Buying a property: how the process works

Room 1

The stages of buying a property

The Western Australian guide sets out the process as a run of stages: researching the market, working through costs and finance, inspections, property documents, the buying options, sale and loan contracts, and what selling agents tell buyers. The guide asks buyers to think about the kind of property they want, whether an established home, an apartment, a unit or vacant land, and to list the areas they prefer along with the features that matter to them.

HomeSeeker SA gives the South Australian stages in order: saving for a deposit and the other up-front costs, seeing how much can be borrowed, choosing a home loan, talking to a lender or a broker, obtaining pre-approval, finding a home, bargaining with the seller's agent, appointing a conveyancer, putting in an offer and signing the contract of sale. HomeSeeker SA asks buyers to think about why they are buying, to tell apart the features they cannot do without from the ones they could add later, and to stay within their spending range, looking at nearby suburbs when the one they want costs too much. HomeSeeker SA contrasts a new build with an established home. A build can take 8 to 12 months and typically brings extra spending on landscaping and fittings, while an established home often settles in under three months.

Room 2

Deposits, loans and the cost of buying

HomeSeeker SA describes the deposit as the up-front sum paid to a vendor to secure a purchase, often quoted as a percentage of the home's cost. It says requirements differ between lenders, with some accepting as little as 2%, and that a larger deposit shows a lender that a buyer saves and manages money well. On the open market in South Australia, it says a deposit of at least 10% is likely unless the contract says otherwise.

Up-front costs listed for South Australia include stamp duty, Land Services SA fees, loan establishment fees, legal and conveyancing fees, and building and pest inspections, HomeSeeker SA says. It lists ongoing costs such as insurance, maintenance, water bills, council rates and strata fees. The Western Australian guide names legal and settlement fees, loan establishment fees, transfer duty, inspection fees, moving costs, insurance, rates and maintenance, and points to a first homeowner grant and a home buyers assistance account. HomeSeeker SA says first home owners in South Australia who qualify and buy or build a new home can get the First Home Owner Grant, along with stamp duty relief.

HomeSeeker SA sets out what a lender weighs: credit history and job status, the savings going towards a deposit, the ability to keep up repayments, any property offered as collateral, and market conditions such as interest rates and how large the loan is. It explains that pre-approval lasts three to six months and helps set a spending range, and that a loan consultant is associated with a bank or lender while a broker can draw on loans from many lenders and is paid through a fee or commission from those lenders, so a borrower probably does not pay the broker directly. It also describes principal and interest loans, interest-only loans, fixed rates locked in for a period, variable rates, offset accounts and redraw facilities.

Room 3

Inspections and property documents

HomeSeeker SA advises looking past the interior styling at an open inspection and checking for water stains, corrosion and mould, sagging ceilings, leaks or rising damp, large cracks in the walls and roof lines that run straight. Cracks wider than 2.0 millimetres are a concern, it says, and should be looked at by a qualified building inspector. It adds that location matters, including a nearby major road, a noisy pub or factory, and the distance to schools and public transport.

A building and pest inspector can be engaged once an offer is accepted, HomeSeeker SA says, with the inspection written into the offer as a condition of sale. It suggests asking trusted people for recommendations, checking reviews, seeking a few quotes, and confirming what each quote covers and how long a report will take. Pest inspectors in South Australia are licensed, it says, while building inspectors need no particular licence, though a registered architect or licensed builder has met qualification requirements.

The Western Australian guide points to Landgate documents that carry detail about a property. A Certificate of Title sets out the mortgage and the land boundaries and any restrictions on how the owner can use the land, such as footpaths and sewage and electricity lines. A property interest report covers legal restrictions and responsibilities, including heritage listings, zoning and environmental or government restrictions. A licensed agent or sales representative may provide copies free or at low cost. The guide also notes a six-star energy efficiency standard for new homes and says sustainable features in a pre-owned home can lower living costs and greenhouse gas emissions and raise a property's value.

Room 4

Agents, conveyancers and others who help

The Western Australian guide sets out three ways to buy: representing yourself, which means finding the property and negotiating both the amount and the contract terms; hiring a property finder, who gathers listings based on a buyer's criteria but is not licensed in the state and cannot negotiate a purchase; or using a buyer's agent. In Western Australia, the guide says a buyer's agent has to hold a real estate agent's or sales representative's licence in that state, or hold a licence from another state or territory and work in Western Australia, and can research properties, negotiate, arrange inspections, explain contract conditions and watch over settlement on the buyer's behalf.

The Western Australian guide says buyer's agents in the state quote a single fee that includes GST, and that the fee may take the form of an engagement or activation charge, a set charge for tasks such as bidding at auction, or a percentage of the amount paid for the property. It describes conjunctional agents, known as 'buyer managers', as acting under the seller and bringing buyers to properties, making offers on a buyer's behalf to the seller's agent, and sharing the seller's commission with the selling agent. The guide says a buyer who is not paying an agent to help with a purchase should assume that agent is working for the seller, and that agents have to tell would-be buyers anything that might affect their choice, such as a property's use as a drug laboratory, structural problems, planning restrictions or hazards such as asbestos. The Western Australian guide says a buyer's agent may only give financial advice if they hold an Australian Financial Services licence.

HomeSeeker SA explains that a conveyancer is appointed by the buyer and protects the buyer's interests, doing Certificate of Title searches, inquiries of government departments and local councils, and preparing and lodging legal documents. It lists questions worth putting to a selling agent in South Australia, including why the property is on the market, how long it has been listed, when it was built, and the settlement terms the owners want. It also notes that a buyer at auction in South Australia pays a 10% deposit on the day, that a deposit cannot legally exceed 10%, and that the money sits in the real estate's trust account until settlement.