Property Tricks and Traps
Misunderstanding the type of property
There are various types of property including fee simple, crosslease, Stata title, company share and leaseholds. Each have advantages and disadvantages that you should be aware of prior to purchasing. Misunderstanding the type of property you are purchasing or the interests in the land may result in an unexpected impact on your enjoyment and use of the property.
Misunderstanding the agent’s role
Always remember the real estate agent is trying to sell the property at the best possible price for the vendor (the person selling the property). Don’t show all your cards to the agent at the outset and don’t disclose your financial limit to them.
Signing agreement under pressure
Putting in an offer can be exciting. Don’t feel compelled to sign an Agreement straightaway. Once an Agreement is signed it is a legally binding contract. Make sure you understand what it is you are signing. All of our Orion Settlements team lawyers have cellphones (see the Our People page for their cellphone numbers). Feel free to ring them at any time. If you are unable to make contact get the agent to include a solicitor’s approval clause.
You have an obligation of good faith to the vendor. You can’t use a finance clause, for example, to get out of an agreement if you have simply changed your mind. Carefully consider the reports you wish to obtain on the property before you sign e.g. builder’s report, valuation report. If any of these reports do not meet the standard you require you are able to cancel the Agreement. However as soon as the conditions relating to the reports are formally confirmed the Agreement is binding on you.
Deemed consent conditions
Avoid conditions that are deemed to be satisfied unless you notify the vendor. These are dangerous. If you don’t confirm or notify the vendor that the condition is not satisfied they are deemed to be satisfied.
Have your finance pre-approved
Sort out your finances before you start looking. A pre-approval certificate can often be obtained from your Lender. Advice from mortgage and finance brokers can be valuable because of their independence. A broker can often get you a more favorable finance package. Having finance pre-approved means you know exactly what you can spend. Don’t set yourself a budget that will mean you are unable to address emergencies. Interest rates go up and down. Be able to accommodate interest rate increases.
Use a home open checklist
Going to home opens can be overwhelming. After visiting a number of homes you won’t remember important things about individual properties. Use a checklist to record the details of each home you visit. This checklist will be an invaluable tool to help you remember the property and the state it was in at the time you inspected it.
Check chattels carefully
Always check chattels such as ovens, heaters and dishwashers to ensure they are in working order prior to signing an Agreement. Don’t be afraid to flush the toilet, turn on the shower or taps to check water pressure. Ensure all the chattels you are expecting to purchase are listed on the Agreement. Some items that you may be expecting to purchase may not be fixtures. Err on the safe side and include everything that you are expecting to receive e.g. large potted plants, heated towel rails, heaters.
Ask the agent questions about the property. Why is it on the market? Are there any issues with wiring or leaks? It is in your interests to ask as many questions as you can. In particular ask the agent “is there anything about this property that you are aware of that might impact on my decision to purchase?”
Visit the property more than once
Check the property out on different days and at different times of day. Go on a weekday to see what the traffic or noise is like. Go around in the afternoon to see how long the sun lasts for. Visit the property at night. Check the neighbors.
It is customary for real estate agents to prepare the Agreement. There is a standard form which virtually everyone uses. Conditions, however, need to be drafted and included. The wording of conditions can be significant. Our Orion Settlement team lawyers are happy to review and confirm appropriate wording over the phone. They all have cellphones (see the Our People page for their cellphone numbers). Feel free to ring them or have the agent ring them at any time.
Selling a Property
Shop around for agents
All real estate companies are different in the way they market your property. Find a real estate company and, more importantly, an agent that suits you best. For any given area there will usually be one or more agents who have the best listings. Always read the agency contract, check the length of the term, your right to cancel and fees for advertising. Ask us to review the listing contract. Negotiate the commission. Competition is fierce and you may be able to negotiate a very favorable fee.
Know how much your home is worth
Check recent sales and investigate the other properties on the market in your area.
Have consideration for the condition of your home. How much you paid for it, what you think it is worth and the amount of money you will need to buy a new house do not have any effect on the value of your property.
Keep the property tidy
Present your property in its best possible condition inside and out. Avoid making extensive changes and focus on fixing the small things that people notice. Always check with the agent. They will be able to tell you what will increase the sale ability of your property.
Presenting your property
Your agent will give you good advice. It usually includes removing clutter (books, piles of magazines, bric a brac.)
Be up front about building works
Ensure you have all the permits and consents for your property available. If you don’t have any permits or consents you should address this before putting the property on the market as the Agreement contains a clause whereby you warrant that you hold all consents and permits for work you have done to the property.
Choosing between multiple offers
Be mindful of your situation. The highest offer may not always be the best offer. Remember that an offer with lots of conditions can be cancelled based on any of those conditions. Sometimes accepting a lower unconditional offer can be the better option.
As a vendor, once you have signed an Agreement for Sale and Purchase you are legally bound by it and cannot change your mind. Make sure you are clear about what you are signing. The Purchaser is now in control of whether the sale proceeds.
If your property is tenanted and the purchaser wants the property empty on settlement, you must give the tenants the requires legal notice to vacate the property. Ensure that the settlement date on the Agreement for Sale and Purchase reflects this.
Beware of purchasers attempting to cancel an agreement or attempting to reduce the purchase price after obtaining a builder’s report on the basis of matters they should have, or did, know about when making their offer. Always ensure the clause includes your right to rectify the issue and your right to see the report before the purchaser can cancel. Do not agree to a reduction in the purchase price without speaking to us first.
Never sign a back-up offer without obtaining legal advice first. This can result in the property being sold to two separate purchasers.
Selling and buying
Entering into an agreement to purchase a property if you haven’t unconditionally sold your own property can result in having to arrange bridging finance or pay penalties because you haven’t got the funds from your sale.
Selling to buy
If you are selling with the intention of purchasing but haven’t found a new property be very careful that you are not selling too low and that you will be able to purchase the type of property you want for the price you have in mind. It can be distressing to have a sale you are committed to only to find you can’t find a better property to move into or even one as good at the same price.