Buying a property can be daunting, whether it be your first home, an investment property, or your dream family home. It is likely one of the most significant financial transactions a person will engage in. Yet, at Attwood Marshall Lawyers, we are often presented with buyers failing to prepare for it adequately. Attwood Marshall Lawyers Property and Commercial Lawyer, Aimee Turner, discusses common mistakes made by buyers and how to mitigate them.
1. Signing the dotted line too early
In a competitive market, buyers will often experience a fear of missing out and proceeding to sign a Contract for Sale under pressure. Unfortunately, there are often dire consequences linked with this further down the track, which could have been avoided by simply obtaining pre-signing advice from a property lawyer.
When entering a Contract for Sale, pre-signing advice is crucial. A property lawyer will read the fine print, advise of any issues they may foresee, and recommend additional special conditions that may be beneficial to include whilst taking each buyer’s needs and intent into consideration. Minor errors in a Contract for Sale can lead to significant setbacks, and hidden clauses can result in unexpected expenses.
2. Not obtaining pre-approval
When making an offer on a property, you want to be aware of the amount of money a lender will lend you so that you know how much you can spend. As a result, you can place offers confidently and reduce the chance of missing out on your dream property. Additionally, a buyer with pre-approval may be more appealing to the seller of a property in comparison to a buyer without pre-approval.
A pre-approval will outline your price range and state the maximum amount you can borrow. A pre-approval is to be contrasted with unconditional approval as generally, a pre-approval will be subject to a few conditions, such as a valuation of the purchased property. Consequently, it is still recommended that a proposed Contract for Sale include a finance condition even where pre-approval has been obtained.
3. Failing to conduct due diligence
Many buyers are unaware of the opportunity and benefits of conducting due diligence. Due diligence varies and can be tailored to each separate buyer’s needs but is commonly missed.
Simply put, due diligence is a means of doing your homework on the property being purchased. This may include, but is not limited to, research on the neighbourhood, the likelihood of flooding in the area or any planning controls and policies in place. In addition, we often recommend that buyers conduct building and pest inspections and review any applicable Strata Reports.
Building & Pest Inspection – Although you may physically inspect a property yourself, there may be structural and/or foundation issues or pest infestations that can only be identified by qualified building or pest inspectors. Being aware of such issues may provide you with a better idea of how much a property is really worth to you and how much you’re willing to offer. The team at Attwood Marshall Lawyers can refer you to a list of building and pest inspectors we often work with.
Strata Report – If you are purchasing a strata title property, such as an apartment or townhouse, it is recommended that you obtain a copy of the Strata Report. A Strata Report may reveal the following:
- The age and condition of the building
- The balance of the administrative and sinking levy funds
- Any upcoming works to be conducted
- Any upcoming special levies to be paid
Our property lawyers can obtain copies of relevant Strata Reports and review these for potential buyers.
4. Not realising that the negotiated price is not the full cost
Frequently, buyers will purchase a property and not be aware that there are multiple additional costs on top of the purchase price. It is imperative that you are aware of these costs or speak to a professional to gain further insight concerning this. Costs in addition to the purchase price may include, but are not limited to:
- Transfer Duty
- Registration Fees
- Legal Fees
- Mortgage Insurance
- Loan Application Fees.
Factoring in these associated costs may reduce hurdles and create a more streamlined transaction process as unexpected outlays along the way are mitigated.
5. Not using an expert
The transfer of a property from one person to another is a legal transaction, and several processes must be followed in actioning this. When it comes to engaging in this type of transaction, it’s essential that an experienced property lawyer is engaged. An experienced property lawyer will assist in reviewing contracts and other documentation throughout the process, negotiating a fair deal, meeting contract deadlines, liaising with all relevant parties and much more.
Many people are unaware of the difference between a property lawyer and a conveyancer. Both property lawyers and conveyancers are qualified to act in a conveyancing transaction. However, a conveyancer will only specialise in the transfer of ownership. In contrast, a property lawyer holds an extensive range of legal skills, which can greatly advantage throughout a conveyancing transaction.
Property lawyers and conveyancers will generally charge a fixed fee to act in a conveyancing transaction. Commonly, the fixed fee of a conveyancer is less than that of a property lawyer. The reason for this is that a conveyancer is restricted to acting only in the transfer of ownership and is unable to provide legal advice on complex legal matters that may arise throughout a conveyancing transaction.
Both are qualified to act for you in a conveyancing transaction. However, the primary difference is that a conveyancer only specialises in the transfer of ownership of property between parties. In contrast, a property lawyer has a more extensive range of legal skills that will give you a greater advantage throughout the conveyancing process.
Most lawyers and conveyancers charge a fixed conveyancing fee. Conveyancers generally offer a cheaper conveyancing fee but are only limited to providing conveyancing work. They cannot provide advice in complex legal matters, and in most cases, you will get what you pay for.
If you want peace of mind that if something goes wrong with your conveyancing matter, you are adequately protected and have a qualified legal professional to give you advice and guidance, you are better off letting a property lawyer handle your transaction.
6. Not including suitable terms and conditions in the Contract for Sale
It is common for buyers to be presented with a basic contract prepared by a sales agent, which is not tailored to a buyer’s needs or wants. More commonly, the team at Attwood Marshall Lawyers see the consequences that result from buyers signing these ‘basic contracts.’
The terms and conditions of a Contract for Sale can be tailored to suit the circumstances of each buyer. Each buyer and seller’s circumstances are different, so there will always be varying matters to consider.
Special conditions are drafted to meet the needs of each party. They are annexed to the Contract for Sale, which differentiates from and is in addition to the standard conditions typically found in a contract. It is common practice to incorporate special conditions, but they may differ from contract to contract depending on the circumstances being addressed and the parties’ interests being met.
Attwood Marshall Lawyers – we can help you avoid making costly mistakes when purchasing property
Attwood Marshall Lawyers offers FREE pre-signing Contract advice to buyers and sellers in Queensland. Our lawyers can explain the contract terms and conditions to the buyer or seller before signing, and we can further advise on any need to draft additional special conditions. It is often too late to make changes to a Contract or for one party to change their mind once both parties have signed.
For advice when purchasing or selling a property, contact our team by calling Property and Commercial Department Manager Jess Kimpton on 07 5506 821 or mobile 0432 857 300. Alternatively, email email@example.com
Our Property and Commercial Lawyers are available for appointments at our offices located in Coolangatta, Robina Town Centre, Brisbane, Kingscliff, Sydney and Melbourne. If you require our assistance outside normal business hours. Additionally, our Robina Town Centre office is open Thursday nights until 9pm and Saturday mornings from 9am until 12noon.
Signing a Contract of Sale to buy property without getting legal advice could cost you your life savings
Looking to buy property? 5 things you should know before signing a QLD Residential Purchase Contract