Today, we're going to go through five questions you need to ask yourself
before signing a contract to sell to buy a home.
So you're thinking about buying a house? You're thinking about signing a contract to sell?
It's kind of scary but you might start asking yourself a few questions:
is this the right thing to do? Should I be doing this?
And they're all valid but today, we're going to go through questions that you need to ask yourself
to make sure you're covered on the contract, that you've got the right conditions on there,
that you're not going to get caught out, that you're not going to be flattering
and actually signing unconditional contract and throwing away your cooling-off period.
So Nathan, let's go. - Question #1, are you getting what you're looking for?
So Jayden, we've seen this many times where people think they're getting the dryer,
they're getting the fridge, they're getting this and that, what does it look like?
So you're right. You might go into a place where you see...
I don't know, the dryer is a good one because they usually bolt it down.
You just assume that that's going to be part of the house or you know, the oven,
I think it's fair to say that's it's going to be there but I've seen cases where people take them away
because it wasn't included in the contract.
So the first thing you need to check in the contract is, are all the items in the house included in there?
Now, they refer to them in the contract, using big legal speak, as chattels.
So that can include, actually writing on the contract saying, dishwasher, clothes dryer --
-- air conditioning. - Air conditioning unit.
It might sound silly but we've seen stories where things have gone missing,
the pool filter parts have come out of there.
It's genuinely insane. But it even goes one step further than this.
Nathan, I know there's a case that you had recently where a client had to speak to a conveyancer
and the conveyancer or solicitor usually do checks and make sure that there's not going to be
any highways built on your house or there's no any easement, which means that
the government can basically take off a big chunk of your land but they're buying a house that was on
400 square meters, let's say and were they getting their 400 square meters?
Yeah, so interestingly, this customer had a fence going through their part of the property
which wasn't removable and when they looked at the 400 square meters that was advertised,
they're only getting 370 square meters.
They went back and they re-negotiated the contract down because they were under the impression
they're getting 400 square meters.
So with all these sort of things, it's extremely important you get advice from your legal team,
whether it'd be a solicitor or a conveyancer and ensure that they represent you
to make sure it's all part of the contract.
The thing I like about that story too is the client went back and said,
"Hey, you guys are cheating me basically 10% of my land. I want to get a contract price.
I'm going to get a reduction on the price," and he end up negotiating like a reasonable chunk off there,
I'm pretty certain, so you know, $10k or $20k or $30,000, so it's worth doing these checks because A,
you're going to get what you're looking for and B, you can actually save some money
because they should be aware of that.
Question #2, how much deposit do I actually need to pay?
Now, I get asked this question a lot.
When you get the contract to sell, the real estate agent will tell you to put a specific amount,
usually 3%, 4%, 5% of the contract amount.
What is actually required or what should I put down on the contract there, Jayden?
Well, this is where it's confusing because for your bank, you might need your 5%, 10% 15%, 20% deposit
to by the place and that's fine but when you sign the contract to sell,
you actually might need to pay, you know?
The real estate agent, like you said, might ask you pay 5% or 10%
and you got to get that 10% off the purchase price.
It might be $40k or $50k or $60k into their account the next day.
So the answer to this question is it's really up to you. It's all negotiable.
Everything is negotiable on this stuff.
So you just need to be aware of how much cash you have at that time when you sign
the contract to sell because reality is if you're borrowing money from your parents,
if you're getting the First Home Owners Grant, you might not have your full
5% or 10% deposit available on that day.
You need to make sure the real estate agents are aware of this when you sign the contract
because that can actually affect things later on.
Question #3, does a contract have any special conditions?
So I think this one's a really neat one.
If you're in a power position when you're negotiating,
you can add special conditions in there as many as you like.
One that I usually see people miss is getting the property professionally bonded cleaned
because there's nothing worse when you buy your property and you get in there
and it's dirty or it hasn't been cleaned -- -- Stinky jocks like in the back cupboard,
you don't want that. So remember,
check the special conditions and add any that you think are relevant to you.
It's like another weird special condition we see here in Queensland often is about insurance.
So you might not know but in Queensland, when you sign a contract
-- when the insurance is through Nathan?
It's usually 5PM of the next business day after the contract has been accepted
and that's in the back of the terms and conditions, usually under Section 8 Rights and Obligations,
so that's right at the back of the terms and conditions glossary.
So in other words, when you sign a contract to sell on a house in Queensland,
even though you don't even own the place, you're liable to pay for its insurance
from 5PM the next day you signed the contract
but this is where you can actually use a special condition in your favor
and you can make the current owner liable for that insurance until settlement.
Now, it's not one we see often but it is one that you can actually use to work
in your favor to help save three days of insurance.
Otherwise, there are any other solutions.
And there's usually insurers that will give you a complimentary cover until settlement,
so it's all not bad or you know, pretty flexible if you do have to end up getting that cover --
You just want to get it because you don't want the house burn down and be caught out.
Question #4, how long should my settlement period be?
Yes, so in Queensland, the default can be usually 45 days
but sometimes, they'll stick 30 days on there.
In New South Wales, they'll give you 60 days and in other states, it's actually more.
But it's important to know this because you could make a 30-day settlement not realize
that there's not enough days on Christmas or you might not be able to get removalist,
you might not be able to get power connected, I think there could be all sorts of issues
so just being aware of the settlement date and how long the settlement period is,
can help you just work around that and make sure you don't get caught out.
And lastly, is there any cooling-off period?
Jayden, what is a cooling off period and why should I be concerned
about having this on the contract to sell.
Yes, so in Queensland by default, you get a five-day cooling off period
and it's similar interstate depending on where you are.
Now, I know in New South Wales when I bought my first place, the real estate agent
basically made me sign a waiver of cooling off period
and what that means is well, the cooling off period is there to protect you,
so it means that if you decide within those five days that, "You know what,
I don't really want to buy this place and although my finance can get approved and although
the building and pest is okay, I want to pull out," the cooling-off period let you do that.
It lets you do just that. There are some penalties.
Yeah, you can pull out any time within that five days.
You'll lose 0.25% of the purchase price.
So if it's $500, I think is $1200. - $500,000?
Sorry, $500,000 is $1200.
So we're not talking a huge amount of money.
Once again, you need no reasons to pull out within five days, you're cooling-off,
you can have any reason to do so.
Good thing in Queensland is this might not be as valid because you can have other clauses in like finance
or building and pest to be also get out of the contract and not have to lose any money at all.
So it's worth again, like Nathan said earlier, speaking to your lawyer, speaking to your solicitor,
speaking to your conveyancer to see what your options are, if you find the property
just isn't suitable and you actually don't really want to go ahead.
So there are five questions that you need to ask yourself before you sign a contract to sell or buy a home.
Which was your favorite? Which you're going to use?
It's all right, you can call. We don't mind. Let us know...
Let us know in the comments below. We'd love to hear
and if you have any questions or if you want, you know, a future topic covered
in the video, let us know at HunterGalloway.com.au.