
Australia before - but only
if you have Permanent Residency). Also, be aware the rebate is on a
sliding scale depending upon the property price. You pay no stamp duty if you are buying a property
up to $250,000, and full duty if it is
above $350,000.
A First Time Homebuyers Grant of $7000 is also available to citizens and
new migrant families (only on Permanent Resident Visas) which is paid
irrespective of the property purchase price.
Tip:
The grant is normally paid at the time of settlement and reduces your
deposit accordingly - but some lenders don't do this, or if there is a
problem with the paperwork (as happened to us) then you'll have to come
up with the extra cash to complete the sale. Later you can then claim
the grant money directly from the state government.
Step 5: Settlement Approaches
The Real Estate Agent will
arrange for you to do an inspection of the property. This is your final
chance to find any faults that the current owner has to fix before you
take possession. Tip:
Make a list of everything to check. Take a small light or another
electrical appliance to test every socket (your agent should have a
tester - but just in case...). Basically, you should go over the house
from top to bottom - don't forget the retic outside as well as the
garage door...
Some mortgage lenders may
insist that you have buildings insurance in place before
taking ownership of the property. I'm not sure if this is true or not :-
At this stage, even if the house burned down, you would still have to
take possession. Apparently the value is attributed to the land - not
the house. Urban myth or not, be aware you will need buildings insurance
to be in place before the lender will release the funds.
As the settlement day
approaches, your settlement agent will arrange for all the services to
be moved over into your name (electricity, gas, phone etc.) and will
advise you accordingly.
In many cases the deal
doesn't settle on the specified day (problem with someone else down the
chain etc.). Basically, anyone in the buying chain can delay settlement
for up to 5 working days before financial penalties start - so keep on
top of your settlement agent beforehand to get a heads-up on impending
delays, and be prepared to change you plans at the drop of a hat.
Tip:
If
you are moving from a rental property, keep it for a week beyond your
proposed moving date. Not only will you have time to clean it up
properly and fix any damage (maximising your chance of getting your bond
back...), but you will have somewhere to stay should settlement be
delayed. Also, don't get the utilities cut off until after you have
moved.
Sometimes, if settlement
is delayed, everyone in the buying chain may agree to take early
possession (i.e. you all move into houses you don't yet own!)
Step 5: Settlement Day
Well the day has come...
Your settlement agent will give you a time slot during which the
settlement should be completed. All you can do now is wait by the phone
and keep the Champaign on ice... Once it is all done and dusted, the
real estate agent should give you the keys.
|
