Do I Need Legal Advice on Property Purchases

The answer is yes you do and you need it in every case, unless of course you are legally qualified yourself.

The purchase of a property is almost always a substantial investment and there are two complex contracts involved;

  • Contract of Sale ( CoS) – these are generally specific to the state in which the property is located.   There are important differences between the states and so you need advice specific to that state’s laws.   The CoS specifies the details of the property being purchased and obviously you need to ensure that you are buying what you think you are buying.  This involves title searches etc and checks to ensure that no one else has a claim on the title.

    The CoS also details what is included in the sale ie: house fittings such as dish washer etc.  More importantly the CoS specifies the start date of the contract, the settlement date ( when money changes hands) and the “get-out dates” ie: your last chance to withdraw from a contract – these dates allow for cooling off,  building, pest inspections and for you to arrange finance.  It is vitally important that you understand that apart from the cooling off period,  these other clauses are specific and so you cannot use these clauses as a get-out just because you have changed your mind.  Many contract finance approval clauses require that you specify a lender and it is not unusual for a vendor to demand to see a letter from that lender confirming that they have rejected your application.  If you have not made a reasonable an attempt to obtain the finance you may be in breach and you really need to understand what that means.

    The CoS may also include information about  GST payable and/or the current use of the property.  This can be very important if for instance the property was not technically being used for residential purposes or if the property is being sold with tenants in possession.  If you are purchasing a property as primary place of residence it really must have vacant possession ie: no one paying rent, on the date of settlement.  Get this wrong could impact the ” main residence exemption”.

  • Mortgage Documents – once again this is a contract and as such requires legal perusal.  The mortgage contract is often weighted strongly in the favour of the lender however you have legal rights and it is important that you understand the limitations and your responsibilities.   The MFAA recommends that broker members should never attempt to provide advice to clients on what is in the mortgage contract or its attachments. It is important that you understand your responsibilities and the implications of any breach on your part.  This includes failing to make repayments but also covers things such as renovations or demolishing the house.

    One of the most common areas for confusion is the schedule of fees.  This outlines every possible fee that may be applied to the contract because if the lender does not list it then they cannot charge it.   However most of these fees only apply under specific circumstances, most of which are in your control and so will not be applied unless you cause them to be.   The fees often mention stamp duty and other charges that should not apply however if the government were to change policy and demand payment at settlement then the lender is covered.

There are many participants in the home loan process these include you the buyer, the vendor, lender’s staff, real estate agents, valuers, inspectors, tenants, accountants, conveyancers, solicitors and finally your mortgage broker.  Our role is to assist you in selecting a suitable home loan and then managing the process of successfully obtaining that finance.  We liahttps://www.peachhomeloans.com.au//home-loan-application-process.htmise with many of the other participants however we are legally and professionally constrained and so please do not ask your mortgage broker for legal or tax advice.

Your CRA – it may not pay to shop around

With the changes to the credit reporting regime coming into effect in March 2014 it is still appropriate for borrowers to get a better understanding of how the current system works and what the changes may mean.

So many borrowers run into unexpected rejections or questions from lenders due to what appears on their CRA reports and one of the most common and unexpected causes is simply shopping around for the best deal in your home loan, your credit card and even your mobile phone. That’s right you don’t need to have an unpaid default on your CRA for it to cause a disappointing outcome.

Have a look at this new interesting article on how your CRA effects your chances of success in obtaining a new home loan.

How presentation and care affects a property’s value

There are many reasons as to how properties get their value. A valuer arriving to a specific amount considers a lot of factors. One may not think that a property’s look, care and presentation matter but presentation and care actually belonged to the top factors as revealed by the valuers at propellvaluers.com.

According to propellvaluers’ Top 10 factors affecting valuation (2011), presentation and care was seventh. According to Propell’s article, “presentation and care refers to the quality or absence of maintenance, garden care, suitability and cleanliness of the property.”

For people having properties or for those new home buyers, first home buyers or property investors on the hunt for a property of their own it is best to know which part of the presentation and care mattered to valuers when they come up with the value of a property.

A property’s maintenance is one of the crucial areas considered by property valuers. Although they are not property inspectors, property valuers have been trained on what to look for in the building. Property owners should not set maintenance aside as it can greatly affect the value of the property.

Anything that is rotting is not a good sign so always look for this as one issue can lead to another one. Prevention is always better than cure but nobody would want to pay for costly repairs so avoiding one before it happens should be practiced. Always look at the other houses in the vicinity as it is one of the aspects that valuers consider. Remember that if your property is well maintained, it most likely has retained its value.

Gardens are also a good place to look at. If you’re the only jungle in the neighborhood it could go back to the thought that your property is not maintained so looking after your garden is important. Make sure that it is neat and clean. Pull out weeds and clear out dead plants. Try to be the greener pasture on the next yard. Try to keep making your property look like an inspiration.

Keeping renovations in proportion should also be practiced as the surrounding properties have an indirect effect on your property’s price. Try not be the castle surrounded by peasant houses as it could be a red flag for valuers as it could mean that you are over-capitalised for that location.

The last and most subjective factor affecting the value of a property is cleanliness. Although an objective view is required when coming up with a final price, a dirty property would go back to the notion of the property lacking maintenance. Dirty kitchens or bathrooms for example could automatically lead valuers to think that what is underneath is rotting and dirty as well.

 

Australians holding on to properties longer

New figures from RP Data Property Pulse reveal a growing trend of Australians holding on to their residential properties for longer periods of time.

Data showed that before selling properties, Australia’s house owners hold on to their houses for an average nine years and 7.7 years for unit-holders. The longer time of holding on to properties was said to be due to the higher prices and costs of buying and selling a property.

Cameron Kusher, RP Data’s research analyst, stated, “The average hold period for houses and units was fairly static until late 2005 and actually began to decline during the 2001-04 property boom, however, it has since consistently increased.”

At the same time last year, houses were held for 8.5 years and units 7.4 years. Compared to other capital city markets, Melbourne holds the record for the longest average hold period for its houses at 10.4 years and units at 8.3. Sydney house owners kept houses for an average 9.8 years. In the year 2000, houses in Melbourne were held for an average period of 8.4 years and 6.3 years for houses in Sydney.

Kusher shared, “Given that Sydney and Melbourne are the most populous capital cities as well as two of the most expensive, it’s no surprise to see that they also have the longest tenure. It appears that home owners are increasingly likely to keep their current properties rather than upgrade due to the significant cost.”

“The trend towards longer tenure is apparent across each capital city market – all of which are showing an increase in the average hold period of both houses and units over the past year. Currently, the average hold period across each capital is much higher than it was five years ago and substantially higher than they were in 2000.”

In the context of buying and selling properties, it is obvious that it is now more expensive because of the fact that properties cost higher nowadays not to mention higher costs of stamp duty and commissions for real estate agents.

In addition, the times have also made it harder for property values to accrue like they used to be as evidenced by another survey from RP Data showing capital cities home values falling 5.3 per cent in the 12 months to April 2012.

Kusher shared that instead of moving, home owners would rather upgrade their existing properties. “Affordability barriers mean that people are more likely to choose to upgrade their current home rather than purchase a new one.”

Areas to renovate which add value to a property

Despite the fact that times seem to be harder nowadays especially with ongoing pressures brought to the global financial market by the Eurozone, an article at news.com.au written by Anthony Keane stated that more than half of Australia’s homeowners are planning to renovate their properties in the next four years.”

Renovating a property in the right way could mean not blowing the budget and finding the right place in the house to renovate is always a good choice.

Appliances Online conducted a national survey and it was found that the prime focus of renovators are usually the bathrooms but experts say there still are other places where one can better spend money for.

According to the survey, “South Australians are the most likely of all people to renovate in the next 12 months, at 34 per cent, with 37 per cent targeting the bathroom and 28 per cent planning a kitchen upgrade.”

John Winning, chief executive of Appliances Online said that if one were to choose between renovating a kitchen and a bathroom, the kitchen is always the good place to start.

Winning shared, “Clean the bathroom and renovate the kitchen. It’s really obvious if you have an old kitchen.”

Adding on some items to one’s kitchen like soft-closing drawers, self-closing cupboards, classy benchtops, steam ovens and induction cooktops are the features that usually impress people and the good news is that prices for these items have dropped recently.

Winning added, “Never go cheap on the rangehood. Everyone tries to save money on it but it’s the most important appliance for the longevity of a kitchen.”

Tim Thredgold, a Toop & Toop sales partner shared that another renovation that is within budget and could add value to a property is a new paint job. Thredgold shared, “A good paint-through will change a home, clean it, brighten it, and lighten it.”

Thredgold stated that people who plan to do major renovation projects should focus to those which add value. He listed, in order, renovations which add value to a property like a “family room addition, outdoor living spaces, kitchen, and then the bathroom.”

Thredgold shared a tip to renovators saying, “Pay attention to the money areas, kitchens and bathrooms. A change of fittings, taps and towel rails can give a lift if they match. Appliances in a kitchen can give a mighty lift.”

It is also vitally important to make sure you have sufficient finance in place before you start knocking holes in the walls.  Renovating almost always costs more than you think and we regularly have clients calling for an urgent home loan refinance in order to complete the job.  The problem is that most lenders won’t touch a property that is not full habitable, what’s more if your credit cards are maxed out then lenders credit scoring is going to be very hard on you.  Plan ahead and speak to your lender or mortgage broker to ensure that you have access to funds in place just in case the budget blows out.

 

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