There’s a sweet moment of elation when your lender calls to give you the good news that your lending is approved and you’re free to peruse the pages of Real Estate Magazines, noting down a list of ‘Must View Open Homes’ for the weekend ahead … But it doesn’t take long for a feeling of trepidation to creep in. What do you do when you have found the home you’ve been dreaming of? How do you know how much to offer? How do you even make the offer?
The first step is to ask the listing Real Estate Agent to Draft a Sale & Purchase Agreement. It’s a good idea for you to read over it and familiarise yourself with such an agreement, but more imperatively take it to your lawyer! You don’t want to sign anything without your lawyer seeing the pages of the Sale & Purchase Agreement first.
Your solicitor will be involved every step of the way. They will arrange to see a copy of the LIM & Title, so that they can review it and advise you accordingly if they find any issues within the report. They will manage communications between you and the vendor’s solicitor. They will also be involved in the financial details, reviewing your mortgage documents, and administering the payment of funds on settlement day.
Your solicitor will help you include conditions that are for YOUR benefit within the Agreement. There are three clauses (conditions) that you should consider discussing with your lawyer: Finance, Insurance and Builders Report.
The Finance Clause:
Even though you may have approved lending, there are still further tasks that need to be carried out by yourself and your lender to ensure you have the funds necessary to go through with this agreement. Your lender may ask you to get a property valuation, make sure you allow yourself time in the conditions to have this completed.
The Insurance Clause:
Although finances are obviously a major aspect of this agreement, you are stepping into a long-term commitment and securing your biggest asset. You therefore need to make sure you also allow yourself time to arrange for an insurance policy you’re satisfied with, before this property is in your possession.
The Builders Report Clause:
This clause allows you the time needed to obtain a builder’s report that you can rely on, giving you detailed information on the condition of the property. Ask your solicitor to include wording in the clause that will allow you to be released from the agreement, should the builders report highlight any issue you are not prepared for, or that makes you unwilling to proceed.
So by now, the last question remains … How much do I offer?
To answer this, you need to do your homework. You may opt to get a Registered Valuation, and this will give you a firm assurance of the property’s current value or you may choose to do your own research. Find out as much as you can about the property, the area, and the recent sales from comparable properties in the same area to get an idea of the properties value.
We know buying your First Home is exciting and daunting, so please reach out if you have further questions about putting in an offer on your first home – we’re here to help.