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Choosing Your Home

Whether buying a home to live in or as an investment, you need to approach the process in a methodical manner. Make a list of your requirements – the things that the home must
have to suit your needs. It is tempting to become attached to a house that looks good, but doesn’t have what you want. Here is a checklist of things you may want to consider:

LOCATION

Perhaps the most important of all aspects and the one attribute that has the greatest influence on the potential capital growth of your investment. Do you want to be close to schools, family, parks, shops, public transport? Do you want to be on a main road or side street? All these have an impact on the value of a property, and so sometimes it is necessary to compromise, but be sure to prioritise your needs, and stick to your guns. Even a beautiful house with all the latest mod cons will not make up for the fact that it is 5 kilometres from a train station, if that is a priority. The suburb or area you choose to look in will also be dictated by your budget, but once you have made your decision, try to draw a boundary around the area you prefer and only look at properties in that area. This will save you time and effort when house hunting.

TYPES OF PROPERTY

Everyone’s needs are different. Families need space and are usually looking for homes with land in suburban areas. Couples, singles and empty-nesters may be interested in inner city townhouse or apartment living that reduces maintenance and offers closer proximity to work or city venues. Again, it is important to decide on which property type suits your needs and budget for as long as possible. Investors may look to see which types of properties have resulted in the best long-term gains. Things like number of bedrooms, bathrooms and state of renovation are also important factors, as is land size. If you intend to work from home, a studio or extra bedroom will be necessary.

ORIENTATION

This is not always the most important factor, but it does have an influence on how light your house is and how much sun your outdoor living area will receive. Everyone has different tastes, but the most sought-after orientation is usually a north-west facing rear garden or living area – This orientation maximises sun in the afternoon and if the bedroom/s are at the front of the house, will help keep these areas cooler during the summer months.

Building Inspections

Independent building reports are common in the market place. They are conducted by qualified architects, engineers and builders who provide a detailed condition report on the property to be purchased.  Prospective purchasers can arrange for these reports to be carried out to alert them to any defects or maintenance issues, include a cost guide for repairs and advise a budget for planned alterations.

Builder/architectural friends and trades people can also be of assistance in providing a pre – purchase assessment. The staff at Buckingham & Company are happy to provide independent contacts for assistance in this area.

 

Auction or Private Sale

Often the buyer has no choice as to whether their desired home is purchased at auction or via private sale. The seller dictates these terms. However, as with everything
relating to purchasing a property, it pays to be informed.

Bidding at auction for the first time can be intimidating. Similarly, the excitement of an auction can cause emotions to cloud sound judgement. So if you don’t feel
confident participating in the auction process, you can ask a friend, or qualified buyer’s advocate to bid on your behalf.

Some of the benefits of buying at Auction include:

    • A transparent bidding process where you are aware of competitive offers and can gauge the market ‘feel’.
    • All Vendors are genuine sellers.
    • The sale and signing of documents all takes place on the day.

PRIVATE SALE

The property will have an advertised price – the starting point for negotiations which usually take place through the Vendor’s agent. Negotiations continue until both parties agree on price. Unlike an auction, the negotiation process is not as transparent, however the pace is not as frenzied.

The staff at Buckingham & Company are always available to thoroughly explain both processes to interested buyers and assist in making your buying experience as smooth
and transparent as possible.

Costs Involved

This checklist highlights the costs most Victorian homebuyers will have to consider:

    • Purchase price of home (including 10% deposit on signing of contract with balance payable at settlement)
    • Stamp Duty on the transfer of property

 

STAMP DUTY

 

VALUE OF PROPERTY STAMP DUTY PAYABLE

Firstname Lastname
$250,000 $8,870.00
$300,000 $11,370.00
$350,000 $13,870.00
$400,000 $16,370.00
$450,000 $18,970.00
$500,000 $21,970.00
$550,000 $24,970.00
$600,000 $31,070.00
$700,000 $37,070.00
$800,000 $43,070.00
$900,000 $49,070.00
$1,000,000 $55,000.00
$1,500,000 $82,500.00
$2,000,000 $110,000.00

Conveyencing

Conveyancing is the transfer of ownership of a property from a seller to a buyer.

Usually, the buyer and seller each engage a legal practitioner or conveyancer to handle this process. There are differences in what legal practitioners and conveyancers are legally allowed to undertake on behalf of a client.

We recommend you:

  • choose a legal practitioner or conveyancer that you feel comfortable with and meets your needs.
  • check references and make enquiries about the standard of their services
  • obtain written quotes from several, and discuss all disbursements (administrative costs).

LEGAL PRACTITIONERS AND CONVEYANCERS

When you deal with a legal practitioner or conveyancer, you are protected by:

  • professional indemnity insurance
  • statutory compensation funds.  These funds compensate buyers and sellers for the loss of any money held on their behalf by a legal practitioner or conveyancer.

Your legal practitioner can prepare or review all documentation required for a property sale, including your vendor’s statement and the contract.

A legal practinioner:

  • Must hold a current practising certificate
  • Can perform general legal work and provide legal advice to their client.

Some legal practitioners specialise in conveyancing and property law.

CONVEYANCERS

You can engage a conveyancer to prepare or review the vendors statement and other legal documentation, such as the contract of sale.

A conveyancer is a person other than a legal practitioner, licensed to:

  • Undertake property conveyancing work
  • Do legal work or give legal advice about the transfer of title.

If you use a conveyancer, make sure that they are licensed.  You can find a licensed conveyancer, or check a conveyancer’s licence details, by searching the Business Licensing Authority’s public register of conveyancers.

Vendor’s statement (also known as a section 32)

Before a property is sold, you are required to provide the buyer with a vendor’s statement. This is usually prepared by your legal practitioner or conveyancer.

The vendor’s statement is also known as a section 32, because the information it must contain is set out in section 32 of the Sale of Land Act 1962.

You sign the vendor’s statement, a legal document that must be factually accurate and complete. If it contains incorrect or insufficient information, a buyer may be able to withdraw from the sale or take legal action.

Usually, the your agent makes the document available to prospective buyers before the sale or auction.

A prospective buyer may have the statement checked by his or her own legal practitioner or conveyancer before purchase.

The vendor’s statement contains information about the property’s title, including:

  • mortgages
  • covenants
  • easements
  • zoning
  • outgoings (for example, rates).

CONTRACT OF SALE FOR PROPERTY

A property is sold when both you and the buyer have signed the contract of sale.

The contract of sale can also be used by prospective buyers to make an offer on a property.

It contains:

  • details of the property
  • your name and the names of buyers
  • the name of your estate agent, if you are using one
  • details of legal practitioners or conveyancers that you and the buyer have engaged
  • the price
  • balance owing at settlement
  • any special conditions, such as clause ‘subject to finance’.

 

The contract must clearly specify whether the price includes or excludes the goods and services tax (GST) and, if included, how the amount will be calculated.

Finance

It goes without saying that careful consideration should always be given to assessing exactly what loan amount a buyer can comfortably live with. This amount will dictate your ‘best’ purchase price, and it is always imperative that buyers stick to their budget.

Buckingham and Company are able to give you free advice on choosing the right housing loan.

We have established relationships with a wide variety of lenders, which means that you are able to take advantage of our large range of exclusive financial packages. Always seek independent advice when it comes to the tax implications and relevant financial details of purchasing a property.

Our financial managers have many years of experience in this area. They will qualify you for the best loan possible suited to your requirements at the best possible rates. Buckingham and Company finance managers are happy to talk to your tax advisors and accountants regarding setting up investment or home loans to suit you so you can benefit all round.

Making the Final Decision

Most people have heard the expression ‘Caveat Emptor’, which translates to “Let the buyer beware’. Seeking independent legal, financial and architectural advice helps reduce risks in these areas.

Ultimately, it is your money you are spending, and it is your needs that matter when buying a home. Once you have done your homework and decided on your requirements, the process of looking for a home can be exciting and fun.

Visit the property during peak hour – is traffic noise a problem?

Turn on the hot and cold water taps to check water pressure.

Visit the property at different times of the day to check variations in internal light, and where the sun falls.

Consider obtaining a professional building inspection.

Check heating/cooling and which appliances are serviced by gas or electricity.

What is the home’s current level of security? (alarm, window looks, deadlocks etc).

To summarise:

    • Be informed
    • Shop around
    • Don’t hurry
    • Read everything before you sign

For more information on buying a home, visit the Real Estate Institute of Victoria’s website www.reiv.com.au

Do Your Research on the Area

Don’t be in a rush. Check out the area you are interested in by reading the results of recent sales, attending auctions and getting a feel for the market.

Banyule Council

Nillumbik Council

To find out more about the surrounding suburbs and facilities

Things to look for:

    • Transport
    • Parklands and facilities
    • Local Schools, State/Private, Primary/Secondary
    • Neighbourhood gardens
    • Graffiti
    • Quality of other homes in the area
    • Recent comparable sales
    • Capital growth and rental potential
    • Shopping Centre facilities
    • Sporting/Leisure Clubs

Thinking of Renovating a Property?

If you are in the market for a renovator’s delight, do your research first by checking council regulations and zoning constraints.

You may find the area is covered by an overlay that restricts certain renovations to occur. This information should also be provided in the Section 32 of the Contract of Sale.

Speak to registered builders qualified by HIA or master builders association and get recommendations from them on price and approval on concepts on extending and renovating.
Heritage overlays on dwellings, covenants or restrictions may restrict the properties potential.

Legal Advice

Before making an offer on a property or bidding at an auction, have your solicitor or conveyancer read over the vendor’s statement (Section 32) which has been prepared by the vendor’s representative.   They will advise you on zoning, overlays, covenants or easements that may appear on the Section 32.

By receiving solicitors advice you waiver your right to a cooling off period (Section 32 of the Sale of Land Act 1962) which all buyers get when buying a property outside the “Auction Process”.

Hidden Costs

Ask your bank, fianancial advisor or lending manager to outline all costs associated with purchasing a property including:

 

  • Mortgage Insurance (if relevant)
  • Stamp duties
  • Bank Valuation costs
  • Loan establishment/penalty fees (if any)

 

This will help you when calculating your budget.  Building insurance may also be required by your lender in order to approve your loan.  It is also important to have a deposit of 10% of the sale price available when purchasing.

Buying Off the Plan

 

Purchasing property “off the plan”, is only applicable to the construction of new homes where construction is yet to commence, or alternatively, where construction has commenced but is yet to be completed.

InVictoriathere are many advantages in buying property at this preliminary stage.

  • You will usually pay less than the market value for the property when purchasing off-the plan, as developers financially benefit strong pre-sale records and in return their financial risk is reduced. Usually they can sell most lots in a development prior to construction, meaning they can calculate what funds to expect upon completion.
  • You will only pay a fraction of the full stamp duty normally applied. For example, you would save approximately $9,000.00 when purchasing a $240,000.00 property “off the plan”.

But Buyer Beware!  With these advantages also come disadvantages, the obvious being you must hand over your deposit money for something that is not yet built. Before signing a contract and committing funds, it is imperative that you do some research on the proposed property, carry out inspections, ask plenty of questions and seek professional advice.  This will help you ensure that you know what you are getting, who you are dealing with, and the terms of your agreement.

Here are some of the most important issues that you should be aware of before purchasing “off the plan”:

ENQUIRIES AND INSPECTIONS

In purchasing “off the plan” you must rely on the reputation, honesty, goodwill and the financial security of the developer;

  • Research the developer before you sign the contract. Find out how long they have been in the industry and how many projects they have been involved in. Ask if you can inspect similar houses already built under the developers  instruction, so that you can see the quality of the finished work.
  • Check with Builder’s Licensing Authorities to see if complaints have been lodged about the developer.
  • If the developer goes under before the property is finished, you may be left with nothing to show for your deposit, conveyancing and other legal costs. Ask to see the developer’s balance sheet so that you can determine their financial strength and their ability to deliver their promises.
  • Carefully inspect any display homes, models and plans of the property you intend to purchase. Investigate the details, the fixtures, fittings and finishes.
  • Note that while you might make a quick capital gain because the value of the property has increased between the deposit being paid and settlement, you may also be vulnerable to market fluctuations, oversupply and interest rate rises. These can all cause the value of the property to fall over time. You should find out how long the development has been on the market and check with local real estate agents to see what the property values are like in the area in which you intend to build.

THE CONTRACT

“Off the plan” Contracts can be very complex and may contain unexpected provisos and clauses which can lead to the detriment of an uninformed purchaser.

  • Have your conveyancer or legal representative examine the fine details found in the Contract to identify whether there are any important omissions from the written agreement.
  • The Contract should fully disclose all charges. You should be aware of whether there are any hidden charges or any other ways in which the purchase price may increase.
  • The Contract should clearly specify the cost of upgrading fixtures and fittings from the standard options. It should also include carpeting, painting, window dressings, and possibly appliances. Make sure that whatever you have discussed with the builder/developer in this regard, such as particular brands of fittings, are stipulated in the Contract.
  • The Contract should require the developer to commence construction within a specified time. It should list the remedies available to you if construction is delayed and whether there are any penalties for late completion.
  • You should determine whether you have any remedy or if there is a dispute procedure in place should the developer misrepresent the property, or you are dissatisfied with the finished product.
  • The Contract should include where relevant a copy of the draft Strata Plan (showing the lot, any garage, car space, or storeroom), a copy of the approved plans and specifications, and a description of the proposed registered “Title”.

Body Corporate/ Owners Corporation

If you are looking to purchase a flat, unit or apartment you will have to pay a fee to a Body Corporate which is responsible for maintaining the building and common areas, such as entry areas, stairs and shared gardens. Make yourself aware of annual fees and check minutes to establish if any major or expensive works are scheduled in the near future.

A body corporate is a company or body that looks after insurance for buildings and liability of all common grounds. It manages the gardens, lighting or any other maintenance required. Body Corporate may have rules regarding parking facilities. It would be beneficial to contact the Body Corporate to answer any questions you may have.

Choosing a Good Street

Walk up and down the street you are looking to purchase in.

What are the likely values of surrounding properties?

Are there signs of renovations/extensions and activity in the street?

Ask your agent for a list of recent nearby sales. Look at the quality of ownership and manicured gardens, this will show you the street appeal.

CONTACT US

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