Buying A Property in Western Australia

Article by: Elizabeth
Last updated: Tuesday, 11-Jul-2006 00:00:00 CEST

Buying a property in Western Australia is very similar to other countries although Australian property sales come under the name of Real Estate. The Australian system of dealing with the transfer of ownership of property is a transparent one and can be much quicker. The system is user friendly and below are some points for consideration.

Most Popular Pages

Cost and Budget

The cost of your new home in Australia will be the biggest item on your list and has to be given great consideration and time to evaluate the impact on your life.

How much can you afford to pay? Work out the deposit required and also the lending costs. This include interest payable, finance fees, stamp duty, settlement agent fees, searches, etc. etc.
Where would you get the finance from and who would it be best to approach?

Again, research is a key element to make sure you fully understand what you need to do and the costs involved as well as the price you can afford to pay. You should:

1.Consider renting in the area you like before you buy
2.Ask questions of your neighbours and local people, real estate agents, shop assistants etc
3.Consider schools that are in the area
4.Is public transport available
5.Other services that are available
6.What recreational clubs are in the locality
7.The parks or playgrounds that are close by
8.How close are the local shops, shopping centres, a garage
9.Any future developments that are being planned for the area i.e. roads, other property
10.Whether the local population is mainly old, young, etc
11.Current property prices, past valuations, future forecasts. Visit the local real estate agents and ask their advice

Visit several properties that are for sale in order to evaluate what is available. This can be done when there is a "Home Open" which are normally advertised in the newspaper or online. Leave your name and contact details with a real estate agent and ask for information when a particular type and price of property comes onto the market..

Types of Sale

There are 4 main ways of buying and selling property in Australia which are:

Real Estate Agent Sale; this is the normal method of selling property by listing it with a real estate agent that operates in the area

Auction; this also is a common method for selling property, usually when a property is in a sought after area. It also tests the market as to how much people are willing to pay for a property. Anyone can attend a property auction and the home is usually open for inspection 45 minutes prior to the sale commencing.

Private Sale; this means you will deal directly with the owner on all aspects of the sale including negotiation of the price

By Tender; this method is used only occasionally for normal house sales

Expressions of interest; this is now becoming a little more widely used and basically means you express an interest in the purchase of the property and put an indicative offer in along side a number of other people. The vendor then chooses who s/he would like to go with in terms of the most attractive offer to them.

There are different titles of ownership and the details are a little complex. Dependant upon the type of title you are buying it could affect the future selling price so you need to be aware of what it all means.

Old System title is also known as "common law title" and is an older system of property title. You can have increased fees for buying a property with this type of title as the conveyencor has to carry out extra work.

Torrens Title is the name given to the system of registration of ownership and dealing with land. This title is the most common and the cheapest to buy and sell.

Strata Title is the common method of unit, apartment or flat ownership. Strata relates to the piece of land being subdivided into different lots with ownership of the common areas being a shared ownership

Community Title is where communities may be created through registration of combination of plans and schemes. Community property lots are common areas owned by an association for use by the owners.

You are now ready to buy a property!

It's best to deal with a licensed real estate agent that is a member of REIWA (The Real Estate Institute of Western Australia). The agents are bound by law to obtain the best deal for the vendor so make sure you achieve the best outcome for yourself.

The agent you deal with will prepare a standard contract for the property up for sale. As a new migrant with little knowledge of the Australian system it would be best to consider not masking an offer or signing the contract as of yet. Take the contract to a solicitor and make sure you understand the terms and conditions you are about to sign up to and be bound by.

The contract contains all the details of the property, vendor, your details the asking price and the proposed offer. The contract is negotiable and can carry with it conditions that have to be met such as satisfactory finance being put in place, an inspection of the property by a pest control company, etc. Also ensure any other conditions such as leaving floor coverings, light fittings, electrical appliances etc. are detailed within the contract conditions. A settlement date also has to be included in the contract.

Next item price - the fun is about to begin! The negotiation of the price involves the contract signing ritual and some agents carry out the negotiations verbally but most use the following method.

The asking price is detailed on the contract; if your offer is less then you must cross out that figure and insert your offer and then sign it. The contract is then taken to the vendor by the agent for their consideration. If your offer is acceptable, the contract is counter signed and the deal is complete. If your offer is rejected then the figure you inserted is crossed out by the vendor and a figure acceptable to them is written down and signed. The contract is then returned to you again and so it goes on until a figure acceptable to both parties is agreed on. Once this is agreed you then pay a deposit and the settlement agent is appointed and they conveyancing commences. Once the contracts are signed you are bound to carry through with the agreement unless you invoke one of the conditions such as unable to obtain satisfactory finance arrangements, etc. Should you drop out of the contract for any reason other than the contract's exit conditions then you will be liable for a percentage of the asking price as a penalty.

You must have building insurance in position when you exchange contracts and it must run from the date settlement takes place.

As mentioned above, you are expected to pay a deposit when you sign the contract and this can be anything form $1,00 to $10,000. At an auction, you would be required to deposit 10% ofthe purchase price immediately.

Finding a Mortgage; there are many lending institutions and the amount you can borrow and the terms and conditions of a loan will vary from company to company. It would be wise to consider shopping around first before you buy a house and have a mortgage set up and approved for when the time comes. This can also strengthen your offer by presenting a confirmed offer of finance. The amount of borrowing against a property is usually 80% of the agreed purchase price. You will need to fund the balance from personal savings. In the event of you needing to borrow more than 80% then lenders will normally look for an indemnity insurance premium. All this is of course dependant on each person's individual circumstances, earnings, assets, etc. etc.

Lenders will want to know all the details of your personal financial affairs and also like to have sight of evidence of how you have managed money in the past by looking at savings books, previous bank statements and records, etc.

Fees and Charges can add up to a substantial sum of money. Two amounts of stamp duty are payable - on the purchase price of the house which usually amounts to approx. 5% of the purchase price and the second is on the mortgage or loan. This is quite a hefty sum of money to find on top of the deposit and other outgoings. The amounts are based on the cost of the property.

A Transfer Fee is payable to the Western Australian Government to cover the transfer of title of your newly purchased property.

Land Tax is payable to the Western Australian Government

Local Government Rates and Water Rates; both of these items are payable from the date of purchase and are usually handled by your settlement agent. Check with your agent to ensure this has been carried out so you don't receive a surprise large bill in 12 months time!

Bank / Lender Fees

Registration of mortgage; this is payable to the land title office to register the mortgage.

Loan application fee; each lender has a different fee structure in order to set up your loan.

Valuation fee; if the lender requires an independant valuation of the property, this is fee is payable by the purchaser prior to any funds being released.

Legal fees; conveyancing work is carried out by the settlement agent and includes title searches, searches of local government records, land registration fees, certificates from local council, water board and others.

Insurances; building insurance plus content insurance

Surveys; if you require a pest report (usually recommended), building report or electrical inspection these fees are payable by the prospective purchaser

Other fees and costs include removals, telephone and internet connection, electricity, gas, mail re-direction (always advisable).