Question about buying property in NSW

[Edmond Dantes]

Somersoftians,

When I bought my IP in queensland, I provided a deposit of $1000 when I signed the contract. Does the same process apply here in NSW? or is there a limit amount that you must provide when signing a contract? This will be for a private sale, not auction.

Also, when I signed the contract in QLD, I immediately got my home insurance (coz I was liable if anything happened). Same in NSW?? I read this on a copy of a contract of sale:

"The vendor should continue the vendor's insurance until completion. If the vendor wants to give the purchaser possession before completion, the vendor should first ask the insurer to confirm this will not affect the insurance"

"the purchaser should arrange insurance as appropriate"

 

[Propertunity]

When I bought my IP in queensland, I provided a deposit of $1000 when I signed the contract. Does the same process apply here in NSW?

There are 2 ways to purchase property in NSW (excluding auctions, which are pretty much the same everywhere):
Way 1
Sign a contract in the real estate agent’s office & pay a 0.25% deposit. 5 business day ‘cooling off’ period begins the following day.
2. Do pest & building reports. Apply for finance approval if required for the purchase. Seek, but don't necessarily gain, an extension of time if there are hold ups getting this done (quite common at the moment).
3. All good? do nothing - day 6, pay up the balance of 10% i.e. 9.75% and contracts are formally exchanged by default
4. Settlement in 42 days later (typically)
Way 2
1. Make a written offer. Written offer has clause such as "finance approval, building and pest, settlement period"
2. If the vendor accepts the offer (written), finance approval, building and pest inspections are initiated
3. Vendor's solicitor issues contract to your (purchaser's solicitor)
4. All good? Sign contracts, pay 10% deposit. NO cooling off period applies. You sign a 66W form along with your solicitor, that you acknowledge that no cooling off period applies.
5. Contracts are exchanged
6. Settlement in 42 days later (typically)

Under Way 2, you are open to being gazumped at any point up until points 4. & 5. i.e. Other purchasers could buy the property before contracts are exchanged and you would miss out.

I would recommend Way 1 as the way to go in the present market conditions.

Get insurance as soon as a formal exchange of contracts has taken place (i.e. cooling off period expired)

 

[Edmond Dantes]

Excellent, thanks!

In Option 1:

Sign a contract in the real estate agent’s office & pay a 0.25% deposit. 5 business day ‘cooling off’ period begins the following day.

I could easily go with a check or cash, but

3. All good? do nothing - day 6, pay up the balance of 10% i.e. 9.75% and contracts are formally exchanged by default
...
Would that be through my solicitor? (i.e. the solicitor will handle the money transfer?)

thanks again

 

[Player]

Thanks for that explanation of the time-line Propertunity.

In order to avoid being gazumped with Way 2, can you not attach an annexure of subject to conditions and also pay 0.25 % (still have time to cool off) and if you (after the five day cooling off) change you mind due to your building/pest, etc, just walk away and obviously forfeit the 0.25 %?

People relying on finance are best pre-approved and ensure they do not over-pay with emotional purchases. The finance conditions cannot be executed in five days.

Sometimes 5 days is also insufficient to have building and pest done (if deemed necessary) under the Way 1 of the typical cooling off. I have had such done in Vic in less than five days, however occasionally in a longer timeframe.

Anyway, is my question above an alternative way to go or is it as cut and dried as using only Way 1 or Way 2.

Thanks

 

[Propertunity]

Would that be through my solicitor? (i.e. the solicitor will handle the money transfer?)

Normally, yes as you are in the solicitor's office discussing the contract etc. but if your solicitor is somewhere else and you just having phone conversations, then nothing wrong with giving the balance directly to the REA - he's going to end up with it in his trust account anyway whether you give it to him or your solicitor.

 

[Propertunity]

In order to avoid being gazumped with Way 2, can you not attach an annexure of subject to conditions and also pay 0.25 % (still have time to cool off) and if you (after the five day cooling off) change you mind due to your building/pest, etc, just walk away and obviously forfeit the 0.25 %?

I understand why you will want to know, shortly

If you want to mess with the contract conditions as presented in the original contract, then the REA will mostly shy away from doing them or attaching annexures and defer to having them done by the vendor's solicitor. Once this happens (if agreed to by the vendor etc) then the REA could then turn up with a new contract for you to sign under Way 1. However, that all takes time and generally speaking, you'd be doing this kind of thing under Way 2 (although not necessarily).