How to buy property in NSW

If you’re a First Home Buyer, or you haven’t bought property in a few years, you might not know what to expect or where to start. Each state and territory has different processes and timelines for purchasing property. Here we will walk you through buying property in NSW.

If you have a Pre-approval, it is usually valid for 90 days. This allows you to shop around for the property that suits your needs and fits your budget. You do not have to have a Pre-approval to make an offer, but be sure you have spoken to your Broker and you are confident of your limits (see Borrowing Power and Purchasing Power blog here).

When you find the property you like, and have conducted your research (including requesting a free Property Report from us), you will approach the real estate agent with a written offer. This can be in the form of an email or a text message. The real estate agent will discuss your offer with the Vendor (the seller). Once you have negotiated a price that is satisfactory to both the seller and you, the real estate agent will ask for your personal details to prepare a Contract of Sale.

The Contract of Sale will be sent to you and your chosen Conveyancer or Solicitor. Your Conveyancer’s role is to review the Contract and explain it to you, negotiating any terms of the condition that are unsatisfactory. A standard Contract will include a 42 day settlement timeline and require a 10% deposit, however both of these things may be negotiated.

The Real Estate Agent will request you to transfer your deposit to their Trust account. The deposit is 10% of the final sale price, unless otherwise agreed. If you are not contributing a full 10% to the purchase, the Vendor may agree to a 5% deposit or a Deposit Bond.

It is recommended that you order a Pest and Building Report, however it is not mandatory. A professional pest and building inspector will provide a written report to you that includes structural and cosmetic elements of the property, and note any concerns.

Your Broker will use the Contract of Sale to order a valuation and request the bank to convert your pre-approval to a formal approval. If you do not have a pre-approval, your broker will submit a full application for formal approval. The valuation is undertaken by an independent third party, they will contact the selling agent to arrange an inspection time if access is required.

When you have Formal Approval from your lender, you can officially exchange contracts. This means your signed contract is exchanged with the vendors signed contract, and the contract is now binding.

FUN FACT: In NSW, you can be GAZUMPED. This means that your offer was verbally accepted but the seller accepts a higher offer from another buyer. This can occur at any time until Contracts are officially exchanged.

Between exchange of contracts and settlement, usually 6 weeks, you will receive your loan documents to sign and return to the bank. Prior to settlement, you will need to provide a copy of your Certificate of Insurance to prove you have Building Insurance on the property. You will also need to transfer any additional funds that you are contributing to your Conveyancer’s Trust Account, or another account nominated by you in your loan documents. Finally, shortly before settlement, you should complete a ‘final inspection’ to ensure the property is in the standard you expect to receive it – for example, it is vacant, clean of rubbish, undamaged, etc.

On settlement day, your Conveyancer will act on your behalf using the digital platform PEXA. They will combine your contribution with your loan funds to pay the seller. The bank will register a mortgage over the property. You will be notified when it is completed so that you can pick up the key from the seller’s agent. 

Checklist of milestones and who is responsible:

  1. Pre-approvalBuyer and Broker
  2. Negotiate priceBuyer and Selling Agent
  3. Contract of SaleBuyer and Conveyancer
  4. Deposit paidBuyer and Selling Agent
  5. Pest and BuildingBuyer
  6. ValuationBroker
  7. Formal ApprovalBroker
  8. Exchange of contractsBuyer, Seller, Conveyancers
  9. Loan documentsBroker and Buyer
  10. Building InsuranceBuyer
  11. Outstanding contributionBuyer & Conveyancer
  12. Final inspectionBuyer
  13. SettlementConveyancers
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