Homebuyers do their research about loans and bidding at auction but they often fail to think about the contract side of purchasing a property.
When it comes to completing a property transaction, everybody has a role to play.
Real estate and buyers agents must keep their clients’ best interests in mind, lenders must be clear on what options are available and the buyers and sellers themselves also have work to do so everything can be resolved the way they want it to. This includes being aware of what’s involved with signing of contracts.
As a conveyancer, these are the errors I witness property buyers making when they reach the contract stage. These simple mistakes slow the process down and can end up costing money.
Failure to obtain property inspections
When a buyer agrees to purchase a property, the property is being purchased ‘as is’, this means the owner is not obliged to repair anything or change the condition of the property.
If the buyer has failed to arrange a pest and building inspection, they may be unaware of major structural issues with the property. As a result, they can be hit with massive bills, or even worse, a property which is not inhabitable.
A good conveyancer will sound the alarm if clients show up to buy a property without inspection documents. It may feel inconvenient to go back and tick off these boxes but the small outlay of time and money are usually well worth it.
Committing to buy without up to date pre-approval is another huge no-no.
As you are no-doubt aware, this is where a good mortgage broker is an essential resource. They will help buyers confirm their spending limits as well as the finer details of their loan.
One thing worth noting is that pre-approval isn’t unconditional approval. If clients change jobs or run up a fresh credit debt, they may find lending limits and conditions change.
Signing too early
The thrill of being the successful negotiator can incite buyers to sign on the dotted line but this is a terrible thing to do if a conveyancer has not been consulted.
Legal advice is imperative. Your conveyancer will read the fine print, ask for clarification, check and check again. Small errors can lead to major setbacks and hidden clauses can result in unexpected expense.
If you’re working with home buyers, remind them to keep a cool head. Things will still work out for the best if they take one step at a time.
Not using an expert
When it comes to property exchanges, not just any lawyer will do.
It is recommended you use an expert conveyancer or solicitor who is only focused on property law. Their skills and know-how will come in handy in more ways than one when it comes to reviewing contracts, staying organised and keeping people accountable.
Sparing the details
Often agreements are made verbally during a property sale are forgotten about until the contract is signed. Sometimes assumptions are made but never actually raised in discussion.
For example, the pest control report may come back highlighting a termite problem, which the seller then insists will be fixed. However, if this isn’t in writing, it counts for nothing. The same goes for items like curtains or white goods which are ‘promised’ to be included in the sale. Everything needs to be documented and included in the contract as additional special conditions.
Many homebuyers fail to realise that a verbal promise is not binding until it is too late. They also don’t mention their discussions with their conveyancer. As a result, they don’t get what they are expecting.
Lack of timeliness
Settlement can feel long and drawn out but this is partly because there is a lot to do and quite a few parties involved.
Some homebuyers make the mistake of being late with signed documents, thinking there is plenty of time. The reality is banks work to their own timelines. They need a few days to get to the documents that buyers have forwarded to them.
Thinking a day or two is enough is a mistake and could result in your bank not having the funds ready at the expected settlement date.
No attention to detail
When signing a contract, the legal name you use is important.
A common mistake is to write ‘or nominee’ on the front page, thinking you can simply cross out and amend the name after signing of the contract. This can cost not only additional legal fees because once the contract is signed, it cannot be changed but also additional stamp duty.
It’s also important to check prior to agreeing to a final price whether or not it is inclusive of GST. This is not really an issue for existing residential property but off the plan or brand new homes can include GST, which will be a sizable sum to have to come up with at short notice.
If you’re a motivated real estate agent, buyers agent or mortgage broker, hopefully this information will help you keep your clients a step ahead so their entire purchasing transaction feels seamless.
For more information or for the help of a professional, reliable conveyancer, contact Thorpe Conveyancing.
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