www.majesticcentral.com.au What you need to know when purchasing a residential property
What you need to know when purchasing a residential property in Western Australia. Purchasing a property: Thank you for viewing or enquiring about one of Majestic Central Agents properties. This document is designed to help Buyers understand how things work locally and what to do in the real estate buying process. Purchasing residential real estate can be a very exciting process; however, it can also be a confusing time for a prospective Buyer. We will show you as a Buyer what you will need to know about the process and your rights so you can secure a property that is right for you with minimum fuss and stress. When purchasing a property, the Agent will ask the Buyer to confirm the following details, enabling them to help in the best possible way. 1. The actual purchase price the Buyer will be paying for the property. 2. How the Buyer will settle on the property (Cash, finance or subject to sale). 3. The method by which the Buyer chooses to pay the agreed deposit. E.g. cheque/ online transfer etc. 4. The settlement period that the Buyer requires. 5. The name of the Buyer’s chosen Settlement Agent. 6. The name of the bank or financial lending institution (If ‘Subject to Finance’) with the amount the Buyer will be borrowing. 7. Any special conditions or requests that the Buyer may have so that the Agent can inform the Seller. 8. Acknowledgement and explanation of any covenants, easements or Strata details on the title relevant to the sale. Once the Agent has the above information, which is placed into a written document proforma, they are in a position to arrange a meeting with the Seller. The Buying Process: Property owners receive all types of interest –Some genuine, some not, and some in between. 1) Viewings There are two main types of viewings. i. Home Open- The property is advertised for viewing by the public at a certain time. ii. Private ‘By appointment’ viewing– A Buyer requests a separate viewing at an agreed time other than a scheduled home open e.g. Weekday, after-hours etc. Please allow a bit of prior notice for private viewing requests so that the Seller can make sure the home is ready and available to show. Both types of viewings require the Buyer to leave a name and a contact number with the Agent. This is so the Agent can follow up on behalf of the Seller. That is the Agent’s job. Please remember that the property is someone else’s private residence. As the Sellers appointed representative, the Agent has the right to refuse entry if the behaviour of a Buyer is contrary to the purpose of the inspection and not in the Seller’s best interest. Home Opens should be relaxed and nonthreatening for the Buyer. The Agent will ask a few questions about the needs and views of the Buyer relating both specifically to the home and in general. The Seller expects this and indeed this is the reason the home is open for viewing. Please don’t be offended as it is quite normal. As for private viewings, as many Sellers go to considerable effort to present a property in its best light for a Buyer, it is normal and should be expected that a Buyer provides some information or “qualify” themselves before the appointment with the Agent. Please expect a good Agent to do this. To not do this is unprofessional of the Agent. At the very least the Agent will ask what the Buyer is looking for, the price range, and timing. They will ask for a full name, contact number and maybe even an email address. This is considered best practice of a professional Agent. 2) Offers Some Buyers submit offers, whether verbally or in writing, to test the possibility of a sale but do not actually stay true with the offer. This can lead to frustration and concern for the Sellers as they try to assess who is actually a genuine Buyer. If a Buyer has interest in a property and wishes to make an offer, we recommend that the offer is fair and in line with current market value if the Buyer wants the Seller to take the offer seriously and respond in kind. This written document is called an “Offer and Acceptance” or “The Contract”. It is prepared by the Agent then signed and submitted by the Buyer, via the Agent. It can be completed in as short as 5-10 minutes. Usually, it is best to meet in person to do this, however often due to distance or other circumstances, emailed contracts are also submitted on occasion. In Western Australia, this is the only way a property can be purchased. It must be in writing on the appropriate document. I do not test Sellers with verbal or hypothetical offers. Sellers are informed at listing and have agreed that all genuine Buyers will be required to submit their offers in writing only. Agents should have the offers submitted and presented within 24 hours. Offers will be communicated immediately to the Seller. Sellers are not obliged to give a formal reply immediately or at all. At Majestic Central Agents, we educate and advise Sellers that there are risks in not providing a formal reply to Buyers within a reasonable timeframe. A. Withdrawal of an Offer A Buyer may withdraw an offer at any time up until the Seller accepts it in writing and has communicated the fact to the Buyer, through their licensed real estate agent, which in our case is the listing Agent at Majestic Central Agents. Methods of withdrawal can be any phone, text, email, or in person. However, once acceptance and communication of the “acceptance” has occurred, all parties have a binding contract. Methods of communication of acceptance are the same as the methods available to a Buyer to withdraw the offer. The final contract is binding on all parties. B. Low Offers/ Risks The selling Agent will always present all written offers. Whilst the Buyer has the right to submit any amount nominated, we recommend that the offer is fair and in line with the market value if wanting to be treated seriously by the Seller. We at Majestic Central Agents will be extremely professional and thorough when listing a property and will not overappraise to buy any listings. We only work with genuinely motivated Sellers and represent properties that are actually for sale.
Genuine written offers are always treated in kind and stand a far better chance of a positive successful outcome. There are risks for a Buyer who likes a property but is sitting back and waiting for a supposed price reduction or for something to change. Our track record over many years is that we sell a large percentage of our stock for a price close to that listed and appraised. We therefore suggest if you have any further interest in any of our listings, please let the Agent know and work with them to work on submitting an offer. C. Buyer First Right of Refusal / Being advised of other offers or an imminent sale Whilst it may appear “logical and normal” for a Seller or Agent to come back to potentially interested Buyers before deciding on an offer, a Seller is in no way obligated to do so. There are some circumstances where written offers are so attractive to Sellers or have certain conditions on them that require or deserve an immediate response. In these instances, Sellers may say “I want to take the offer now”, irrespective of any request by previous Buyers or advice of the Agent to go back to other Buyers. Ultimately, the Seller always makes the final decision as to what offers to accept and when to do so. (Buyers do not have a first right of refusal or any right to advise of a pending or imminent sale.) As a Buyer, please do not get angry with an Agent if you miss out on a property, there are always risks for the Buyer in sitting back and waiting. If you like or want a property, it is suggested you act on that motivation to avoid missing out. Please let the Agent know if you are interested in one of our properties. 3) Market Value If you require any information about recent comparable sales, how values are established in the area, or information about the market to help you frame realistic perceptions around value, please feel free to enquire or ask for a list of recent relevant sales, we would love to help. Purchasing Variables/ Terms & Options: Option 3)–Subject to Sale This is where the buyer makes an offer that is made ‘Subject to the Sale’ of another property that they own. It is not considered as attractive to sellers as it does not provide them with as much certainty. A buyer may find the willingness of sellers to negotiate other conditions such as price more difficult in the case of a subject-to-sale offer. Deposit Whether cash, finance, or subject to sale the buyer will be required to pay a deposit at acceptance to the agent, this will be held in the Agent’s trust account as a sign of good faith and commitment in the process of submitting the offer. This deposit is part of the overall agreed purchase price. If the buyer has acted according to the contract, used their best endeavours to achieve finance approval, and still receives written notification of a decline by the nominated bank, then the deposit is returned to the buyer without deduction. The same applies to a subject-to-sale offer. In the event the buyer has followed the agreed contract, acted in good faith, and cannot achieve a sale in the timeframe agreed, then the deposit will be refunded without deduction unless an extension of time is requested by the buyer and agreed upon by the seller in writing. Sellers are not required or obliged to grant these expectations. Everything is the subject of a negotiation. Joint Forms of General Conditions 2022 All properties sold in Western Australia have an automatic accompaniment referred to as the ‘Joint Forms of General Conditions 2022’. It is binding on both buyer and seller and describes in detail how things will be handled in general circumstances or in the event of a dispute. The buyer will sign when submitting an offer that they have received this document (It is a 20-page booklet). The buyer should not sign a contract without receiving this book by either hard copy or email. 4) Final Contract Once an agreement on price, settlement, conditions, etc. has been reached with the Seller, the sale can then proceed. The final agreed contract is given to all parties and processing of the contract can commence. There is no cooling-off periods that apply in Western Australia for the purchase of property. Option 1)–Unconditional Cash Offer (Not Subject to Finance) This means the buyer is making an unconditional offer. Often buyers do this to make their offer look more attractive to the seller. Even if a valuation is done by the bank in the case of a line of credit, the buyer is representing that they will be able to settle at settlement. There is no turning back. This option applies when the buyer is the successful bidder at an auction. Cash offers can have “Subject to’s” such as Timber Pest and Building Inspections, RCD and smoke alarm annexures, pool compliance, gas, electrical and water clauses, like any other type of offer. A cash offer is unconditional of the funding component. These clauses rarely result in a sale not proceeding, so cash generally means the sale is certain to proceed once the appropriate clauses are met. Option 2)–Subject to Finance If the buyer requires the bank or a lending institution to provide funding, this is referred to as “Subject to Finance”. Generally, banks want 20-30% equity in the deal, depending on the purchase price, the bank, and the relationship that a buyer has with that bank. It can take between 21 to 28 days to get formal written finance approval. We suggest that the buyer obtains preapproval from the bank before the buyer makes an offer or at least speaks to the bank or broker and advises them on the intention to buy a property and get an “in principle” go-ahead from the bank. As the seller’s agent, we will be required to ask some general questions before writing an offer to establish what degree of advancement has occurred in the applying for finance process. Again, don’t be surprised or offended by this. To not do so is incompetent and certainly unprofessional by the agent. When entering a contract ‘Subject to Finance’ the buyer is agreeing to act in good faith and use their best endeavours to apply for finance. The buyer may be required to prove that they have done that in the event of a finance decline and cannot use “Subject to Finance” as a reason to change their mind later. This is part of the standard ‘Subject to Finance’ conditions enforced in Western Australia as outlined in the contract and the Joint Forms of General Conditions 2022.
21 Kearns Crescent, Applecross www.majesticcentral.com.au Ian Barnes P 0423 123 533 E ian@majesticcentral.com.au I hope the above has been helpful and useful. I look forward to helping you get sold in the minimum possible reasonable timeframe with the best possible outcome. Thank you. What you need to know when purchasing a residential property in Western Australia. Tips 1) Get Organised If you want to make an offer, be certain that you can follow through by having the following items confirmed. P A pre-approval of finance from your bank or lending institution. P Your property sold or at least assessed for value and possible sale time. P You have a Settlement Agent selected. P Determine how you will be paying the deposit and associated costs. P An idea of settlement times required before you take possession. P Understanding the Stamp Duty due and when it is payable. 2) Building & Pest Reports As part of any process to purchase a residential property in Western Australia, it is important that you make the offer subject to a building inspection where a written report on the condition of the building is prepared for the buyer and a copy is given to the seller and agent. There are standard annexures for this purpose. Expect this to cost anywhere from $750 to $1,000 (or more depending on what you ask them, to do) and this is paid for by the buyer directly to the qualified contractor of their choosing. There are usually two components to this report. i. Is the property structurally defective? ii. Routine maintenance issues Sellers do not have to rectify every item on the report, unless it is structural. These reports are not an automatic “out” for the buyer. Their purpose is to protect you that you have not bought a lemon. Even homes that are structurally sound will have regular, routine maintenance items consistent with the age of the home. We have never heard of a home, even a brand new one, that doesn’t have some maintenance required. This is quite normal. 3) Bank Valuations Don’t be alarmed if your bank or lending institution requests a valuation by a licensed property valuer. This is normal practice by lending institutions and serves as a confirmation of the agreed sale price. Most offers above $1 Million or where there is 20% or less in equity will usually automatically be “subject to valuation” by the bank. 4) Buying at Auction If you are intending to buy at auction, all the above-mentioned must be in place. The Auction is final. If you turn up to bid and you are the highest bidder past the reserve price, the on-the-market price, you are the instant owner awaiting settlement of that property. Congratulations to you. Summary Preparation is the key. Understand your rights and obligations and have everything in place. If you follow the tips in this document, along with that of your Settlement Agent and your Majestic Central Agent, you will be on your way to securing the right home for you. If you are genuinely looking to purchase a property, the following actions can assist you in the process, and all services we can help you with. 1. An updated appraisal of the likely selling price of your property 2. Preparing your home for sale advice or tips 3. Buyer match or registration service. Let us know what you are after so we can advise of new or “Coming Soon” listings we may have available. Whether you are considering purchasing a property shortly or are currently buying a home through another company and need advice, please feel free to call me with any questions you may have. I will be happy to assist you. Thank you.
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