Are you in the market for your very first home? Congratulations. Buying a home is an exciting and rewarding experience, but it can also be fraught with pitfalls. Luckily, many of these traps are avoidable when you appoint a conveyancer early in the buying process.
What is a conveyancer?
Before you take possession of your first home, the property needs to settle. Settlement is a complex process that involves many layers of administrative and financial duties, usually handled by a conveyancer.
The conveyancer is responsible for organising the transfer of ownership of a legal title to the new owner, explains Kerry Cable, Strand Legal and Conveyancing’s Business Manager.
Your conveyancer helps you complete all documents relevant to the purchase or sale. Sounds easy, right? However, for most home buyers, the legal terms within many of these documents are challenging to decipher.
A conveyancer will explain all the documents to you in detail, ensuring you understand what you’re signing.
“Generally, most client’s come to us after the sale contract is signed. However, some client’s ask us to check the contract and ensure there is nothing untoward in the clauses before signing,” says Kerry.
Conveyancers also cross-check that all conditions precedents have been satisfied and that no nasty surprises are lurking in the small print.
Ten home buying traps
According to Kerry Cable, the ten most common home buyer traps are:
1. Blindly signing the contract of sale
The contract of sale is a legal document that outlines the terms and conditions of your purchase. Consequently, it’s essential to understand all the terms and conditions before you sign. If you have doubts, you can always ask your conveyancer to review the contract prior to signing.
2. Failing to get a professional building inspection
Before settlement, it’s essential to check the property to identify hazards, safety issues and significant building defects. Most people hire a professional building inspector for the job. In fact, it’s almost standard practice to make a property settlement conditional to a satisfactory building and pest inspection report.
As Kerry explains, “Forgoing a property inspection report is risky because after the property settles, you may no longer have any claim on the seller to fix issues not identified during the initial property inspection or subsequent building report.”
3. Overlooking a pest inspection
Pest inspections, like building reports, are essential when buying a property because they identify any structural or health problems with the property. For example, in Western Australia, termites and other timber pest reports are paramount. Often damage done by these pests is not visible to the human eye, so it’s essential to have a professional conduct a thorough inspection.
4. Forgetting to have insurance in place
It’s essential to have insurance before settlement, as this will protect you if something goes wrong with the property after settlement.
Kerry explains, ‘Most banks will insist on insurance being in place as a condition of finance approval.”
Increasingly, title insurance is becoming more popular because it protects you from financial loss if there are problems with the title for the lifetime you own the property. For example, if there’s a mistake in the public records or someone else claims ownership of the property, title insurance will cover your legal expenses and any financial losses.”
5. Omitting to identify all the costs
Several additional costs are involved in buying a property, including duty, Government and Statutory Charges, and settlement costs. A conveyancer itemises all the costs involved in your purchase upfront, allowing you to budget accordingly.
6. Neglecting to obtain a mortgage pre-approval
If you’re planning on taking out a mortgage to finance your purchase, it’s prudent to obtain a pre-approval before signing the offer and acceptance.
“Alternatively, if you make an offer and don’t have the funds in place, always make the offer subject to finance approval,” says Kerry.
The disadvantage is that if more than one buyer contends for the same property, the buyer offering the best price and proof of finance pre-approval is more likely to succeed.
7. Having unrealistic expectations
When buying any property, it’s essential to remain realistic. For example, accepting that the property may not be perfect and that some minor defects are unreasonable to expect the seller to repair or replace.
“Real estate agents mostly help in this regard, but your conveyancer advises on your rights as to what is reasonable to expect according to the contract,” says Kerry.
8. Inadequately preparing for settlement
Attention to detail at each step of the settlement process is the key to a stress-free property buying experience. While your conveyancer will go through all of the documentation to ensure that everything is in order, the process relies on your timely responses when requested to sign or supply further information.
9. Bypassing checking with an accountant
When you’re buying an investment property, financial advice from an accountant regarding any tax implications is a smart move.
10. Ignoring the need to use a conveyancer
While not a requirement by law, it’s advisable to use a conveyancer when buying a property.
Broadly speaking, a conveyancer is responsible for making sure you meet all the legal obligations involved in your property transaction. Furthermore, a conveyancer protects your rights throughout the complex process. As an example, a conveyancer checks mortgages or encumbrances registered on the title. By doing so, your conveyancer ensures the seller owns the property and has the legal right to sell it to you.
“Choosing to forego a professional conveyancer and self-manage the process is fraught with many potential pitfalls that could jeopardise the success of your property purchase,” says Kerry.