Home Buyer: sale & purchase agreement

1. Sign a sale and purchase agreement

Once you’ve got pre-approval from your bank and found the house you want to buy, it’s time to make an offer. Remember to talk to your solicitor about the offer you’re making and ask them to read over your sale and purchase agreement. You should also ask them what conditions you should include – like a Land Information Memorandum (LIM), building inspection, certificate of title check, valuation and you obtaining finance. Your solicitor will help you understand what your obligations are under the agreement and what happens if you don’t meet them. They’ll also explain what the vendor’s obligations are.

You’ll make the offer through a real estate agent or a private vendor by completing a sale and purchase agreement. This will include things like:

• The names of the buyers and the vendor
• Chattels included with the home
• Offer price
• Conditions
• Conditional period and unconditional date
• Deposit amount
• Possession date

The real estate agent will help you complete the sale and purchase agreement, and then present it to the vendor.

The vendor might then make a counter offer (an amendment to any terms and conditions of the sale and purchase agreement). Counter offers are commonly centred on price and conditions.

When both you and the vendor come to an agreement, both parties initial the changes to acknowledge them.

Once a final agreement has been made in regards to the purchase price, the vendor will sign the sale and purchase agreement and you will need to pay the agreed deposit (usually 5% - 10% of the purchase price) to the real estate agent. If you’re buying the house privately, make sure your deposit is paid to your solicitor (rather than directly to the vendor) so that it can be kept in a trust account until settlement.

2. Conditions

Conditional period: This is a specified timeframe to meet the conditions in the sale and purchase agreement. In this time you’ll need to ensure you can obtain finance to fund the purchase of the property.  Generally the unconditional period is 5-10 days but it’s decided between you and the vendor at the creation of the sale and purchase agreement. If the conditions aren’t met by the unconditional date, you can withdraw your offer.

Go unconditional: Once the conditions have been met, your solicitor will contact the vendor’s solicitor and the agreement will become unconditional. Being unconditional means that you are legally obligated to buy the house. 

3. Settlement

Settlement is when the balance of the funds is paid to complete the purchase of the house and ownership is transferred from the vendor to you. This day is referred to as settlement day and the date is specified in the sale and purchase agreement. The time between going unconditional and settling may feel like a waiting game but there is a lot you can get done; you can use this time to give the landlord notice on your current property (if you’re renting), pack your house, finalise your finance, organise insurance and arrange for your utility accounts to be moved to your new property.

Buying a home at an auction follows a similar process but you’re unconditional straight away so you can’t state any conditions and need to ensure you’ve sorted your finance and done your due diligence before the auction.

1. Bid at the auction

If you’re interested in buying a home that’s going to auction, make sure you’ve engaged the real estate agent so you can register to bid. If you’ve never bid at an auction before, ask the real estate agent to explain the process as they’re very fast-paced. It’s a good idea to go and observe an auction before participating in one.

2. Unconditional

Once your bid is accepted and the hammer has fallen, your purchase is unconditional. You’ll be asked to sign a sale and purchase agreement and pay a deposit which is usually 10% (check with the real estate agent prior to the auction). It’s also vital that you speak to your solicitor before the auction, arrange finance and do your due diligence. If you want to propose different terms, such as a settlement date, you need to make the request before the auction and the real estate agent will seek agreement of the vendor. You can’t do this after the auction.

3. Settlement

As with the other ways of buying a house, there will be a settlement date specified in the sale and purchase agreement. Use the time between the auction and the settlement day to get everything sorted and pack your house.

We hope this helps you when you buy your home. Remember to sort a pre-approval with your bank before you begin house hunting and talk to your solicitor early on.