Stages of a Contract of Sale
When you are buying a property and it comes time to put forward an offer or sign the contract of sale, making your dream house a reality. Here are the general rules to follow when talking with the real estate agent.
Offers vs Contract
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Firstly, you will be putting forward an offer to buy the property. This is an expression of interest to the seller, that you are interested in buying the property for a particular amount with your terms included (see below). The seller will review and the negotiations may start or offer accepted.
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When your offer is accepted a Contract of Sale will be drafted. Basically, a contract is an agreement between two parties (buyer and seller), which is enforceable by law.
Guidelines for Terms in Contract of Sale:
Finance Date:
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You can have a large range of differing finance dates, but generally on every contract you usually have a choice of 7, 14 or 21 days to get your Unconditional Approval From the lender. The timeline starts from the Date the Sale of Contract is signed by all parties.
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At TMB, we like to see a sale contract with 14 or 21 days Finance Clause. This gives us and the lender enough time to assess your application allowing for adequate time for everything to fall into place. You can have 7 Day Finance (if you are required to win the deal), however, we do like to see a pre-approval in place.
Building & Pest:
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A Building and pest clause should exist as a condition of the sale when you are purchasing the property. The report can identify a number of issues about the property. These will range from minor problems to major issues, such as terminate infestation or structural damage.
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Normally 7-14 days to have the report completed and confirmed. If there are issues in the report, you can bring to the attention of the seller and potentially exit the contract or request amendments to the property. Always good to have your Conveyancer kept up-to-date with the report.
Settlement Day:
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Settlement day is when you officially take ownership of the property. On this day, your conveyancer, the sellers conveyancer and the lenders (involved), come together to make sure title hand over is completed.
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Settlement Day can be on any day you wish to take ownership of the property. Normal settlement day conditions are 30 to 45 days from contract date. Usually, it links in with the Finance Date, to allow adequate time for your lender and other party to get ready for settlement.
Unconditional Approval:
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Unconditional Approval or Full Approval is where the lender has given their approval to finance your purchase of the property. At this stage you are buying the property and can potentially not exist the contact.
Attending Auctions:
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Once an Auction is complete, you are at the Unconditional Approval Stage of the Contract of Sale.
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You do Require your finance to be in order before approaching an Auction
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We recommend getting a Pre-Approval in place before going to Auction.
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Pre-Approval is an applicaiton with the lender that allows you to obtain an approval before purchasing a property. Your pre-approval last for 90 days but can be rolled over. Your Broker will make sure you are kept up to date.