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Property purchase process


In Australia there are generally two ways properties are sold, through private treaty or at auction.

Private treaty

This is when a property is advertised for sale at a price, as opposed to using an auction to determine the price.

One advantage of buying by private sale is that you’ve got the chance to agree on a price and exchange contracts before going to the added expense of paying for inspections and conveyancing.


It’s always best to have your finances in order before making an offer. This will help you determine what you can afford and you’ll avoid the embarrassment or financial loss of pulling out of the sale at a later date because your finances have fallen through. A bank might give you pre-approval up to a certain limit based on your capacity to make the repayments, but you may still need a valuation on the home itself. Also it is possible to make your offer subject to finance.

Our partner ANZ is Australia’s most awarded home loan lender and offers a range of home loans and a service by which a home loan specialist can provide pre-arranged finance, find out more.


The contract

If you’re interested in a property, ask for a copy of the contract and check it thoroughly. The contract should list the inclusions and exclusions. These are the items the seller’s either taking from the property or leaving with it. These lists typically include items like appliances, light fittings and wardrobes. You may also want to make changes to the contract itself, such as extending the settlement period. Some of this could be negotiated prior to making your offer.

Agreeing to terms

In Australia, even though you may have verbally agreed on price it’s still possible for the seller (known as the vendor) to sell to another person. The fact is, until the contract’s signed and exchanged the seller has the right to accept or reject any offer.

Contract exchange

Depending on the contract, this doesn’t mean you’re locked in. However, it does prevent the vendor from selling the home to a third party during the cooling-off period.

Cooling-off period

This is a period during which you as the buyer can change your mind, the seller can’t pull out of the agreement. The cooling-off period varies in each state and territory, you can check with consumer affairs in your area.

During the cooling-off period you can arrange building and pest inspections or carry out any other searches you need. You can pull out of the deal if the contract specifies that you’ve the right to withdraw based on these inspections being unsatisfactory. In some cases, you still forfeit a percentage of the deposit if you pull out.

Sometimes, sellers offer to exchange contracts quickly if you agree to forfeit the cooling-off period. Be careful, because
if you pull out for any reason you’ll lose your entire deposit. Once the cooling-off period has passed, you’re locked into buying the property.


housing-auctionBuying at auction is a little more risky. Firstly, much of the expense in checking the contract and getting various reports and inspections on the property have to be done before the auction day. This means you’re paying for inspections on a property when you might not be the highest bidder. Perhaps the most important thing to think about is your own personality. Many people have found themselves carried away by the emotion and competition of an auction and end up paying more than they can afford.

There’s no cooling-off period

If the property passes the reserve price set for it and you’re the highest bidder at the final fall of the hammer, you’re legally bound to purchase the property. You’ll be required to sign
the contract on that day, hand over the deposit specified in the contract (usually 10 percent of the purchase price) and settle for the full amount within an agreed time. While every contract is different, in most cases if you can’t get finance or you pull out of the deal for any other reason, you’ll forfeit your deposit or be liable for any loss suffered on resale of the property.

Buyer’s advocate

If you’re nervous about the process and want to guard against an over-emotional decision, appoint a professional or trusted friend to bid for you. This person needs a letter from you granting them permission to bid on your behalf. Make sure you’re clear about your financial limit. If you’re dealing with a professional advocate this will be included in a written agreement. If you’re using a friend to do your bidding it’s still a good idea to give them a limit in writing to avoid confusion and disappointment.

Terms and conditions of the auction

The legislation governing auctions varies from state to state and the auctioneer normally runs through some of the terms and conditions of the auction process at the start. These terms and conditions should also be on display before the auction. If you can’t see them, ask the agent to provide them.

The reserve price

This price is set by the seller usually on the day of the auction, and is usually not revealed to you. If the property passes the reserve price the auctioneer will announce that the “property is on the market”. Sometimes the agents may confer with the seller in a bid to alter the reserve and then return to declare that the “property is on the market”.

Passed in

This means the reserve price hasn’t been reached. In many cases, the highest bidder is given a chance to negotiate with the agents if the property’s been passed in.


settlementThe settlement is the formal completion of the transaction. When you exchange contracts the timing of the settlement period has normally been agreed and the date defined in the contract. The average contract period is 60-90 days, but it’s common for the parties to negotiate an extended or reduced settlement period.

By the settlement stage your searches and other enquiries about the property should be complete. Your finances should be in order and you’re ready to take the keys for your new property. The settlement is the formal completion of the transaction.

There are a few issues to consider before handing over the final cheques.

Final inspection

Before settlement insist on inspecting the property. Go through the property slowly to ensure all inclusions listed in the contract remain and no damage has been done to the property since you exchanged contracts.


In addition to the purchase price, you’re likely to have
to pay ‘adjustments’. This is payment for taxes, rates and other services that may’ve been paid in advance by the seller.


As the buyer, you have to pay all stamp duty and other statutory fees on the sale and the mortgage. The amount of duty varies according to the purchase price, the amount of your loan and whether you’ll be an owner-occupier
or not.


In most circumstances this money is held in trust by the
real estate agent who sold the home. If the home was sold privately, the deposit is typically held in trust by the vendor’s solicitor. On settlement day, and sometimes before, this money is released to the seller.


Your bank will now pay the agreed loan amount, and you’ll need to pay the adjustments.

A few days before settlement you need to arrange for the transfer or re-connection of services such as gas, electricity and phone. Make sure the rates have been adjusted at settlement so, as the buyer, you only start paying rates from the moment you accept possession of the property.