Looking Jargon Buster

Let’s turn real estate-speak into real language as you hunt for your home.

Buying

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Buying Jargon Buster

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The final checks

Before you sign on the dotted line, know exactly what you need to cross off your pre-purchase checklist.

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You’ve made the winning bid or offer! What happens now?

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8 min read

You’ve made the winning bid or offer! What happens now?

You did it! Whether you bid the winning bid on auction day or you’ve made an offer the seller couldn’t refuse, you’re one huge step closer to the house of your dreams. But it’s not time to pop the bubbles just yet. Here’s what happens next, from the moment your offer is accepted right through to settlement.

Straight after the win

Congrats, you! But heads up: in a private treaty, there’s a risk of what some people call ‘gazumping’, which is when a higher offer comes in after yours has been accepted and the agent is obligated to pass it on to the seller. So be prepared to increase your offer if you need to – or walk away if the higher price is out of your budget. (Note: You can’t be gazumped once both parties have signed and exchanged the contract for sale if this is part of the process of sale in that state.) If you’re at auction, be ready to sign a contract and pay a deposit (around 10%) up front. (Remember, there’s usually no cooling-off period at auction, find out more about that in a sec.)

Committing to the contract of sale

This is when things get official. You’re almost ready to sign (after you do some double-checking – see the next step). After all, no sale is a done deal until you’ve signed and exchanged contracts with the seller and paid the deposit (if contract exchange is part of the process in the state you are purchasing in). But first, consider getting those contracts reviewed by a conveyancer or solicitor. The pace of this step can differ between sale types: for a private treaty, you might take time negotiating changes or adding conditions to the contract. If you’re the winning bidder at an auction, you might be able to negotiate some aspects of the contract, like the deposit amount, but most likely you’re signing on the dotted line right then and there (unless you were able to negotiate some terms prior to auction, speak to your solicitor or conveyancer). Around this time, make sure to take note of any conditions on the contract that you’ll need to fulfil between now and settlement.

Looking twice at legal checks

Just that signature and we’re done? Not exactly. Now’s a good time to double-check the details of the contract before you do go ahead and sign. You’ve been through this with your conveyancer but it’s worth cross-checking things like zoning and council certificates (how the property is zoned can affect how you use it); nitty-gritty stuff like drainage diagrams or a plan of the land; and importantly, the title, which confirms who currently owns the property and whether it has any encumbrances (such as ‘easements’, like a shared driveway or access to essential infrastructure that others need to use and can’t be blocked, or other restrictions). This double-checking step is part-and-parcel with the step of reading and signing the contract.

Considering cooling-off periods

A cooling what now? In a private treaty, this is a set amount of time you have to change your mind and withdraw from the sale without big legal or financial consequences. The period starts on the day you sign the contract, and the amount of time you have varies from State to State (again if contract exchange is part of the process in the state you are purchasing in). It can be anything from no time at all, like in Tassie, to five business days in New South Wales, Queensland and the ACT. (Sellers may sometimes ask for the cooling-off period to be waived so that the contract for sale is binding immediately on its signing and exchange.) At auction, though, a cooling-off period is usually not a thing, so be warned: being the winning bidder comes with a commitment to buy then and there.

Facing up to finance approvals

You might have rocked the auction with pre-approval in your pocket or succeeded at private treaty negotiations with an offer subject to finance – now what? First up, send your lender a copy of the contract of sale to get the ball rolling. Try and have all the most recent and relevant documents at the ready, too, like your ID, details of your income, and a breakdown of your assets and liabilities (it’s likely your lender will have given you a heads-up about which documents you’ll need for this step).

Keep in mind that pre-approval and subject-to-finance are a bit different, too. For one, pre-approval means the lender has agreed to loan you the money in principle but hasn’t committed 100%. They’ll factor in a few things before your pre-approval can become full approval, such as changes to your circumstances (like a loss of employment), financial improvements you need to make (maybe paying down a little more of that credit card debt or reducing the maximum limit), a property valuation, and more. If you’ve made an offer subject to finance, this means you have time to organise the loan after you’ve made the offer. If your finance falls through, you can end the contract. (Note: some sellers may not accept your offer to buy their property if it is subject to finance.)

Investigating inspections

If you’ve made a private treaty offer that’s subject to inspections (meaning you’ll officially buy once you’re satisfied with any building, pest or surveyors’ inspections), now’s the time to get them done. If they’re all good: woo! If they come back unsatisfactory, you might be able to back out.

Celebrating settlement day

It’s been a few weeks since you signed on the dotted line (maybe four, maybe more!) but today’s THE day. Today, your solicitor or conveyancer meets with your lender and the seller’s representatives to hand over documents, transfer the funds and complete the sale to make the home officially yours. Not to go too deep, but your lender will register a mortgage against the property when they transfer the funds to the seller. And your solicitor or conveyancer will make sure that any existing mortgage on the property is discharged (removed, basically), that anyone else with rights to the property is out of the picture and that the transfer of the property is registered in your name at the land registry or titles office (these have different names in different States).

Now *deep breath* unlock the door and step inside your new home.

Buying

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Buying Jargon Buster

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So you’ve found the perfect place: find out from an expert what happens next

So, you’ve found the perfect place to make your first home. This will probably be one of the most intense times in your life – intense and exhilarating! It’s that time between falling in love and committing to buy, either at auction or private treaty, where time compresses and so, so much happens. It can feel overwhelming, a whirlwind of emotions and required brain power. Before you take this step, we thought we’d share some things to think about. We asked established real estate agent Kelly Santos to give us a zoomed-in picture of this part of the process, to help you make the right moves when you get there.

Hi Kelly, thanks for taking the time. Before we talk about what will happen after you’ve found a home you want to make your own, what are some general things to consider about this time?

Buying your first home can be overwhelming, and there’s a lot of emotion involved. So it’s key to do extensive property research and your due diligence. You really want to assess whether the property is right for you. I always say to buyers that you’re never going to get a 10-out-of-10 property, but if it ticks 8 of those 10 boxes, go for it. It’s also easy to fly through inspections and get really excited but not actually look at things critically. So take a checklist with you.

And it’s true that a lot of first home buyers can often be wary of real estate agents, but it’s really important to build a relationship with them so you can ask the right questions. So much of the home-buying process benefits from communication with your agent.

What’s the first thing a first home buyer should do when they’ve found the place they want to buy?

If you’ve found a nice place that’s ticking all the boxes from your checklist, the next thing you want to do is get a strata report, or your pest and building report, and review it.

A strata report is for apartments or townhouses. It will tell you the financials of the block and give you an outline of how the building is maintained – what’s been done so far, what’s coming up, and how much is sitting in the sinking fund or the capital works fund. That fund holds the money that is used when the building needs maintenance, repair or improvements.

With a freestanding home, you might need building and pest reports. These evaluate if the building itself is structurally sound and if there is anything else that’s needed, and the pest reports outline if there has been any termite damage or other pest problems.

If those reports check out, and you’re going to put in an offer or go to bid at auction, then it’s time to get your contract of sale reviewed by a conveyancer or solicitor. And when a property is not being sold at auction, it may be possible to offer a contract subject to satisfactory building and pest inspections.

What advice do you have for a first home buyer who’s trying to get their head around the contract of sale? Any tips or watchouts?

Don’t try and do it yourself! It really needs to be reviewed by a conveyancer or solicitor. Sure, you can look for key things – say, if you’re buying an apartment, you can see the strata plan and it can tell you the size of the apartment, what comes on title, and so on. But ultimately, with clauses and the legal details, a solicitor or conveyancer is worth every single dollar. Leave this to the experts.

How should a buyer prepare themselves for different types of bids or offers? What are the things to know?

First home buyers often have ‘conditional’ home loan approval, and that can mean your offer will be subject to finance. In this case, this means you shouldn’t be buying at an auction. If you want to, you really want to double check with your lender that you’re in a position to do so.

So, in a way, a private treaty tends to be a nicer way for first home buyers to buy, but making an offer kicks off the negotiation. This is where it becomes really important to be having conversations with the real estate agent. You want to say things like, “Great, we love the property. What’s the price feedback been on the property?” And: “What would take it off the market today? We’re keen.”

This step will take you further down the road to snagging that property before someone else. Keep in mind that, depending on the market and what state you’re buying in, there are different ways to negotiate at private treaty, like expressions of interest or, in some cases, a best-and-final offer scenario where an agent can say, “We have a few parties interested in the property. To condense the negotiation process, by 5pm today put your best-and-final offer forward in a closed envelope.”

Sticking with private treaties for a moment, what happens after you’ve made an offer? It’s not over yet, right?

Be prepared for the negotiation. I always say to a first home buyer: “Leave yourself a bit of wiggle room. You want to be able to have a bit of rope to play with.” It’s very rare that the first offer that you put forward is going to be accepted.

And once you make that offer, be ready for things to move quickly. You want to make sure that you’ve given your solicitor or conveyancer notice with something like: “Hey, I’m about to put in an offer on a property. My intention is to buy it. Can you review the contract?”

It’s all about making sure that all your ducks are in a row. You can get so caught up in the negotiation process that it’s important to step back and make sure you’re factoring in things like conveyancer and solicitor costs, stamp duty & transfer fees, your building reports or your strata reports, any levies and maintenance costs. Keep these in mind once the negotiation process starts.

So private treaty involves offers and negotiation. What do you need to keep in mind in case you make a successful bid at auction?

When that hammer falls and you’re the successful bidder, there’s no turning back. You have to be prepared to pay the agreed deposit (usually between 5 and 10 per cent) . You need to make sure you have access to those funds in the form of a bank cheque or electronic funds transfer to provide that straight away to the agent. You will be signing the contract then and there, too. So make sure that any changes to the contract have been agreed upon prior to the auction. The last thing you want to do after successfully winning the auction is say, “Oh, we want to make changes to the contract.” It’s too late. You have to have those changes agreed to before the auction.

Thanks for the chat, Kelly. Any final words of advice?

In the end, whether you’re buying at auction or private treaty, and wherever you are in the process, I always say to get a second opinion from a family member or someone who has done it before. It’s always smart to get another opinion.

Also, connect with a good real estate agent and help them guide you. A good agent loves helping first home buyers. I’ve got a lot of clients who were first home buyers and we’ve now upgraded from their one-bedroom apartments to freestanding homes with kids in tow. The more you understand from them, the better your position will be to put forward an attractive offer to the seller.

Kelly Santos’s six tips for being ready to buy

• When inspecting a place that looks like “The One”, avoid emotion, think critically and measure it up against your checklist.
• Make sure your inspections and reports are completed and checked over.
• Always have a conveyancer or solicitor review the contract of sale.
• Be ready for things to move quickly once you make an offer.
• If you’re making an offer at private treaty, leave yourself wiggle room for negotiations.
• Only proceed to auction when you know you have your finance and contract sorted.

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Getting ready to bid

Auction time is a whirlwind, but preparation pays. Here are four steps you can take to keep your cool so you can rule.

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What’s the difference? Private treaties versus auctions

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First home buyer cheat sheet

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Getting ready to bid

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Real Estate agents

Kelly proves that agents are human and that asking them the right questions can help you be a better property player.

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What’s the difference? Private treaties versus auctions

So you’ve found your dream first home. Huge! Let’s get it. Not so fast, you… Before you can make it yours, you’ll need to pay attention to how it’s being sold – because the two main selling styles are pretty different. Will it be an auction or by private treaty? Does it matter? For a first home buyer, there’s a chunk to know and understand about how each of these selling styles works. So, let’s go through their ins and outs.

Private treaties 101

Price

A listed price for a private treaty sale is the price (and not a range, like an auction) the vendor will likely accept to sell their property. The price gives prospective buyers a good indication of how much they should offer noting it might shift during the negotiations. This means that the listed price could be an accurate reflection of what you’d pay if you made an offer and were successful – so you can be more confident searching within your budget. Of course, there’s paperwork and negotiations (if you’re up for a haggle), but if you fall in love with a place and the listed price is right, then you’re closer to living that first-home dream.

Cooling-off period

Got a bit hot when you made the offer and want to back out of a private treaty?

You might be able to (well, in most states – Western Australia and Tasmania don’t have mandatory cooling-off periods). A cooling-off period basically means that after you sign and exchange contracts and pay a deposit on a property, you can back out – provided you’re still in the cooling off period, you offer written notice and you may have to pay a penalty fee.

So, if you hadn’t quite got all your financial ducks in a row but dived in with an offer, you might be able to step back and say, “Whoa, okay, I’m not quite ready.” You need to say this within a certain time, though, which can be anything from two to five business days, depending on the state you live in, after signing the contracts.

In some states it is possible to contract out of the cooling-off period, so check your contract carefully before you sign if you wish to preserve the cooling-off period.

Contract of sale

Whether your offer is the asking price, a little below or a little above, you’re generally in when the seller accepts it. What comes next makes it officially official: signing the contract of sale. Typically, you will have had this looked over by a conveyancer or a solicitor. You (the buyer) sign first, so make sure the right price is listed on the front page. Then the seller signs. A property is considered sold only once both the seller and the buyer have signed and the cooling-off period has passed.

Conditional or unconditional

Private treaties are different to auctions, which are unconditional (more on that in a bit). With private treaties, you have cooling-off periods and contracts that can be packed full with clauses like ‘subject to finance’ (which basically means the sale will only proceed if your bank will lend to you) or a positive building/pest inspection. You can commit to buy the property ‘subject to’ certain conditions being fulfilled. This is known as a conditional offer, and it means you agree to buy the property provided all the conditions check out. Check with your conveyancer or solicitor for guidance on this condition.

Stress levels

For some people, auction or private treaty = no stress either way. But for the auction-hesitant, a private treaty can be a little more of a steady, orderly ride.

Auctions 101

Price

As you’ve looked, researched and inspected, you’ve probably noticed that homes being sold at auction are priced by range. The property should sell for roughly within that price range, pending no surprises like a rogue bidder with cash to splash. And while it differs a bit state by state, the range is generally about 10% – like $500,000 to $550,000, for example.

This number is no guess – it’s an educated estimate by a real estate agent (because they’re required by law to give an accurate estimate), and it’s based on recent comparable sales. And since the law requires a real estate agent to be accurate with this stuff, it’s a good guide to go with. As for how price works in action on auction day, here’s something to keep in mind: once bidding has reached the reserve price (that is, the minimum price that the seller will sell for), any bid beyond that means that if you put in the last bid, you have committed to buy.

Cooling-off period

The words ‘auction’ and ‘cooling-off period’ don’t really go together in the same sentence. Yep, auctions do not have cooling-off periods. If you’re the successful bidder at an auction, then you are committed to buy. So make sure you arrive completely prepared to see it through.

Contract of sale

Speaking of commitment… if you’re the winning bidder on auction day, be prepared to sign the contract of sale and pay a deposit of around 10% then and there.

Conditional or unconditional

When the auction bidding gets going, bids are unconditional and not subject to finance (you should have finance ready to roll) or any other condition.

Stress levels

The added competition and pressure of an auction can be a bit much for some of us. That’s cool. You do you. But if you’ve found the perfect home and it’s going to auction, it will be a great help gathering as much information on the auction process as possible and getting good advice from an expert. The more you know, the easier it will be.

The biggest differences between private treaty and auction

Price

Private treaty: A price set by the vendor or seller

Auction: An estimated price range outlined before bidding for the property

Cooling-off period

Private treaty:  

Auction:  

Contract of sale

Private treaty: You sign when the seller accepts your offer

Auction: You sign on auction day

Conditional or unconditional

Auction: Always unconditional

Private treaty: Can be both, but ‘subject to finance’ is a common condition

Stress levels

Private treaty : Medium stress. However, you may have more control, as you may be able to tailor the contract to your needs via the inclusion of ‘subject to’ clauses and may have a better understanding of what you are getting into

Auction : High stress. There’s less control and the auction takes place within a couple of hours on one day, so things move quickly.

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New places, new faces: meet the who’s who of the home-buying process

From the moment you start choosing between lenders to the day you move in, you’re going to meet a bunch of new people in your home-buying journey. Let’s find out a little more about who they are, what they do and how you can get the most out of their expertise along the way.

The ING Home Loan Specialist

I’m your ING Home Loan Specialist. I’ll be there from the moment you have your first home loan question to when you want to discuss your borrowing power. I’m your go-to from when you’re ready to start your application right through to when you head into settlement. You can call me on 133 464 for your home buying needs to speak to me. I’ll be your number one contact at ING, so reach out to me for any questions or help.

The JLL buyer’s advocate

When you’re in the pre-approval period for a home loan with ING, you’ll get to meet me (if you want to). I’m a buyer’s advocate from independent property buying experts JLL Australia. We’ll have a 30-minute chat, where you can throw all sorts of questions at me, like: am I buying in the right area, how do I negotiate, how do I make an offer, what’s the difference between private treaties and auctions, how do I deal with real estate agents, and more – way more. I’m here to help give you a better chance of finding and securing the home of your dreams.

The real estate agent

I’m your real estate agent. You’ve either chosen me to help you find your first home or you might’ve fallen in love with the house I’m helping the vendor (the owner, that is) sell. I’m the person who helps you and the seller do important things like negotiate on price. I can also help you find a home, if you haven’t yet. You can ask me about things like recent sales in the area, why the seller is selling, whether there are any issues with the property, how long it has been on the market – and you can even ask me for the suburb’s profile to find out about things like schools and transport.

The building inspector

I’m a home (or building) inspector. The most important thing I do is protect you from buying a house that has underlying issues that you might not notice when you visit yourself. I look for things like structural issues, faulty roofs, rising damp, electrical problems, safety issues and pest damage. Basically, I look for a whole lot. I’ll even offer advice on repairs, including their potential costs.

The conveyancer

My time to shine is when you’re deep in the settlement nitty-gritty, but you can bring me on to do things like review a property’s contract of sale before you make an offer or get geared up to bid. But mostly, I handle the transfer of ownership – the process to legally hand over the property from the seller to you, the buyer. I wrangle the paperwork and handle the documents. I also do things like check on titles and check if there’s any debt on the property, but my focus is on making sure settlement goes through nice and smoothly.

The solicitor

Hi! I’m a solicitor. You can go with a conveyancer or you can go with me. I basically do the same tasks as a conveyancer, but with a little difference. Because of my legal background, I generally have a broader knowledge of the law. The conveyancer and I are both perfectly qualified to help with property transactions, but consider working with me for property transactions that might be more complex or risky, or if you need additional legal advice.

The buyer’s agent

I can be a huge help in your home-buying journey. I’m a buyer’s agent and I am on your side. Sometimes it can feel like things are stacked against buyers in the property market, but that’s where I come in. I’m licensed to help you buy your first home – and the kind of help I can offer includes searching, evaluating and negotiating (even bidding for you at auction!). So, while real estate agents are on the seller’s team, I’m completely in your corner, future home buyer.

The depreciation specialist

Most of you won’t come across me, but I play an important role for anyone who is investing. I can help you save money and improve your cash flow by discovering property tax depreciation deductions for you. I’m here to help you make the right claims at tax time so that you can maximise your tax savings and get the most out of your investment, investor.

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In it to win it: here’s how to tackle buying at auction

Straight talk: you can choose your future dream home, but you can’t choose how the seller wants to sell it. So, if you fall head over heels in love with a place, it’s a good idea to be ready for how it’s being sold, whether that’s through a private treaty or at auction.

Private treaties are fairly straightforward, but an auction is bit of a different ballgame – it can be sporting, competitive and way intense. But no matter whether you get pumped up at the thought of battling it out on the footpath or prefer a cool-headed negotiation, a little auction preparation can go a long long way.

It’s all about planning ahead, thinking through your auction-day tactics and knowing exactly what to do in the heat of the moment. Here are some handy tips to handle the auction action and have a better chance of nailing the winning bid, your way.

A few months ahead: starting your auction prep

Revel in research

Inspect as many properties as you can in the area you’re looking to buy in. Find out how much they’re actually selling for (not just the asking price). Hit up local real estate agents – they’re a great source of this information.

Head along to a few auctions to get a feel for how they run. You’ll experience the atmosphere, how people bid, how different agents operate – plus, seeing how much the properties sell for (or don’t sell for) can help with your price research.

This price probing can give you a better idea of what a property you’re interested in is worth in the market. And it will help you discover your upper limit (because you’ll see how much properties you like are going for) when you start shopping seriously.

Think about preparing with pre-approval

Auctions are different to private treaties in a couple of big ways (and not including the auction-day action). If you win at auction, there’s no cooling-off period and you pay a deposit straight away – usually 10% of the purchase price. So, you might want to think about having your home loan pre-approval sorted ahead of auction day and the deposit amount ready to hand over. Also, pre-approval, depending on the lender, could be valid for up to 90 days, so there’s no harm getting it well before you think you’ll be ready to get your bid on.

Initiate inspections and covet those contracts

If you’ve found a place you’re interested in, and you’re willing to bid, you’ll want to make sure you get all your inspections done (such as pest and building) and reports read (like strata reports, for one) before auction day. And ask the agent for a copy of the contract in advance so you can show it to your solicitor or conveyancer for a once-over. They might request some changes, or they’ll let you know that the contract is good to go. This is a vital step before auction, in case you do land the winning bid and need to sign on the day (yikes but woo!).

Consider making an offer before auction

If you’d prefer not to go to auction, or you love the place so much you want to try to make it yours asap (for a price you’re comfortable with, of course), you could consider making an offer before auction day. This can be a good strategy in a buyer’s market, when there may be lower interest in the property. You risk paying more than you might at a slow auction, but it can be a good way to make the house yours with a little less fuss.

A week (or so) out: talking tactics

In the weeks and days leading up to the auction, play your cards close to your chest when you talk to the seller’s agent. Don’t tell them too much – especially how much you’re prepared to pay. Holding back this info can help improve your negotiating position. It also helps to make sure the seller’s agent doesn’t use the info to sway other interested buyers.

As far as bidding tactics go, there are lots of different opinions out there – but you have to do you! So prepare yourself to go in with an approach you’re comfortable with. Some say to settle the nerves by bidding early, starting low and going slow to set the pace and avoid bidding wars. Others say to wait until the reserve is passed and the property is officially on the market. In the end, it’s all about what works best for you.

Today’s the day: let’s get it!

Register to bid

You can’t just turn up when the auction starts and start screaming bids. You need to register as a bidder if you want to be a part of the auction. Make sure you bring your ID – a drivers licence is fine.

Keep things on the down-low

The agent isn’t the enemy, but they are on the seller’s side. Ask them questions, but keep things like your budget and your emotions about the property close to your chest.

Stand up and be counted

Nudge to the front of the pack so the agent can see you easily. And angle yourself to check out the other bidders’ body language and facial expressions so you can get a read on them.

The waiting game

The agent will open the auction by asking for an opening price. As we said, you can start low and go slow or wait for the reserve to kick things into gear. Just remember, the property is only ‘on the market’ when the reserve is reached.

How to bid

A little swagger doesn’t hurt to make sure the agent knows you’re there. When calling out the number, do it in full numbers (i.e., “three hundred and one thousand”, not “301K”). This sounds impressive, shows other bidders that you’re confident with the price you’re putting forward, and hopefully scares them off. 👻

What to do if the property ‘passes in’ (aka doesn’t meet the reserve)

You could be about to snag yourself a bargain. If no one bids high enough to meet the reserve, the agent will seek more bids in an attempt to save the sale, and the closest bid to the reserve will get the chance to negotiate with the seller. If there are no bids at all, the agent might consider offers after the bidding has finished (but this may depend on where you live).

Bring a buddy

We’re all liable to get caught up in the moment, so take a friend along. Ask them to watch over you, keep you accountable and make sure you don’t let your emotions push you above your price ceiling. Afterwards, buy them a nice dinner.

Don’t forget the deposit

Hey, so, you won! You’ll need to hand over a deposit right then and there. Most people come armed with a bank cheque for 10% of what they’re prepared to pay for the property. Whatever you do, don’t let it blow away in the wind.

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