Albany Prestige Realty

Purchasing a home is one of the most important decisions many people will make during their lives.

This fact sheet advises you of some of the issues that may be important to you when buying a home.

In most cases, there will be a real estate agent, or their sales representative, involved in the marketing and sale of the home you want to buy.

The selling agent is engaged by the seller and must act in the best interests
of the seller, not you as the buyer.

However, the agent has a duty to tell you, as the buyer, relevant facts about the property. Ask the agent precise questions about the property. If the agent cannot answer your questions right away, then clearly ask them to find out the answers
within a specific time period. You can also contact the relevant local council and other government organisations yourself and ask them for the information.

If you are not able to make all the appropriate enquiries yourself, or want someone to act on your behalf, you may appoint another agent as a ‘buyer’s agent’ who will represent you and act in your best interests. A buyer’s agent will negotiate with the seller’s agent on your behalf. If you decide to do this, you will need to enter into a contract with the agent in the same way that a seller contracts with their agent. The REBA fact sheet Real Estate Fees – Negotiating with an Agent gives more information about contracting with an agent.

The standard property contract The standard buying/selling contract for the transfer of property consists of two sections:

1. Contract for the Sale of Land by Offer and Acceptance (commonly called the “O & A”); and
2. Joint Form of General Conditions for the Sale of Land (also referred to as simply The General Conditions).

This publication refers to the O & A which is produced by the Real Estate Institute of Western Australia (REIWA). The General Conditions are produced jointly by REIWA and the Law Society of Western Australia. These forms are widely used in the real estate industry. The General Conditions were last revised in 2002 and differ in some areas to earlier versions. It would be wise to ensure that the agent is using the latest version of the General Conditions when drawing up a contract.

The General Conditions cover important contractual obligations for both buyer and seller including such matters as the paying and holding of a deposit, settlement, adjustment of outgoings, and other payment responsibilities such as underground power and sewerage connections. It is possible to vary the contractual obligations.
You can for instance, delete or amend existing contractual obligations that form the General Conditions should you choose. The seller would have to agree with the changes if the contract is to be binding.

Note that special conditions can be added to the O & A to meet the particular needs of both buyer and seller. Special conditions may cover issues about property inspections (eg building and timber pest inspections), who pays for necessary repairs (eg the repair of a broken window, fixing plumbing, etc), or anything else important for either buyer or seller.

If the seller agrees to all conditions and the offer is accepted, there is a legal obligation to satisfy every condition or the sale may not be completed. However, before signing the O & A, you should carefully consider your financial situation and thoroughly inspect the property. These two issues are discussed below.

Capacity to pay Buying a home is generally a long-term proposition
and you need to think ahead financially. Make sure the home you buy is one you can afford.

It is common practice to require a deposit, so ensure you have the money for this. If you require a home loan, make sure your income is sufficient to enable you to meet the repayments and that you can afford the establishment fee if one is required. Interest rates can vary so you should determine your borrowing capacity before looking at any properties. Financial institutions or mortgage brokers will help you consider various financing options.

You should also be aware that property owners are required to make annual payments such as property and contents insurance, local council rates on the property and service charges for water and sewerage.

Generally, agents provide written information on property costs. In addition to ensuring you have money for moving, there are also costs associated with connecting to and using utilities such as electricity, gas and water. General house maintenance, as well as the upkeep of any lawns and gardens are other costs that should also be considered.

Home Buyers Assistance Fund

The purchase of a property itself also involves substantial costs such as settlement fees and establishment fees. If you are purchasing a property through a licensed real estate agent REBA may be able to help with some of these fees through a scheme called the Home Buyers Assistance Fund (HBAF).To be eligible to access the HBAF, the property’s purchase price must be no more than the maximum limit of $200,000. (This figure is correct at time of publication.)

To be eligible to obtain assistance under the HBAF you must be a first homebuyer and the property must be purchased through a licensed real estate agent. Ask your financial institution about the HBAF. In addition to the HBAF, the Federal Government offers first homebuyers a financial incentive through the First Home Owners Grant.

Regional offices
Great Southern (08) 9842 8366
South-West (08) 9722 2888
Mid-West (08) 9964 5644
Goldfields/Esperance (08) 9021 5966
North-West (08) 9185 0900
Kimberley (08) 9169 2811
TTY: (08) 9282 0800
Quality of Service Feedback Line: 1800 30 40 59

Further information: See the Real Estate and Business Agents Supervisory Board’s Home Buyers Assistance Fund information sheet and application form. Contact the Office of State Revenue on 1300 363 211 about the Federal Government’s First Home Owners Grant.

Finance Condition

If finance is to be arranged to purchase the property a number of general requirements apply. These requirements are shown on the bottom of the front page of the O & A. Make sure you fully understand theimplications of the general requirements.

Before signing an offer to purchase property you should be aware that there are different finance conditions contained in various versions of the O & A.
Some finance conditions suggest an offer to lend is the same as finance approval. The implication of this is that you as a buyer would be legally required to accept any loan offer even if the terms of that offer may seem unreasonable to you.

To avoid the possibility of having to agree to unreasonable conditions, you should inform yourself as to the usual terms and conditions offered by a particular financial institution before making a finance application. There is provision on the O & A form to specify the name of a financial institution (ie lender) from which you intend to seek a loan.

Only after being satisfied that the finance terms and conditions are reasonable should you make an offer on the property.
Alternatively, you may also wish to consider amending the finance condition on the O & A, either yourself or with the assistance of your professional adviser, to suit your own particular finance requirements.

If unchanged and no financial institution is specified in the O & A, the standard finance condition requirements that you should be particularly aware of are: . the “best endeavours” of the buyer must be used to obtain finance by applying to at least one lending institution (eg bank, building society, credit union); . if asked in writing, the buyer must provide written evidence that a loan application was made; . if a lending institution makes a loan offer, the buyer must immediately notify the seller (or the seller’s real estate agent) in writing; and . if a loan application is not approved, the buyer must immediately notify the seller (or the seller’s real estate agent) and provide written evidence of the rejection.

If a loan application is delayed, or likely to be delayed, for any reason, you should advise the agent as soon as possible so that the seller can be approached to consider an extension of time. Failing to obtain finance within the specified timeframe can result in the standard contract being terminated.

If a loan is not required and you have immediate access to funds representing the purchase price, the finance section should be deleted and replaced with
the word “Cash”. Those who sign the O & A should then initial this amendment.

Property inspection Always inspect a property first before making an offer by signing an O & A. You can visit the property during a home-open, or arrange an inspection with the agent at a time convenient to both you and the seller.

Adopt an objective approach during the inspection, taking into account the features of the home and its advantages, as well as disadvantages. Be prepared to put time into each inspection. You can miss important factors if you do not take your time when looking at a property.

Ask the agent detailed questions. Keep notes of the information the agent tells you and copies of all written documents, such as marketing material. Where
possible, try to obtain information about the property in writing.

It is advisable to have an independent expert (eg building surveyor, registered builder, architect, independent valuer, structural engineer or plumber) give you a report on a property you are interested in.
You can include the results of a building inspection is a condition of the O & A. If you decide to include a special condition about obtaining a satisfactory written
report on the structural soundness of the property in the O & A then the inspection should be done to Australian Standard 4349.1 of 1995.

In addition, any timber pest (termite) inspection carried out should be done to Australian Standard 4349.3 of 1998.

Further information: Contact the Consumer Protection Advice Line on 1300 30 40 54 for a range of publications on buying real estate.

What is a land title?

Land title

In Western Australia there is a Certificate of Title for each separately owned portion of land. Generally, the title includes a land description, a diagram of the land (unless it is a strata title), the name and address of the owner/s and details of encumbrances, such as restrictions on the use of the property.

For instance, an easement might be shown on the title. An easement gives permission for part of the property to be used in a particular way by another party such as Main Roads Western Australia, electricity or water utilities, or a neighbour. Examples of easements are giving neighbours the right to use part of a property to gain access to a road, or allowing a utility body access to pipelines passing through the property.

A restrictive covenant may also be listed on the title. This imposes an obligation on the owner not to use the land in a particular way. An example of a restrictive
covenant is an obligation not to use the land for the purposes of any business, or not to build above a certain number of storeys. A caveat, indicating that a person other than the current owner may have a right or interest in the land, may also appear on the title.

When inspecting a property, ask the agent about the title. The agent should have copies of the title and any other relevant documents. Check these documents yourself prior to signing the O & A. Ensure that the copy of the title has been obtained recently, as circumstances can change.

If you have any doubts about anything shown on the title documents, you should seek legal advice prior to signing the O & A.
If you have queries about any pertinent information on the title that the agent cannot answer then direct the agent to follow this up by obtaining copies of relevant documents. If the agent cannot help you, you should seek legal advice or contact the Department of Land Information. Fees will apply if you need to search for some records and obtain copies of documents.
Searches cannot be done by phone.

Further information: The Department of Land
Information Registration Advice Line: 9273 7044.