Buying a House in NSW might feel daunting, but it doesn’t need to be. We take you through the process step by step and provide you helpful tips along the way…
What are the major steps for buying a house in NSW?
So you’ve decided to buy a house in NSW - congratulations! But if this is your first home purchase, or it’s been many years since you have bought a house or you’ve previously purchased in another state you might be feeling a bit overwhelmed and not sure where to start.
Relax, because MMJ Real Estate are here to help. We’ve put together this helpful guide to buying a house in NSW which will guide you through the process step by step.
In a nutshell - there are roughly 5 crucial steps to buying a house in NSW:
- Organise your finance
- Search for and inspect properties
- Submit an offer
- Organise legalities (solicitor or conveyancer)
- Negotiate contracts and place a deposit
We’ll describe each of these steps in more detail in the sections below.
Buying a House in NSW: Step 1 - Organise your finance
Before you can purchase a home, you’ll need to organise finance.
According to Corelogic's Home Value Index, in Jul 2020 the average price of a home in NSW (Sydney) was recorded as being $1,122,000. Of course most people don’t have this kind of money lying around! Before you start searching around for your dream home, it would be wise to get in touch with a range of banks and lending institutes to ascertain how much you are eligible to borrow. The Department of Fair Trading has an excellent article which explains the range of finance options available to you.
Once you know what you can borrow, calculate what the repayments would be for this amount to be certain you can make the repayments - the amount you can borrow may not necessarily be within your means to repay!
This first step is quite important - you don’t want to find a house, fall in love with it and then realise it’s out of your price range. Or worse yet, actually buy the house only to realise you can’t make the repayments.
Buying a House in NSW: Step 2 - Search for and inspect properties
So, now you know how much you can borrow and are confident you can make the repayments for this loan. It’s time for the fun part - searching for your dream home!
Some key considerations at this stage include:
- Location: Obviously if you are reading this article you are interested in buying a house in NSW. But NSW is a big state - are there particular regions or suburbs you are interested in?
- What kind of property do I want to buy? House, apartment, townhouse, unit - there are quite a few options
- How many bedrooms, bathrooms, car spaces do I require?
Once you have an idea of the kind of home you are looking for and the area you want to live in - enter this data along with the price criteria into a real estate listing site. Search property for sale with MMJ Real Estate or subscribe to the Property Alerts eService and have listings sent straight to your inbox. MMJ also allows you to save properties you are interested in inspecting via our add to shortlist function which is a handy feature when it comes to contacting agents or showing significant others. Additionally, you can give us a call or send us an email to discuss your property requirements - we are here to help. Once you have your shortlist either email or call the listing agent to organise your inspection.
It’s really crucial before buying a house in NSW, that you inspect it. This allows you to rule out any serious issues, ensure the property meets your requirements and that you love it! Another option available to you is to organise for a building inspection report which is a building inspection completed by a professional who is trained to assess the condition of the property.
Buying a House in NSW: Step 3 - Submitting an offer
So you’ve done your research, looked through dozens of properties and you’ve found the one. This is truly an exciting time! But the third step in the process - putting in an offer for the property you love - can be daunting. Let’s look at what’s involved and how you can make this less stressful.
When you decide to place an offer on a property, you need to request the agent to give you a copy of the the sale contract for that property. This contract is a legal document which formally identifies the property being sold and will include a number of important documents pertaining to the property. You should pass this contract on to your conveyancer or solicitor for them to review and make sure there are no serious issues or important items missing which would prevent you from purchasing the property.
Once your conveyancer or solicitor advises you that the contract of sale is in order, it’s time to actually ‘make the offer’. When buying a house in NSW, it is acceptable to submit either a verbal or written offer. Many agents will also request a deposit to be placed at this time. This deposit does not guarantee that the property will be sold to you, and you are also not under obligation to buy the property at this stage. If the contract does not go ahead you will be refunded the deposit.
It’s quite possible that other offers will be submitted to the vendor after yours and if this is the case, the agent will keep you informed. This can be a tense time as you wait to hear if your offer has been accepted. However, if your offer is accepted it’s time to exchange contracts with the seller.
Buying a House in NSW: Step 4 - Organise legalities
Great news - your offer has been accepted! You are one step closer to realising your dream of buying a house in NSW!
The fourth step is quite a formal process as legal documents need to be exchanged and signed in order to complete a property purchase. It is absolutely recommended that you engage a conveyancer or a solicitor who specialises in property law to assist you at this stage. When selecting a conveyancer you should ensure they are licensed with NSW Fair Trading - this is a requirement by law. In addition to this, both conveyancers and solicitors should hold professional indemnity insurance which will protect you should any mistakes be made during the process.
Whether you engage a conveyancer or solicitor when you are buying a house in NSW, they should perform the following key tasks:
- Review and assess the sales contract
- Exchange the sale contract with the seller’s legal representative
- Arrange payments such as deposit and stamp duties
- Prepare the mortgage agreement
- Review any payments owing on the property
- Arrange change of title
- Represent you during settlement
Buying a House in NSW: Step 5 - Negotiate contracts and place a deposit
Now that you have engaged a conveyancer or a solicitor who specialises in property law - these professionals will act on your behalf during the contract negotiation process.
When buying a house in NSW, the exchange of contracts is what legally completes the purchase process. Both you and the vendor (seller) will receive a copy of the sale contract and you will need to sign your copy before these are then exchanged. Your conveyancer or solicitor will organise this and at this point you will also be required to pay a deposit for the property. The deposit is usually 10% of the accepted purchase price, however both parties can agree on a different amount which should be reflected in the contract.
A five day cooling off period after exchange is standard when buying a house in NSW. This period allows either party to withdraw from the contract with written notice. If you do withdraw from the contract during cooling off, you will be required to pay the vendor 0.25% of the agreed purchase price.
After contracts have been exchanged, you will then have approximately 6 weeks (this can vary from 4 - 8 weeks) until settlement. This period is typically used to finalise your payment on the property and for your conveyancer/solicitor to prepare legal documents in preparation for settlement day.
Your conveyancer/solicitor will meet with the vendor’s legal representative and both parties bank representatives on settlement day to exchange cheques and officially transfer the property over to you. And once this is done…. the property legally belongs to you! Congratulations, you are a homeowner!
And there you have it - MMJ Real Estate’s guide to buying a house in NSW. We hope this has been helpful in explaining the process and making you feel more informed when it comes to buying your dream property. If you have any questions feel free to get in touch with us as we are here to help.
If you are ready to start looking for properties in NSW,
Why not browse our properties for sale in NSW.