Understanding your sale and purchase agreement

• Tender? This is when you put in a sealed bid to the seller. You don’t know what anyone else has bid, so it pays to go with your best (or highest) offer. You’d hate to miss out if you could have paid an extra $1000 dollars!
• Negotiation? As the name suggests, this is when you put in an offer and then negotiate with the seller one-on-one. This is usually ‘exclusive’ and so the seller is only negotiating with you, not any other potential buyers.
• Auction? This is when you bid in front of other potential buyers and then, once the property reaches a set price (a reserve price), it can be sold to you.
• Is there room for negotiation on the purchase price and settlement date and/or chattels that are included or removed?

• Always finance and due diligence as these are your ‘get out of jail’ free cards. If, for whatever reason, you can't get lending, then you don’t have to go ahead with the purchase.
• It’s important to make sure you’re protected, but don’t apply too many unnecessary conditions as this could cause your offer to be rejected.

• Is it 5% or 10% or 20%?

• Think body corporate or residence association.

• If your home is leaking or has defects, make sure you negotiate with the vendor that they either pay to get it fixed before settlement, or there’s a reduction in the purchase price, so you can pay to get the work done. If the vendor won't negotiate, then you can exit the agreement either based on ‘due diligence condition’ as the property isn't suitable, or a ‘finance condition’ as a bank likely won't lend against a property that’s leaking or falling apart! This is why it’s super important to have finance and due diligence conditions in the sale and purchase agreement.
• If there are delays to your new build, then interest rates might change during this time, meaning your repayments might be more. Or, the value of the property might drop due to market conditions meaning you can't borrow as much. Or, you might have to renew a tenancy and find somewhere to move into, short-term.
• If the property comes in under value after you’ve signed. This is why it’s good to get the valuation done before you go unconditional. This means you might not be able to borrow as much (banks will only lend 80/90% of the lower of the value or purchase price) You’ll need to find additional deposit funds.

Even though you’ll deal with a lot of documentation throughout the homebuying process, and some of it might be quite confusing, pleeeease make sure you read every page. And, if you don’t understand something, ask your lawyer before signing. You should never sign anything you don’t understand – this applies to everything in life, not just property!

Finally, and arguably the most important, is going unconditional and preparing for settlement. This is when your property team comes in most handy!

Unconditional is when the buyer and seller are legally obligated to seal the deal. There is no backing out now!

Having the best understanding of this stage is key. It will allow you to make sure everything is under control, and everyone is doing what they should be for the final stage of the home buying process.

We want to hammer home here that it’s OK to ring your mortgage advisor or solicitor if you want to check that they’re across everything – trust me, they would’ve had more annoying clients than you! It’s better to ask a million questions than sign something you might later regret financially.