The logistics of a property purchase
Purchasing property can be an exciting time, whether you're picking up an investment property to rent out or finalising a deal for your very first home – a place for you and your family to treasure for years to come. In the whirlwind of excitement, it can seem like a bit of a buzz kill to get bogged down in the logistics side of things when you'd prefer to focus on what shade the bedroom curtains should be. The details are very important though, and, especially if it's your first time through the process, you'll want to make sure that all of the i's are dotted and the t's crossed.
Of course, one of the best ways to make sure you've ticked all of the boxes is to work with a property buyer's agent, but it never hurts to be well informed yourself. In this article, we'll run through a few different aspects of the process that can catch out first-time buyers. Read on to find out more about the logistics of purchasing property.
Pre-purchase inspections and reports
The paperwork side of things doesn't start when you sign an agreement. You'll want to be thorough every step of the way, and that means having a full inspection of the property conducted before you commit to buying. This is all part of the due diligence that needs to be carried out before tabling an offer, which should be kept separate from any emotional attachment you might have to the building. Beautiful wallpaper, tiling and fixtures may pull at your desires, but they can hide serious structural flaws that the untrained eye might never notice.
A qualified building inspector can prepare a comprehensive report that covers everything from the wiring and plumbing to checks for rot. This report is absolutely critical for peace of mind, and you never know, it may give you a bit of negotiation power when it comes to price.
The word 'escrow' can strike confusion into even the sturdiest of hearts.
For first-time buyers in particular, the word 'escrow' can strike confusion into even the sturdiest of hearts. What does it mean? How does it work? Perhaps most importantly, does it protect me? While the specialist team at Cohen Handler can help to demystify any specific questions you might have, in general, escrow doesn't have to be a complicated process.
In a nutshell, escrow 'opens' when you sign a purchase agreement with the property seller and make an initial deposit. The money will go to a neutral third party (an escrow company or agent), who will hold it until all terms of the purchase agreement are met. The specifics may vary from case to case, but typical processes that take place during this phase are transferring the title, repair work, organising insurance and the securing of financing. Once all the conditions have been fulfilled and your loan has been approved, the escrow 'closes' and you'll be the proud owner of a new property.
Don't forget the tax
At this stage, it's easy to get a bit carried away and let your mind run rampant with thoughts of moving, decorating and renovating. Before you do any of that though, you'll want to make sure that you're all square with the taxman. This involves settling your stamp duty – a step of the process that can catch out unsuspecting buyers. Essentially, stamp duty is a tax levied by Australian states and territories on all property purchases.
The amount may vary depending on the property price, location and your intended purpose, so it's always worth researching it in advance so you aren't caught out. If it's your first home, you may be eligible for exceptions or concessions when it comes to stamp duty, so make sure you've checked that before paying anything.
Home ownership isn't a quick process, but it certainly doesn't have to be complicated or intimidating. With a little bit of knowledge and the help of the right team, you can get through it without fuss and then start worrying about the perfect shade of blue to paint your front door.