So you’ve found your dream home and it seems to be in your price range. That’s’ great. But there are a few more steps needed before it’s yours.
By now, you should have conditional approval for your home loan. In order to get formal approval, you need to provide details of the property and any other documents your home loan specialist may require.
Final approval is likely to take a few days, as the lender may organise such things as an independent valuation of the property.
You should have building and pest inspections carried out. If you’re buying a unit, townhouse or villa, you’ll also want a strata title search.
Even if you’re madly in love with the place and determined to buy it no matter what, knowing its flaws could help you knock the price down.
The few hundred dollars spent for each of the inspections or searches could save you tens of thousands of dollars down the track.
A building inspector will look at the property inside and out (including the roof space, under the floor, garages, sheds and fencing where access is available) and examine issues of fire-safety upgrading, noise transmission, infestations and waterproofing.
Keep in mind the building inspector won’t always be able to identify every problem, particularly if they haven’t been able to gain access to certain areas, or if some faults (such as leaks) are not visible.
Issues that might be identified could include cracks in walls, rising damp, leaking roof, asbestos presence or drainage problems.
Once you receive the building inspection report, read it carefully. Generally, it won’t include quotes for fixing any problems, unless specifically requested. (But the inspector may be able to give you an idea of whether repairs will be expensive or not)
Having the property surveyed is also a smart idea (not required for ‘strata’ properties). A survey will set out official boundaries; you don’t want to move in and find your extension plans are thwarted because the neighbour owns half of your backyard, for example.
Once finances are sorted, inspections carried out and other necessary inquiries made, you’re ready to make an offer.
NOTE: you can make an offer before you receive formal loan approval and the inspection reports, so long as you specify the offer is conditional on finance, the results of an upcoming inspection or any other matters still outstanding.
The vendor will then decide whether or not to agree to a conditional offer. In addition, there may be some negotiating over the price or, in some instances, another buyer could step in with a higher offer and you could lose out.
Even if the vendor is agreeable to your ‘conditional’ offer, it’s not legally binding on either of you until the contracts have been exchanged (which means you could be gazumped – that is, the vendor could accept someone else’s better offer).
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